State budget cuts will harm Duluth’s poorest

By Carl Sack

Duluth’s most vulnerable residents will lose their health insurance in March 2010 as part of Governor Tim Pawlenty’s state budget unallotments.

General Assistance Medical Care (GAMC), a public medical insurance program, currently covers 35,000 single adults without dependent children in Minnesota, including about 600 in Duluth. The program was axed by the Governor on July 1 to balance the state budget.

GAMC has a very low qualifying income – $7,800 per year or less – and, therefore, covers the poorest of the poor, according to Elizabeth Olson [no relation to current City Council candidate Beth Olson], an advocate with Churches United in Ministry (CHUM).

"We work daily with most of these people because CHUM serves those living on the margin," says Olson. "These are people who are literally so vulnerable that, without health insurance, they would die."

Olson says many of her clients are not yet aware they will lose coverage or what options are available to them.

Seventy percent of those on GAMC struggle with mental illness and/or chemical dependency and 40 percent have chronic physical disabilities, according to data compiled by the Legal Services Advocacy Project.

Most of those individuals will no longer be able to afford regular medication or treatment, which could result in more criminal activity, more interactions with police, and a greater cost to hospitals, who will have to treat them in emergency rooms at a loss, according to Olson.

CHUM is working to alert those in the program as to the cuts and to find alternative coverage, but the only other option for public insurance is MinnesotaCare, which charges sliding–scale premiums based on income, with a minimum of $4 a month.

For Olson’s clients, "something as small as $4 would be enough to be a barrier."

While GAMC is the biggest program to lose its funding through unallotment, other programs protecting vulnerable children and families have also been hit hard, according to St. Louis County Public Health and Human Services Director Ann Busche.

The overwhelming majority of the programs affected by unallotment fall under Health and Human Services, totaling $367 million in cuts over two years. Other cuts have been made to the schools and to higher education, tax credits, and state government operations.

"When the economy goes down," Buche says, "there’s an increased need for services from Public Health and Human Services. We’re not adding any resources to handle that increased demand." Overall, her department’s budget has been reduced by 4.5 percent.

Most of the cuts will impact services considered voluntary by the state, including mental health, chemical dependency, and disability services that help prevent homelessness, as well as family outreach services to keep children safely in their own homes rather than foster care, Busche says.

"Because people are generally more stressed, we’ve seen an increase in some child protection reports," says Busche. "We’re concerned about being able to respond to those issues of safety in the community because we’re stretched really very thin."

The department will lose $915,000 over two years in child support enforcement. Only a third of this is in state funding, but, because of the cut, the department will be ineligible for $610,000 in federal matching grants.

In 2008, state legislation that imposed strict property tax limits on local governments allowed extra levies to make up for unallotments. However, the state Department of Revenue ruled that cuts to Child Support and Children and Community Services are not eligible for the special levies.

Average property taxes in Duluth will actually go down next year because of increased tax capacity, according to St. Louis County Commissioner Steve O’Neil. But for low– and moderate–income renters, that tax advantage will be counteracted by a cut to the renter’s credit.

Currently, about 305,000 households in the state file for this refund, which is meant to make property taxes less regressive. Twenty–eight percent of these households include seniors and/or persons with disabilities.

The 2010 refund will be reduced from 19 to 15 percent of rent paid in 2009. The average amount, currently $570, will go down by $129, according to the Minnesota Department of Revenue.

This cut increases the portion of the property tax burden on lower–income renters, according to the progressive think tank Minnesota 2020, who say that, even before the cut, rental property taxes were increasing at three times the rate of the refund.

CHUM is working with statewide organizations to repeal the cuts to GAMC and the renter’s rebate. "It’s a question of what it means to be human," says Olson.

"You apparently have to make a certain amount of money to be considered human enough to get health insurance in our state."

There will be a listening session on the GAMC cut at the CHUM Drop–In Center, 125 N. First Ave. W., on October 15 at 1:00 p.m.