RALEIGH – Governor Pat McCrory took a stand last week against previous state government budget practices as the Medicaid liability continues to impact the entire budget.

“It is time to solve this mess, not kick the can down the road and manipulate the budget as was done in the past. It stops now,” said McCrory in a press release issued Friday.

McCrory told the State Budget Director to transfer available state funds to the Division of Medical Assistance (Medicaid) to offset the state’s multi-million Medicaid liabilities. In the same memo, the governor directed state agencies to hold salary increases, limit purchases and reduce travel to cover the state’s Medicaid liabilities.

“If we stop this practice and get a handle on the Medicaid hole, we’ll have balanced budgets that fund our priorities, including education, and avoid mid-year shortfalls,” he stated.

This year, the Division of Medical Assistance is facing $100 million or more in cost overruns.  Now add in the Perdue administration’s Department of Health and Human Services holdover of $132 million, an unpaid bill due to the federal government in June 2012 as mentioned in a recent state audit.

The audit also noted that under the previous administration, sufficient cost control measures were not in place, contributing to significant cost overruns- totaling $1.4 billion in each of the past two years and $1.8 billion in 2010 alone.

“Since January, we have been charting a new course of accountability within the Department of Health and Human Services,” said Secretary Aldona Wos, M.D. “We are aggressively pursuing reform to strengthen our Medicaid system and make it more efficient, and I applaud the governor for taking bold and immediate actions to pay off our debts while supporting reform.”

The governor’s memo also urges Council of State members to follow the same cost-control measures and contribute to the budget solution.

State Budget Director Art Pope added, “Despite positive cash balances, we need to live within our budget and make sure everything is disclosed and accounted for. That is why the state needs to reduce spending now, rather than waiting until the end of the fiscal year, or using accounting gimmicks to pass on the costs to next year.”