McAuliffe’s best option on the budget

June 19

Virginia Gov. Terry McAuliffe has until Sunday to figure out what to do about the troublesome budget the General Assembly has handed him that forbids the expansion of Medicaid health coverage to 400,000 lower-income state residents.

Depending on what he chooses to do, McAuliffe risks blowing out the entire $96 billion, two-year budget and tossing state finances into turmoil on July 1. Since he has vowed to make expanded Medicaid a reality, he is sure to do something other than simply approve the budget.

What are his options?

1. McAuliffe could simply veto the entire budget, but that would involve maximum brinksmanship given the June 30 deadline. Such a course would be complicated and risky.

2. He could use his line-item veto on budget language tailored to prevent Medicaid expansion. Republicans engineered the inclusion of this language barring expansion or a private alternative without approval of both houses of the legislature.

In this scenario, McAuliffe could approve the bulk of the budget, wipe out the nettlesome Medicaid language and put the ball back in the court of recalcitrant Republicans in the legislature. They’d need to come up with a two-thirds majority to override his line-item veto.

They don’t have it, Richmond political analyst Bob Holsworth told me. In which case McAuliffe could introduce some form of Medicaid expansion by executive decree. He’d risk a court fight, but the deed would be done.

3. A third option could be using the state’s Public-Private Partnership Act, normally employed to tap private money to build public roads and tunnels. Republicans and Democrats alike have been enamored of the PPP3 Act because it lets them get public works projects done while not directly raising taxes. Instead, PPP3 uses tolls or other ways of raising money to pay off debt.

As Jeff Schapiro of the Richmond Times-Dispatch points out, PPP3 can be used for just about any state service, not just roads. It could be used to build up a private vehicle for Medicaid such as Marketplace Virginia, which had been pitched as a way to expand Medicaid through exchanges selling private insurance policies. It could tap the $2 billion in federal money meant to expand Medicaid in the state.

There are some problems. Using PPP3 would be time-consuming. It would involve finding a private firm willing to make a bid on a project that makes use of the act. Then, the state would have to open the process to other bidders, Holsworth told me.

Another issue is that PPP3 has gotten a bad rap for some highly flawed projects, such as building a superhighway near U.S. 460 in southeastern Virginia.

On Medicaid expansion, McAuliffe is walking through a high-wire drama that has resulted in one of the most convoluted and frustrating General Assembly sessions in memory.

It seems his best option is to go for the line-item veto and expand Medicaid through executive order. The pushback will be strong, but it is his least painful approach he has.

Peter Galuszka blogs at Bacon’s Rebellion. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

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