Senate advances Medicaid, school aid bill that promises millions for Nevada

WASHINGTON -- Senate Democrats on Wednesday defeated a Republican filibuster and cleared a path for a $26 billion bill to rescue cash-starved states contemplating layoffs to teachers and other public employees.

For Nevada, the legislation promises $83 million to bolster school budgets and $79 million to cushion a shortfall in state spending on health care for the poor, said Sen. Harry Reid, D-Nev.

Supporters said it would stop the layoffs of almost 300,000 teachers, firefighters, police and other local and state government workers nationwide.

But it also involved trade-offs in other areas, including a $12 billion rollback in food stamp benefits and a $1.5 billion cut in loan guarantees for renewable energy firms eyeing investments in Nevada and the West.

The reduction from a $6 billion loan guarantee fund was protested by the solar power industry association that said it would "result in the loss of thousands of jobs" while leaving investors "high and dry."

Reid said clean energy remained important but the immediate need was to bail out governors and state legislatures struggling with recession-fueled shortfalls.

"Today the U.S. Senate did its job and saved people's jobs," Reid said after a key vote. "Public employees are desperate for help. This is also to take the burden off of our states because we have people losing their jobs and are more dependent on Medicaid.

"This gives money to our states to try to solve some of those problems," Reid said.

Nevada's share of the money will help state officials avert drastic cuts to health care for mothers, children and senior citizens and could mean 1,200 to 1,400 more teachers than anticipated in schools statewide, Nevada education and public employee association officials said.

While they welcomed the news, they said they have questions about how the money will be dispersed. For example, they don't know how much Clark County schools will receive, and what kinds of strings will be attached to the bill.

The health care money comes in the form of matching funds for Medicaid services.

An "enhanced rate" matching rate in the American Recovery and Reinvestment Act, the so-called economic stimulus law, meant the federal government was covering nearly 64 cents of every dollar spent delivering health care to Nevada's Medicaid recipients.

Without the bill Reid is shepherding through Congress, that match would revert to about 51 cents per dollar on Jan. 1.

If that happened, it would leave the state's Medicaid administrators about $69 million short of what they need to pay for care through June 30, the end of the fiscal year.

Coping with the shortfall could have meant suspending payments to health care providers for the final weeks of the fiscal year, said Charles Duarte, administrator of the Nevada Department of Health and Human Services Division of Health Care Financing and Policy.

That could have prompted private health providers to stop accepting Medicaid patients and made it hard for nursing homes to pay vendors and provide services.

"We were very concerned and watching very, very closely the goings-on in Congress the last few months," Duarte said.

Although the money wasn't guaranteed, legislators had already included it in estimates they used during a special session of the Legislature held earlier this year to fill an estimated $800 million budget shortfall.

If it hadn't come through, there was no obvious source of cash to cover it.

"There was still a gap there and we had not come up with any solutions," said Andrew Clinger, budget director for Gov. Jim Gibbons. "Getting the $79 million really puts us in a much better position going into the (2011) legislative session."

If the House approves the bill next week and President Barack Obama signs it, the education funds in the measure could be in Nevada by the end of September, said Reid spokesman Tom Brede. The money is enough to provide for about 1,200 to 1,400 teacher positions across the state.

It could be used, according to Brede, to pay existing employees, rehire laid off employees or hire new employees.

It can't be used for administrative or support services expenses, he said.

Keith Rheault, superintendent of public instruction for Nevada, said he would like to see the money go toward filling open positions, as opposed to offsetting compensation cuts to which teacher unions have already agreed.

"To me my priority is to get those positions back so that we are at least trying to maintain what the students had last year," Rheault said.

Lynn Warne, president of the Nevada State Education Association, also said the money would be well spent filling as many teaching jobs as possible.

"Right now we are just trying to get class sizes down to a manageable level," she said.

Ben Kieckhefer, spokesman for the Nevada Health and Human Services Department, said the $79 million in federal aid still is $10 million short of what the Legislature had anticipated in additional matching funds for Medicaid, the state administered program that provides free health care for the poor and disabled.

"It is then a $10 million shortfall we have to account for somehow," Kieckhefer.

The bill was scaled back from a more ambitious effort that Democrats were unable to pass earlier this year. Still, passage would hand Reid, the Senate majority leader, a victory on an economic recovery issue just days before he returns to Nevada to campaign for re-election.

The bill advanced by a 61-38 tally with Sens. Olympia Snowe and Susan Collins, both R-Maine, crossing over to provide key votes that overcame a Republican filibuster.

That ensures the measure will pass before the Senate breaks by Friday for a five-week summer recess.

House members already are on recess, but Speaker Nancy Pelosi, D-Calif., announced they will be summoned back next week for a final vote that would deliver the bill to Obama.

Rep. Shelley Berkley, D-Nev., "strongly supports this funding," spokesman David Cherry said. "She will vote for its passage when the bill comes before the House next week."

Likewise, Rep. Dina Titus, D-Nev., will be there and will vote for the bill, an aide said.

If the House is called into session, Rep. Dean Heller, R-Nev., "will come back to vote," aide Stewart Bybee said. He did not say how Heller would vote.

The legislation provides $10 billion to states and local school districts to prevent teacher layoffs, and $16 billion to states for Medicaid and other needs.

To pay for the measure, Democrats proposed a combination of tax increases and spending cuts to avoid increasing the budget deficit. The bill would eliminate in March 2014 an expanded food stamp benefit enacted last year and limit the ability of some U.S.-based multinational companies to use foreign tax credits to reduce their U.S. taxes.

Most Republicans opposed the measure, calling it a payoff to public employee unions and warning that it would make the states ever-dependent on federal funds. GOP senators also balked at the corporate tax hikes. "That would have the effect of driving jobs overseas," said Sen. Lamar Alexander, R-Tenn.

Sen. John Ensign, R-Nev., voted against the bill. He said it will offer temporary relief, but would pay for it through "permanent" tax hikes.

"This legislation will raise taxes to pay for temporary spending; not something we should be doing to Nevadans in this tough economic climate," Ensign said.

Among the cutbacks is a $1.5 billion cut out of a $6 billion loan guarantee fund for renewable energy firms that was met by protests among trade groups.

"Rescinding funding at this time would be devastating to the solar industry's efforts to develop clean electric generation and would result in the loss of thousands of jobs," Daniel Adamson, vice president of government affairs for the Solar Energy Industries Association, said in a letter sent to senators.

Investors "and the industry's tens of thousands of employees would be left high and dry," Adamson said.

Reid spokesman Tom Brede said clean energy remained important to Reid, and he would continue to seek tax breaks and other funding for it.

"While this is a priority for Senator Reid, so is protecting the jobs of teachers and first responders, and that is what this bill is all about," Brede said.

The legislation is scaled back from versions that stalled earlier this summer as part of a larger tax-and-spend measure extending jobless benefits and a variety of expired tax breaks.

It's less generous than the help provided under the stimulus law but is still desperately sought by governors, who have already made big budget cuts as tax revenues have plummeted in the recession and warn of even worse cuts if the federal help is not continued.

"This legislation makes a difference," said Sen. Patty Murray, D-Wash. "Real people in real jobs. Real paychecks."

Obama called the breaking of the filibuster an important step toward "ensuring that teachers across the country can stay in the classroom and cash-strapped states can get the relief they need."

The Education Department estimates the $10 billion for school districts would save about 140,000 teacher jobs. The Economic Policy Institute, a liberal think tank partially funded by labor unions, estimates the $16 billion in additional Medicaid funding next year would save the jobs of more than 150,000 state employees across the country.

Wednesday's vote to break a GOP filibuster came after Democratic leaders made final tweaks to the measure in hopes of winning over Snowe and Collins. The duo also provided the key votes last month to pass a six-month extension of jobless assistance for the long-term unemployed.

A vote scheduled for Monday was postponed after an analysis by the Congressional Budget Office showed the measure would add to the deficit. Snowe and Collins also had been concerned about cuts to Navy shipbuilding accounts since the Bath Iron Works in Maine is so essential to the state's economy. Reid got rid of the proposed cuts Monday night.

Reid orchestrated other changes to close an almost $5 billion deficit gap, including new reforms to a tax credit claimed by the working poor.

Collins has been a past supporter of giving states help with their budgets and was the driving force behind an aid package enacted in 2003 that added $20 billion to the deficit.

Both provisions are heavily backed by unions for teachers and public employees, key allies of the Democratic Party.

Review-Journal writer Benjamin Spillman and The Associated Press contributed to this report. Contact Stephens Washington Bureau Chief at stetreault@ or 202-783-1760.