An IOM editorial in the Daily News explains why the state's scramble to cut $250 million didn't have to happen:
Normally, $600 million from the federal government would be good news. In Pennsylvania, it's cause for consternation because lawmakers thought the state would be getting more.
In July, state lawmakers passed a budget that assumed Congress would approve a higher funding level of Medicaid, the state-administered medical-assistance program for the poor. State lawmakers were counting on getting $850 million. The federal government had increased the funding program - known as Federal Medical Assistance Percentages or FMAP - as part of the $787 billion stimulus package passed in 2009. However, the additional funding was scheduled to run out this year.
Congress lowered the package because of fears about the growing deficit. Pennsylvania will be getting only $600 million in assistance. That, plus an increase in state Medicaid costs, means Gov. Rendell and state lawmakers must now make $282 million more in cuts. Now the scramble is on: Rendell is proposing that all departments, as well as the Legislature and elected officials, take a reduction of 1.9 percent. He also wants to cut $50 million from education and use $80 million from a new tax on natural-gas extraction to fill the rest.