Washington, DC) – Today, the House passed the “Require a PLAN Act” requiring President Obama to produce a budget that balances within 10 years or provide a supplemental budget plan by April 1, 2013 indentifying the year it will balance.

Congressman Bucshon (IN-08) states:

“The House has now mandated that the Senate Democrats and the President do their job. We forced the Senate Democrats to pass a budget with “No Budget, No Pay” and we are requiring the President to get serious about balancing the budget.

“The House passed legislation today requiring the President to submit a budget plan to Congress that balances, not a budget that results in a trillion dollar deficit each year and pays for record levels of spending with record levels of borrowing and increased taxes. As we saw last week, spending is the problem – the consequences of out-of-control federal spending have been a shrinking economy and sustained levels of unemployment. The President got the revenue increases he wanted; now it is time to start spending within our means.

“Hoosier families and businesses run on responsible budgets and expect the government to do the same. It is time the President joined with the House to balance the budget so that we can create more jobs and opportunity for the American people.

“The certainty created by a balanced federal budget will help your family at the gasoline pump, the grocery store and work. Ultimately, prices will remain low and wages will climb. As your Representative in Congress, I am working to promote policies that help you and your family live better quality and more prosperous lives.”

BACKGROUND:

Full text of H.R. 444, which passed the House today 253 to 167, can be accessed here.

The Budget and Accounting Act of 1921 requires the President to submit an annual budget on the first Monday in February. President Obama has failed to meet this legal obligation four out of the five years he has been in office. The President missed his deadline for 2013 this week – Monday, February 4th.

The Congressional Budget Act of 1974 requires that a budget resolution be passed no later than April 15th annually. Since taking control of the House in 2010, Republicans have passed a budget every year and will continue to do so. On the other hand, the United States Senate has not passed a budget since 2009, all under President Obama. Moreover, in May of 2011, Senate Majority Leader Harry Reid stated that it would “foolish” for Senate Democrats to offer a budget (Los Angeles Times; 5/20/2011).

On Monday, February 4, 2013, President Obama signed into law the House-led “No Budget No Pay Act” requiring Congress to pass a budget or forfeit pay until they do so.

According to the Congressional Budget Office, 2012 marked the fourth consecutive year with more than a $1 trillion deficit. The CBO announced yesterday that the budget deficit for fiscal year 2013 is projected to be $845 billion (The Hill; 5/05/2013).

Last Wednesday, the U.S. Bureau of Economic Analysis announced that, “Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 0.1 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis.”

Last Friday, the U.S. Bureau of Labor Statistics reported that the U.S. unemployment rate increased to 7.9%, up from 7.8%, during the month of January. Access my statement here.
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Editor’s note: Baltimore has endured many of the same problems that Evansville has including a shrinking population, declining wages, and a large number of vacant houses. Baltimore preceeded Evansville in throwing taxpayer dollars into temples to sport subsidizing stadiums for both the Baltimore Orioles baseball team and the Super Bowl Champion Baltimore Ravens. Baltimore even doubled down on hospitality subisidizing hotels, restaurants, and other retail space in a big harbor project. As pretty as the structures are even with sell outs and world championships to show for it Baltimore is still failing financially. Why? Jobs, Lifestyle, Public Safety, and Infrastructure were neglected to get the party started. Can Evansville afford to continue to copy failed cities? Can the United States?

About the Situation in Baltimore:

The Baltimore is on a path to financial ruin and must enact major reforms to stave off bankruptcy, according to a 10-year forecast the city commissioned from an outside firm.

The forecast, shows that the city will accumulate $745 million in budget deficits over the next decade because of a widening gap between projected revenues and expenditures.

If the city’s infrastructure needs and its liability for retiree health care benefits are included, the total shortfall reaches $2 billion over 10 years, the report found. Baltimore’s annual operating budget is $2.2 billion.

The report was prepared by Philadelphia-based Public Financial Management Inc., a consulting firm that has prepared similar forecasts for Miami, Philadelphia, Pittsburgh and the District of Columbia. Baltimore’s decision to commission the forecast differs from those cities because each of them had already ceded financial oversight to the state, or in the district’s case, the federal government.

The forecast will provide the basis for financial reforms that Mayor Stephanie Rawlings-Blake plans to propose next week. The city has dealt with budget deficits for the past several years, closing a $121 million gap in 2010. But those deficits have been addressed with one-time fixes that haven’t addressed the long-term structural imbalance.

“When you have budget after budget and you know that there are systemic problems, I felt an obligation to do more than what we have done in the past,” Rawlings-Blake told the AP. The forecast, she said, shows that the city needs to address its financial woes “before it’s too late, and somebody is coming in and making these choices for us.”

That’s what happened to the District of Columbia, 38 miles to the south, in 1995 after the city reported a budget deficit of $700 million. Congress created a financial control board that instituted tight spending controls and ultimately took over all hiring and firing in nine city agencies. The spending cuts, combined with a robust regional and national economy, drove the nation’s capital back into the black.

Not all municipalities have been so fortunate. In late 2011, Jefferson County, Ala., filed the nation’s largest-ever local government bankruptcy, citing $4.15 billion in debt, and last year, Stockton, Calif., became the largest American city to declare bankruptcy.

In Baltimore, the erosion of the tax base is easy to see. The city’s population has dropped from a peak of 950,000 in 1950 to 619,000 today, and while the decline has slowed, there have been few signs of the trend reversing. The median income is $40,000, and 22 percent of the city’s residents live in poverty, according to Census data. The city also has 16,000 vacant properties.

Baltimore already has the highest property taxes in Maryland — twice as high as in neighboring Baltimore County. The city’s local income taxes are the highest allowed under state law. While the city enacted some new taxes to deal with the 2010 deficit — including taxes on bottled beverages and higher hotel and parking levies — city officials say they can’t tax their way out of the problem without driving away residents and businesses.

“We’ve got to go from a vicious cycle to a virtuous cycle. That starts with a good, stable fiscal foundation for the city government,” said Andrew Kleine, the city’s budget director. “When you’ve lost so much population and the tax base has shrunk, it’s very difficult to deal with.”

If the city chose to use its reserve fund to cover the deficits, the fund would be empty in three years, the report found.

“Quite simply, a status quo approach is not financially sustainable,” the report says.

In 2010, the mayor’s office released a “doomsday” budget that would have meant firing police officers and closing seven fire stations, among other cuts, and some criticized the move as a tactic intended to soften up the City Council to approve tax increases.

But officials say the new forecast doesn’t envision a worst-case scenario. It assumes modest economic growth nationwide over the next decade, said Michael Nadol, a management director at PFM and a lead author of the report.

Rawlings-Blake said the report was intended to be an honest assessment.

“It’s not like we’ve had rosy budgets over the past five years, and now we’re screaming that the sky is falling,” she said.

Rawlings-Blake, a Democrat, became mayor in 2010 after Sheila Dixon resigned as part of a plea deal for stealing gift cards donated to the city for needy residents. She was elected in 2011 and has nearly four years remaining in her term.

Health care benefits for retired city workers will be a major drag on city finances in the future, according to the forecasts. The city still faces increasing pension costs despite a recent restructuring of the pension plans for police officers and firefighters.

Like many cities, Baltimore doesn’t factor the escalating future costs of retiree health care into its annual budgets, and if that doesn’t change, the city will be on the hook for another $300 million in 10 years, the report found.

While city officials declined to specify how they would address the shortfall, they said some restructuring of the retiree health plan would be necessary.

The forecast cost the city $460,000. PJM won the contract through a competitive bidding process and subcontracted some of the work, including actuarial analysis.

Shayne Kavanagh, a researcher at the Government Finance Officers Association, said the group recommends that city governments engage in long-term financial planning, but few have taken that step.

“Most government budget practices are one-time, year-by-year affairs,” Kavanagh said. “What Baltimore’s doing is trying to integrate a longer-term perspective.”

The Heart Hospital at Deaconess Gateway and the University of Southern Indiana partnered with the Indiana Medicare Quality Improvement Organization (QIO) in 2008, to conduct a three-year national initiative, Care Transitions, designed to reduce re-hospitalizations for their Medicare patients. The final result was a 14.74% reduction in 30-day re-hospitalizations in the targeted community.

Re-hospitalization represents a major opportunity to improve care for patients and families. That is why The Heart Hospital at Deaconess Gateway and the University of Southern Indiana College of Nursing and Health Professions partnered with Health Care Excel (HCE), the Indiana Medicare QIO, to address this important health care topic.

The first step in the Care Transitions project was to receive funding from the Centers for Medicare and Medicaid Services (CMS) to coordinate care in 14 tri-state communities. Once the funding was secure, HCE chose the Evansville Hospital Service area, which included Vincennes, based on opportunity for improvement and strong history of community support. In 2010, having restructured their community, Evansville participated in innovative work focusing on community-based transitions and has further reduced re-hospitalization rates by 13.65% to date. The preliminary results of the project are reported as part of a larger evaluation in the January 23, 2013, issue of JAMA.

Executive Director and Chief Nursing Officer of The Heart Hospital at Deaconess Gateway, Becky Malotte commented, “Through our partnership on Care Transitions with the University of Southern Indiana, we have engaged student nurses and social work students in utilizing the Coleman Model and “Teach Back” model to help set personalized goals with patients and their families. Completing a Personal Health Record provided patients key information to take with them in the transition out of the acute care hospital setting to outpatient and other segments of the health care system. We have continued these efforts with follow up phone calls to our patients and have seen significant improvements in hospital readmissions.” Dr. M. Jane Swartz, Assistant Professor of Nursing at the University of Southern Indiana, stated, “We have seen great student benefits through our participation in this project and have incorporated the Coleman Model into our curriculum here at USI.”

Executive Director Malotte added, “HCE offered The Heart Hospital an opportunity to look at how we could reduce readmissions, be budget conscious, and provide the best quality of care possible for our Medicare patients. The project offered us the opportunity to collaborate with other local health care providers, stakeholders, and partners to bring awareness to this important initiative.”

Currently, The Heart Hospital at Deaconess Gateway is continuing its mission to empower the Evansville community by disseminating educational tools such as medication safety information, personal health records, and important questions to ask when patients are discharged from the hospital.

For more information, contact The Heart Hospital at Deaconess Gateway, at 812-842-4784.

i. The 13.65% is for the current project rehospitalization rates with the 2011 reconfiguration of the community. The rate for 2008 quarterly data from baseline (01/01/2008-03/31/2008) to end of contract (04/01/2010-06/30/2010) is 14.74% relative improvement rate.

ii. Jane Brock, MD, MSPH (2013). Association Between Quality Improvement for Care Transitions in Communities and Rehospitalizations Among Medicare Beneficiaries. JAMA , 381-391.