Medicaid, jobless costs will boost state budget

Gov.-elect Brian Sandoval flew to Washington, D.C., Tuesday to discuss the potential cost Nevada may face from rising Medicaid and unemployment insurance loans.

Spokesman Dale Erquiaga said Sandoval asked U.S. Senate Majority Leader Harry Reid, D-Nev., for help on those issues. He said the change in the federal match for Medicaid when stimulus money goes away could reduce what Nevada receives by nearly 10 percent, forcing the state to pay more than $200 million more to cover Medicaid costs during the next two years.

Erquiaga said Sandoval asked Reid's help in finding "some accommodation" to help the state cover those costs.

In a statement issued late Tuesday, Reid was non-committal about his ability to make those changes but said he looks forward to working with Sandoval to help Nevada.

With the stimulus money in place, the federal government has been covering just less than 64 percent of Medicaid costs for the state. When that expires, the percentage will drop back to as low as 50 percent and the state will be forced to make up the difference.

Gov. Jim Gibbons earlier this year sent a letter to Nevada's congressional delegation urging Congress to extend the added Medicaid funding.

In addition, Erquiaga said, the state is facing a potential $105 million bill this coming biennium to cover interest costs on the money the state has had to borrow to pay unemployment claims during this recession. The loans are interest free this year but that is scheduled to change next year unless Congress approves an extension of the interest waiver for Nevada and other states borrowing money from the federal unemployment insurance trust.

The state could elect to hit Nevada businesses for those interest costs but, under existing rules, the money would have to come from the General Fund. The Employment Security Council in October voted to raise the employment insurance rate from an overall

1.33 percent to 2 percent next year. The cost of covering interest would be added on top of that rate.

Cindy Jones, administrator of the state's Employment Security Division, told the council in October she had already borrowed $526 million to pay benefits as of Sept. 30 but expressed hope the total borrowed wouldn't reach $1 billion by the time the economy turns around.