As fiscal year 2009 comes to a close, U.S. states continue to face serious budget challenges with implications across the depth and breadth of government functions.

The Center on Budget and Policy Priorities (CBPP) says the situation has already led at least 39 states to cut funding for various services, including public health programs and programs for elders and people with disabilities.

According to the CPBB,

At least 22 states, plus the District of Columbia are cutting medical, rehabilitative, home care, or other services needed by low-income people who are elderly or have disabilities, or significantly increasing the cost of these services. For example, Florida has frozen reimbursements to nursing homes and relaxed staffing standards, Nevada is making it harder for beneficiaries to qualify for nursing home care, and Rhode Island is requiring low-income elderly people to pay more for adult daycare (“An Update on State Budget Cuts,” June 29).

Federal recovery act money and tax increases are helping to offset some of the effects of these cuts, says the CPBB, “but only to a point.”

Here are a few snapshots of what’s happening in several states:

California

California failed to meet their budget deadline on June 30, thus putting Medicaid and other states services at risk of significant cuts. According to McKnight’s,  the California Association of Healthcare Facilities (CAHF) indicated that even though California has begun issuing IOUs in lieu of payment to several state agencies, it will keep issuing warrants to skilled nursing and disability care providers through July. However, CAHF also “strongly recommends [that] providers prepare for possible contingencies… in the event that the state can’t borrow sufficient cash to meet its expense needs.”

New York

State controller Thomas DiNapoli said on July 5 that New York is headed for a “budget free fall” if Democratic Gov. David Paterson and the state legislature fail to slash the summer budget (“Plunging revenue causes new problems,” Stateline.org, July 9). This comes after a partisan deadlock in the state Senate caused New York to enter fiscal year 2010 without a budget in place. On July 6 he told the New York Daily News that while his state’s condition isn’t quite as bad as that of California — which is now paying bills with IOUs thanks to its budget gap – “we certainly have a budget that appears not to be holding together.”

According to PHI New York Policy Director Carol Rodat, “New York’s Fiscal Year 2010 budget, already deemed to be out of balance, contains $160.28 million in home care cuts and $449.2 million in nursing home cuts. While these cuts reflect the rejection of much larger cuts originally proposed by the Governor, those interested in services and supports for the elderly and people living with disabilities can expect to fight the budget battles once more, perhaps before year end.”

Ohio

Governor Ted Strickland, faced with a $3.2 billion budget deficit, has proposed a cut to the state’s Passport program, which helps seniors stay at home instead of moving into nursing homes. The program is paid for by state Medicaid funds (“Seniors’ home-based care could be cut,” Wilmington News Journal, July 2). He told the Washington Post, “For a lot of people, there is a continuing failure to recognize the severity of what is happening with this economy. . . . Programs will be reduced. Some programs will be eliminated” (“States Straining to Repair Budgets,” July 7).

Michigan

Facing one of the ten worst budget gaps in the U.S and a 36% decline in state revenue since last year, Michigan lawmakers are considering an 8 percent ($94.9-million) cut in Medicaid fees paid to physicians, hospitals, and others. The state Senate has already approved the cut, and lawmakers from both the Senate and House will be working in coming weeks on hammering out a budget before October 1, the start of Michigan’s new fiscal year. Richard E. Smith, MD, President of the Michigan State Medical Society, estimates that federal matching funds will be reduced by more than twice the state cut (“Michigan Senate Oks 8% Medicaid Fee Cut,” American Medical News, July 8). Additionally, cuts to Michigan’s local public health program are already impacting some local health services and departments.

Pennsylvania

Pennsylvania failed to approve a budget in time for the beginning of fiscal year 2010 on July 1, portending a situation that “has the potential to be a disaster” for local social services, according to Armstrong County Commissioner Rich Fink (“State budget mess could cause local social service ‘disaster,’” Pittsburgh Tribune-Review, July 3).

The Philadelphia Inquirer reported on July 3 that health service providers around the state, including nursing homes, may suffer if state leaders fail to resolve the budget impasse swiftly. “The most affected,” the Inquirer wrote, “provide services to the medical assistance population, including hospitals, nursing homes, and doctors who help an estimated two million people who cannot afford to pay on their own.”

The paper quoted Philadelphia nursing home administrator Nancy Kleinberg, who said she had received a notice from the state’s Department of Public Welfare warning of a possible delay in medical assistance payments. She said she would first try to work out delayed payments to her suppliers, and would then rely on any reserves, but after that she would have no choice but to ask her staff to work without pay, on the promise of a reimbursement. “What makes this even harder is that we don’t know how long this delay will last,” she said (“Budget fight may affect health-service providers,” July 3).