Friday, October 10, 2003

Who is Donna Arduin?

Arduin will audit California's budget. What can California expect? Given her record, they can expect Medicaid cuts, they can expect higher local taxes, and they can expect a continuation of the tax policies that led California to it current crisis.

When an advisor to Republican Governor George Pataki, Arduin offered a budget balanced with Medicaid cuts:

Mr. Pataki's aides said he would reduce state financing for Medicaid by $913 million in the next fiscal year, a drop of about 7.4 percent, largely by eliminating a host of reimbursement formulas that they say have encouraged waste and replacing them with set fees for recipients.
Donna Arduin, the Governor's deputy budget director, defended the proposed cuts, saying, "We want to get rid of the patchwork reimbursement system that has encouraged inefficiency and replace it with a system that rewards health care providers that operate efficiently."
Because the Federal Government and localities match each dollar the state pays for Medicaid, the actual cut for hospitals, nursing homes and home care providers is $2.1 billion. Though Medicaid is often regarded as a program that pays only to tend the medical needs of the poor, such a cut would affect communities rich and poor because health care institutions have long relied on Medicaid to help cover overall expenses.
"There are no Medicaid nurses, no Medicaid doctors, no Medicaid X-ray technicians in New York State hospitals," Mr. Silver said. "When an emergency room is forced to shrink its staff because of these cuts in health care, we all lose. Whether you pay by credit card, by third-party insurance, Medicaid or Medicare, you lose as a result of these cuts."
The state's hospitals take the biggest hit under the Governor's plan. Over all, the Governor's plan would cut state, Federal and local Medicaid financing for hospitals by about $824 million, with $275 million of that involving state cuts.
From "In the Fight Over Medicaid Cuts, Signs of a Tense Year in Albany" by Raymond Hernandez in the New York Times on January 16, 1997.

Further, Arduin helped craft budgets like those that led to California's deficit:

A major Wall Street rating agency is warning that New York State's budget, with its commitments to deep tax cuts and big increases in school spending -- and what the agency sees as a risky reliance on a continued bull market -- is a prescription for enormous budget deficits in a few years.
The report by Moody's Investors Service echoes criticism already heard from State Comptroller H. Carl McCall, independent budget watchers like the Citizens Budget Commission, and others. But the warning carries particular weight coming from Moody's, whose judgments are closely watched in the financial markets. The report is to be released later this week.
[T]he report criticizes the $67.4 billion budget negotiated by the Governor and legislative leaders, and enacted in August, for making five-year commitments to phasing in tax cuts and broad new education programs, which together will cost the state more than $6 billion a year. The budget allowed lawmakers to go into an election year boasting of the politically popular cuts and programs, but most of the bill will not come due until 2001 and 2002.
The report asserts that the budget includes "deep backloaded tax cuts and multiyear spending obligations requiring future, unspecified spending cuts."
But administration officials insist that the budget will not result in a retreat from the long-term commitments or in serious program cuts. The Governor and his aides have often noted that, defying doubters' predictions, the state has been able since he was elected to cut taxes and increase spending at the same time.
"We've been getting this kind of criticism for three years," said Donna Arduin, first deputy budget director. She noted that the first two fiscal years under Mr. Pataki ended "not just with balanced budgets but with large surpluses."
But that has happened during the historic Wall Street boom, which has sent the state's personal income tax collections soaring. Moody's, like most other budget-watchers, argues that the state appears to be counting on a continued bull market, despite the historic volatility of financial markets and the possibility of a recession over the next five years.
From "Moody's Warns That New York State's Budget Could Spawn Gigantic Deficits" by Richard Perez-Pena in The New York Times on October 15, 1997

When an advisor to Florida Governor Jeb Bush, Arduin again turned to Medicaid cuts:

Here's what life without Prozac is like for Barbara Lee. It starts with small overreactions: tears over a dropped glass. Then comes the morning that she can't seem to get out of bed. Finally, there's the mind-numbing depression, the kind that leaves no room for any thought beyond her suicide plan.
"If I was told I could not get Prozac, I would have to go into therapy about the anxiety that alone would cause me," said Lee, a University of South Florida psychology researcher from St. Petersburg.
But under a plan being pushed by Gov. Jeb Bush, it could become more difficult for poor Floridians and for state employees such as Lee to get expensive, name-brand drugs they use to control everything from certain mental illnesses to ulcers to heart problems.
From the governor's office comes this argument: Exploding Medicaid costs make the proposed reforms necessary. Besides, the governor's aides argue, private insurers and some states have been reining in costs for years by limiting the types of drugs available.
During the past five years, Medicaid drug spending increased an average of 16 percent per year and is expected to top $ 1.1-billion next year. That's nearly 2 percent of Florida's entire state budget for 2000. Bush's budget director Donna Arduin said Florida's Medicaid program lags far behind other states, such as Texas and Illinois, when it comes to using low-cost drug substitutes.
The whole idea is to save money by forcing doctors to think twice about the drugs they are prescribing to Medicaid patients and state employees. But the savings might not materialize, according to opponents of the Bush plan. They point to states such as West Virginia, which considered and rejected a similar plan, and Georgia, which backed off a plan to make its list more restrictive.
Policymakers in those states were persuaded by studies, some funded by drug companies and one by the Medical Association of Georgia, that showed the money states save by restricting open access to drugs was offset by increased overall medical costs. Spending for doctors and emergency room visits went up, studies show, as drug costs went down.
The only guaranteed outcome in Florida, opponents say, will be that state employees and the poor will end up with second-rate medications.
From "Plans push cheaper medicines" by Jo Becker in The St. Petersburg Times on February 28, 1999

And again, Arduin helped craft budgets like those that led to California's deficit:

How will proposed tax cuts and other measures affect city and county fees and services? The answer may be years away.
With the economy strong and no threat of a recession visible on the horizon, state lawmakers are jubilantly finding ways to return what they call "the people's money."
They have increased police and fire pension funding, and are poised to cut taxes by as much as $ 1.25 billion, change utility and telecommunications law, and institute millions of dollars of sales tax exemptions for targeted industries.
But this politics of plenty may also mean heartburn for cities and counties.
As measures move through the Legislature, local officials are watching for what John Wayne Smith, a lobbyist for the Florida Association of Counties, calls the "shift and shaft," which he describes as "taking from one area to pay for something else."
There is reason for such cynicism. Just last year, for example, the state's attempt to shift the burden to fund state courts became so taxing to counties that local leaders rebelled. They pushed for, and last November got voters to approve, a constitutional amendment shifting the burdensome costs back to the state. Several years ago, Florida voters also backed an amendment that said no to unfunded mandates, but lawmakers have found loopholes.
"It's a fiscal illusion," Smith said. "They never follow the fiscal impact at the local level. To figure out if you got a true tax cut or a true tax savings, you have to follow the impact down to the local level."
Gov. Jeb Bush's staff said its budget and tax cut plan - which will give the average family about $ 100 and average businesses $ 1,400 - is responsible. Their calculations show local governments may actually gain money - although that doesn't necessarily translate into reductions in fees at the local level.
"We haven't included unfunded mandates. They've gotten more money out of this budget," said budget director Donna Arduin. "We're paying for the whole thing up front."
From "Tax cuts' impact may hide for years" by Margaret Talev in The Tampa Tribune on March 14, 1999
Larry Fuchs, Florida's chief tax collector and best manager in state government, is delivering a message that some don't want to hear: Florida's tax system is a dangerous mess that could crumble in the face of a recession. Are you willing to listen?
Yes, it's true, nods Larry Fuchs, the state of Florida's chief taxman, the state is enjoying the largest economic expansion in its history. Yes, the state did take in a record $ 1.05-billion in tax revenues - in one day - earlier this year. Yes, he acknowledges, state tax collections have exceeded forecasts in six of the last seven years. Welfare costs are stable or dropping, and prison space is abundant. Corporate profits are up, wages are rising, residents and tourists are spending freely.
But there's one problem, says Fuchs, a man with the earnest, passionate air of a minister. The state is broke, or as Fuchs puts it, "functionally bankrupt."
What he means is this: Florida's finances might hold up fine if the national economy hums along forever as it has for the past seven years. But eventually, he believes, there will be another recession. And the state has created such a rickety, unstable tax structure that even a mild 1990-92-type downturn would exhaust Florida's reserves quickly. Within 12 to 18 months, the state would be $ 1.5-billion in the hole, Fuchs says. A more severe recession means state coffers will dry up even faster.
The response has been the same one given to the boy who yelled out that the emperor has no clothes: Uncomfortable adults look the other way and pretend not to notice. With the 2000 elections approaching, legislators are tiptoeing around the problem. They've asked legislative analysts to estimate how a recession would affect Florida's revenues but have taken pains to make sure no one thinks they're worried. The title of the Senate project is called "Fail Safe: Impacts of Economic Downturn on Florida Revenues." Bush also has his economists checking Fuchs' claims. But Donna Arduin, the governor's budget chief, says the administration is not ready to say there are problems with the state's tax base until it has challenged all the spending assumptions on which the budget is built, including the automatic appropriations to trust funds.
From "The taxman has a warning for you" by Mary Ellen Klas in The St. Petersburg Times on August 08, 1999