In December, when Gov. Chris Gregoire proposed her budget for the 2009-11 biennium, she was counting on $498 million in increased federal support for Medicaid as part of the federal stimulus package. But the federal Medicaid stimulus turned out to be $1.22 billion - an increase of $722 million. And that's good news.

But, since November, the estimate of state tax revenue over the course of the biennium has dropped by $2.3 billion. So the $722 million increase in federal stimulus funding for Medicaid is offset by the $2.3 billion decrease in anticipated state revenue.

Meanwhile, as the difficult economy continues, more people will need help, so the cost of DSHS caseloads is now expected to increase by another $165 million over the biennium.

So even with the infusion of $1.2 billion in federal stimulus money for health care, decreasing state revenue and increasing caseloads means the state faces the need for additional resources or more spending cuts to balance needed services and its 2009-2011 state budget.

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