Paying for patients and potholes
REFUSE FEDERAL MONEY makes a great political bumper sticker, but what does it really mean? What are we really refusing? Let’s first define federal money. Federal money is Idaho taxpayers’ tax dollars and fees sent to the federal government. It’s your federal income and gas taxes. It’s YOUR money. If we refuse federal funds we’ll have two choices, replace the money with Idaho tax dollars or get rid of the programs funded by federal money.
Two arguments are made to refuse federal money. The first is the federal government’s spending is out of control. This is true. This is otherwise known as deficit spending and is not sustainable over the long run. While accepting money from an unsustainable source is risky business, blanket refusal of federal money is ludicrous. It’s still your money. Idaho’s refusal of federal money will not resolve the Fed’s irresponsible spending. Nor is the federal government offering to reduce or eliminate your federal income or gas tax if the state refuses federal money. Your money would just be spent in other states and you will still get to pay off the related debt.
The second argument for refusing federal money is there are certain expectations, otherwise known as strings attached. This is true. All money comes with expectations or strings attached. We see this in our personal lives, businesses, and government. When we give someone money we attach strings. We expect them to deliver a product or service. This is how money and capitalism works.
Just like blindly refusing federal money, it is also ludicrous to blindly accept federal money. The state must understand the strings attached and weigh that against the benefits the money will produce. A simple cost benefit analysis. If the costs of accepting the federal dollars outweigh the benefits, the state should pass on the federal money. Otherwise, if the benefits outweigh the costs the state should accept the money on behalf of Idaho taxpayers and put it to work.
This year the State of Idaho’s budget totals $13.9 billion in spending including $5.6 billion of federal dollars or 40% of the total money spent by the state. Drilling down further we see that $3.6 billion of the $5.6 billion, or 55% of Idaho’s total federal funds are spent on two programs. These programs are Medicaid of $3.14 billion and Transportation of $465 million.
Medicaid is used by 411,464 Idahoans or 20% of our population for their healthcare needs. Pregnant women, children, and those with disabilities and special health needs make up the vast majority of Idahoans utilizing Medicaid. Non-profit hospitals are required by law to accept anyone seeking healthcare regardless of their ability to pay. The need for healthcare for these Idahoans will not disappear if we refuse federal tax dollars. How we pay for it will. The cost of providing indigent health care will shift from federal dollars to Idaho taxpayers through higher state taxes, higher healthcare costs and higher insurance rates. It’s likely the cost increases will be more than the total cost of the current Medicaid spending.
Idaho’s second highest use of federal funds is transportation. Federal funds build and maintain more Idaho roads and bridges than any other source of funding. Refusal of federal dollars would also leave us with a couple choices, replace the federal dollars with state tax dollars or stop building and maintaining Idaho roads and bridges. Neither option is a good one.
Refusal of federal money makes for a good political bumper sticker, but the reality is there are costly consequences for Idaho to refuse all federal money. Idaho should continue using a cost benefit analysis before accepting any funding, especially federal funding. We need to be thoughtful in our spending because there is always more to the story. The fine print on the REFUSE FEDERAL MONEY bumper sticker should read “now how will Idaho pay for our patients and potholes?”
