Lose some, win some: the new federal spending plan contains bad news for states. But there's good news, too, especially in the Medicaid law.

• Author: Tubbesing, Carl

It took Congress until Feb. 1 to finally pass a spending bill. And it is--in some ways-bad news for the states. Now they must figure out how to absorb some $10 billion over the next five years in child support enforcement, child welfare, child care and reductions and cost shifts in Temporary Assistance for Needy Families.

The news could have been worse. State legislators effectively stifled other cost shift targets. These efforts erased a $1 billion proposed change in the Food Stamps program, overcame $3.7 billion of a House-approved $5.2 billion child support enforcement reduction package and curbed potentially draconian reductions to the Medicaid program.

The spending plan passed by the narrowest of votes just before the House and Senate adjourned in December and then was re-passed at the beginning of the new session because of a technicality.

"If you care about the integrity of state budgets," says Illinois Senator Steve Rauschenberger, "then you have to view last December as the 'bleak mid-winter' of fiscal federalism."

North Dakota Representative Ken Svedjan puts it this way. "Like most state legislators, I personally feel strongly that the federal budget deficit has to be eliminated. It's achieving that goal so disproportionately at the expense of the states that I find so disturbing."

Heading the list of disturbing decisions is renewal of the landmark 1996 welfare reform law. The Temporary Assistance for Needy Families law was due to expire in October 2002, but has been kept alive for three years through a series of short-term extensions. "We knew we would be in deep trouble if TANF reauthorization got included in reconciliation," says Kansas Representative Melvin Neufeld, a member of NCSL's task force on welfare reform.

When they negotiated the 1996 law, state legislators and governors agreed to a fundamental trade. They gave up the certainty and restrictions of an entitlement program--the old AFDC law--for the policy flexibility of a block grant.

"The new law abrogates the spirit and letter of the historic 1996 agreement, " says Representative Neufeld. "I would argue that the underlying philosophy of the original law has been altered. Gone is deference to state innovation and creativity. Back are the federal decision-making handcuffs that characterized the old AFDC law."

A LOSS WITH TANF

Although the funding levels for the core TANF block grant remain unchanged, money for some related programs, such as high performance and...