The Legislature could be called back to Olympia before summer's end if Congress doesn't act to extend financial help to the states before its August recess.
Gov. Chris Gregoire joined a bipartisan group of governors in Washington, D.C., on Wednesday to urge Congress to approve a package of Medicaid money for the states.
"The consequences of it not happening would be approximately 6,400 jobs," Gregoire told reporters on a conference call. "The message collectively from the governors is we have expected there will not be federal dollars coming in the next biennium, but we need them in this biennium."
At least 30 states -- including Washington -- wrote budgets relying on an infusion of federal cash to balance deficits, but the bill including the money failed in the Senate a week ago and seems unlikely to be resurrected.
Eli Zupnick, spokesman for Sen. Patty Murray, D-Wash., said Republicans in Congress have blocked the Medicaid extension despite efforts by Democrats to trim the package and reduce the deficit incurred.
"We did everything they asked," Zupnick said. "We brought it back to the floor, and they blocked it one more time. ... Once again the Republicans put partisan politics above their states and said, 'No.'"
Zupnick said Murray would keep trying to get the Medicaid extension passed in some form, but prospects for the package seem grim as long as Republicans block the idea.
A glimmer of hope may exist in a bill planned by Sen. Scott Brown, R-Mass., who said in a written statement Wednesday that he planned to introduce a bill to extend the Medicaid funding without raising the deficit.
"My compromise bill uses unspent stimulus funds and cuts wasteful and unnecessary spending in other areas to pay for these important programs," Brown said. "While my bill pays for additional (Medicaid) assistance for one more year, this phase-down provides states an opportunity to get their fiscal houses in order -- but also makes it clear that they can no longer pass the buck to the federal government, which has budgetary problems of its own."
Brown's office did not return a message Wednesday seeking details about his proposal.
The supplemental budget passed by the Washington Legislature and signed by Gregoire relied on about $483 million in Federal Medicaid Assistance Percentage, or FMAP, funds coming to Washington under a six-month extension to the program proposed in a recently failed bill. That measure also would have extended unemployment benefits to laid-off workers.
The FMAP match originally was created in the stimulus bill to boost the amount of Medicaid money coming to the states.
The extra Medicaid match expires at the end of December, but the six-month extension would have continued funding through the end of the state's 2009-11 biennium, which ends June 30, 2011.
The supplemental budget as signed by Gregoire left $452 million in reserves, but the potential loss of the FMAP money and a recent $200 million drop in expected revenues could leave the state more than $230 million in the hole for the remainder of the biennium.
The Legislature has faced large deficits in each of the past two sessions, totaling about $12 billion for the biennium. Lawmakers relied heavily on federal money to fill the gaps, along with cuts to services, fund transfers and nearly $800 million in new taxes passed in the session that ended in April.
Gregoire said the state could be facing deep program cuts and massive layoffs of state employees if the federal government doesn't come through with the money.
Cutting $480 million could translate into 6,400 jobs lost, although a hard number is yet to be determined, she said.
"If we do across-the-board cuts, I don't know of much more program cuts that can be made," she said. "It is down to layoffs."
The biggest cuts likely would come in social and human services, corrections and higher education because of laws and regulations that protect other parts of the budget from cuts.
The minimum for across-the-board cuts would be 4 percent, but that would leave the state with nothing in reserves, Gregoire said. The more likely target is 7.4 percent.
State Senate Minority Leader Mike Hewitt, R-Walla Walla, said it was ridiculous for the state to count on the federal money before it was approved by Congress.
"I think this thing is going to come home to roost in (Democrats') beds because they never should have assumed this $480 million in federal money coming," Hewitt said. "People are so upset about federal spending, they're throwing them out of Congress right and left. (Republicans) never thought this money was going to materialize."
But Hewitt also said he thought across-the-board cuts would hurt the state.
"I don't like across-the-board cuts, quite frankly," he said. "We like more targeted cuts in specific areas. When cutting across the board you can cut things that are supposed to be self-supporting. You have to be careful with across-the-board."
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