Cuts stretch to Myrtle Beach area; Budget vetoes hit vulnerable

Many of Gov. Mark Sanford's final budget vetoes upheld by legislators last month will hit those most vulnerable on the Grand Strand, including the poor, the addicted and victims of fraud.

Medicaid patients will see new restrictions, and may lose pharmacy benefits altogether. The county's detox center is in danger of closing. And the local program in charge of delivering meals to the elderly could be forced to cut enrollment, among other changes.

After the $5 billion budget was passed, Sanford sent it back to the legislature June 9 with 107 vetoes attached, totaling more than $300 million. The proposed cuts were made partly to end spurious programs, Sanford said in his veto message, and partly to lessen the pain of the next budget year, which many are projecting to be even more harrowing.

"It's a very small drop in the bucket when you look at next year's challenge," his spokesman Ben Fox said.

Without a federal stimulus package to prop the state up, budget writers will begin next year with a $1 billion shortfall, Fox said. Many of the vetoes were made to sock some money away for the future, he said, and to get ready for what will be a "horrendous" budget season in 2011.

Sanford, who in the past has seen most or all of his budget vetoes overturned, had unusual success this year. The legislature finished its votes on the vetoes June 29, upholding 55 of them, and stripping more than $250 million from the budgets of state agencies.

With just two days left before the fiscal year began, affected agencies scrambled to play a nerve-racking game of budget Jenga, determining what could be pulled out of already tight finances without toppling services entirely. Many are still working out the details of furloughs, layoffs and closings. But as the particulars are worked out, it seems certain the cutbacks will touch many on the Strand.

Health and human services

The agency that oversees Medicaid in the state has taken one of the largest hits to its budget. Sanford vetoed the entire section of the state budget funded by a proposed federal extension of stimulus funding for Medicaid, because Congress had yet to pass the extension and the funding wasn't assured. In the month since Sanford's veto, the bill has gone stagnant, and as time goes on, its chances of passage dim.

Without that extra stimulus money, the state Department of Health and Human Services is "more than $170 million short in terms of our budget request and what we actually received," said spokesman Jeff Stensland.

To compound the problem, at the same time the agency's budget has been cut, the recession has boosted the number of those turning to Medicaid, the federal health care program for the poor. The state has seen more than 88,000 new enrollees since the recession officially began in mid 2008. In Horry County, almost one in five residents are eligible for Medicaid help.

Among children, the rate is even higher, with more than half in the county eligible for help.

State Rep. Tracy Edge, R-Myrtle Beach, chairman of the finance subcommittee in charge of Medicaid funding, said that when the House wrote the budget, the extension of Medicaid stimulus funds seemed almost a done deal.

"Had we known that was going to go differently, we would have budgeted differently," he said.

Health and Human Services finds itself strictly limited in what it can adjust to make up the gap. Many programs are mandated by state or federal law, and the new federal health care reform forbids the agency from making changes that would reduce eligibility, so the patient rolls can't shrink. State law forbids the agency from reducing the rates it pays doctors and hospitals. Nevertheless, Stensland said, Medicaid recipients will see some changes.

Pharmacy benefits will become less generous. Patients, who were previously covered for up to 10 prescriptions a month, will now be limited to eight prescriptions. More patients will also be required to choose from a limited network of doctors and health care providers.

Even with alterations to services and a variety of administrative changes, Stensland isn't sure the agency will be able to work within its budget. He warned it "may be unavoidable" to run a deficit.

Edge said the idea of eliminating benefits on a larger scale is not out of the question.

"There are things we can eliminate, but they're very popular things," he said.

If the program is running a deficit, pharmacy, dental and hospice care coverage could be dropped altogether, he said, and "we may have to reconvene and take a look at those."

Alcohol and other drug abuse services

A $1.1 million cut to the agency that provides help to the state's addicted population struck an agency already struggling with budget woes. Lee Dutton, assistant director at the Department of Alcohol and Other Drug Abuse Services, said the agency is now functioning on 55 percent of the budget it had in 2008. In response, it has closed an inpatient center for pregnant teens and two inpatient detox centers elsewhere in the state.

The local detox center, at Shoreline Behavioral Health Services in Conway, could follow suit if things don't turn around in the next six months.

"I've said to the state that if I can't figure out some way to make ends meet, I may also consider that," said John Coffin, the center's executive director.

The state agency serves about 49,000 S.C. residents a year through a decentralized system that relies on local contractors such as Shoreline. Dutton estimated that those local contractors have laid off around 100 employees as the agency's budget has shrunk. Coffin said Shoreline has been able to avoid layoffs or furloughs thus far, but "it's always an option."

Coffin said changes to improve productivity at Shoreline has meant the center has been less affected than some centers in the state, but he's still worried about the future.

Shoreline's state funding level hasn't risen since 1993 and county funding has dried up. Much of Shoreline's revenue now depends on Medicaid and on fees paid by residents, but Coffin said that the detox center's patients are often jobless and 34 percent of the time they simply don't pay.

"Those people who come in, very sick and often after losing a job, usually come in indigent, very much in need of treatment," Coffin said. "That's a very successful program, but it needs heavy support."

The center's residential detox program serves about 100 people a year, 10 at any time, with a waiting list to get in. He said that if he's forced to close it will actually cost more. Without Shoreline's program, he said, indigent residents or those on Medicaid will put off getting help and will likely end up in a more supervised facility, which can cost $400 to $500 a day instead of his center, which charges around $125 a day.

Mental health

The Department of Mental Health's budget had also been riding on the hope of extended stimulus funding from Washington. The agency had to trim $18 million from its budget after the veto was upheld and is back to funding levels not seen since 1987, according to Murry Chesson, executive director of the Waccamaw Health Center.

Chesson's center serves Horry, Georgetown and Williamsburg counties, with 4,500 outpatients receiving care at any time. Chesson said he's not filling vacant positions, looking at ways to use facilities differently and searching out alternate funding to fill the gap. Chesson, who receives half the center's funding from the state, is confident he can keep needed services viable, but he can't help voicing concern about the way the state budget is going.

"If we keep backing up services," he said, "it's going to be really problematic for the people that we serve."

Three years ago, the agency was operating with $220 million, but it has seen that slashed to $147 million this year.

For many of the residents Chesson serves, going without treatment could take them a step closer to jail, a hospital bed or life on the streets, he said. That's a prospect he's working hard to head off.

"There may be some programs that are reorganized, so access to some programs may be harder than in the past," he said, but Chesson vowed to make sure his center's services continue, one way or another. "We're going to figure out a way to get this done."

Consumer affairs

Victims of business or mortgage fraud will find their complaints take longer to address this year. The Department of Consumer Affairs, which takes consumer complaints and licenses mortgage brokers, among other tasks, lost $675,000 in the final budget. In his veto message, Sanford wrote that the agency "does very important work" but the agency's functions overlap work done by several other state entities.

With cuts last year and this year, Strand residents will see longer wait times for help with fraud complaints and fewer seminars on consumer scams. The agency has closed its regional offices around the state, although Administrator Brandolyn Pinkston prefers to say they're "on hiatus." The agency has already felt the pain of steep budget shortfalls, laying off 24 people last year, leaving 32 full-time employees to advocate for the state's consumers.

Pinkston remains committed, however, to doing as much as she can by exploring innovative and creative options. The agency's mortgage fraud hotline, which was canceled for lack of funds, was revived earlier this year through a partnership with the attorney general's office. It's now staffed partly by volunteer students from University of South Carolina's law school. The hotline is particularly crucial to an area like the Grand Strand.

"The mortgage fraud problem is statewide, but the Myrtle Beach area is particularly vulnerable," William Nettles, the U.S. attorney for South Carolina, said last month during a news conference at Francis Marion University announcing a crackdown on the crime.

Pinkston's hotline has received hundreds of calls, and 600 actual cases to follow up on since June 2008, but she warns that with the agency's reduced complaint services division, responses will inevitably take longer.

"In an area where we had 21 people, we now have eight," Pinkston said.

Other agencies

The state Office on Aging lost $1.3 million for its home-delivered meals program, similar to the nonprofit Meals on Wheels. Spokesman John Legare said the agency is reviewing its options, but in the meantime it has told its local counterparts across the state to freeze their enrollment.

"It's going to be a challenge. What we've told our providers is to keep providing meals, but don't sign new people up right now," he said.

Kim Harmon, the director of the Waccamaw Area Agency on Aging, which serves Horry, Georgetown and Williamsburg counties, said that the program is dealing with the loss by keeping positions vacant and is not planning on dropping any participants right away. If things don't look up around December, however, she said cuts may be possible.

At the Department of Health and Environmental Control, meetings have been going on for weeks to figure out what the budget cuts will mean. The agency, which performs restaurant inspections, ocean water quality monitoring and hospital regulation among other things, saw more than $18 million evaporate in vetoes.

Spokesman Thom Berry said that from the agency's peak of nearly 6,000 workers in the late '90s, about 3,600 are left. The agency hopes to avoid layoffs this year, he said, but "we're looking at the possibility of, well, everything."

Sanford spokesman Fox said that while the vetoes may not be popular, they were necessary this year.

"Tough budget times demand tough decisions," he said.

And he pointed once again to the shortfall looming next year as stimulus funding dries up.

"Whoever comes in after us will have to immediately, from day one, hit the ground running making decisions that will be politically unpopular."

Meanwhile, the Board of Economic Advisors is reporting that tax revenues have been higher than expected for the last three months. Nobody is celebrating quite yet, but if the trend continues, perhaps a few falls could still be cushioned.