November, 2009

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Louisiana Taxes Hit Poor and Middle Class Far Harder Than the Wealthy

Wednesday, November 18th, 2009

Low‐ and middle‐income families in Louisiana pay a far higher share of their income in state and local taxes than do the richest families in Louisiana, according to a new national study by the Washington DC‐based Institute on Taxation & Economic Policy (ITEP).

ITEP’s new study titled, Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, finds that:

Louisiana families earning less than $15,000—the poorest fifth of Louisiana non‐elderly taxpayers—pay 10.4% of their income in Louisiana state and local taxes.
Middle‐income Louisiana taxpayers—those earning between $29,000 and $46,000—pay 9.9% of their income in Louisiana state and local taxes.
But the richest 1 percent of Louisiana taxpayers—with average incomes of $1,027,100—pay only 5.7% of their income in Louisiana state and local taxes.

The main reason for the unfairness of Louisiana taxes is the state’s reliance on sales and excise taxes, which fall disproportionately on the most vulnerable families, and the state’s reliance on property taxes. Because lower income households tend to spend a higher percentage of their income on purchases, they end up paying a higher share of their income in taxes too. The exception is the state income tax, where rates rise with income. It’s the only tax based on the ability to pay, but Louisiana doesn’t rely on its income tax enough to make up for the impact of the other taxes on low‐ and middle‐income households.

Louisiana’s reliance on sales and excise taxes is 65 percent higher than the national average, according to the ITEP study. Its reliance on property taxes is 47 percent below the national average, and its reliance on income taxes is 14 percent below the national average.

To address this, the Louisiana Budget Project has issued a press release that illustrates how low‐ and middle‐income families in Louisiana pay a far higher share of their income in state and local taxes than do the richest families, and the need for changes in Louisiana’s tax structure to make it more equitable.

Posted in Press Release, Revenue and Taxes | No Responses »
Tags: ITEP, Tax

State Streamlining Commission Should Explain Where Cost Savings Coming From

Tuesday, November 17th, 2009

The Louisiana Budget Project calls on the Commission on Streamlining Government to release the fiscal notes to the Commission’s recommendations.

Louisiana faces a serious decline in revenues in the next two years. It is critically important that the Streamlining Commission be completely transparent when making recommendations on where to cut spending and how to achieve efficiencies in state government

The state Streamlining Government Commission has released 80 proposals it says would save Louisiana money – but there is no information about how those savings were derived, who will be impacted, and how. Many of these programs provide critical healthcare and social services, such as Medicaid, pharmacy services, food stamps, nursing home care, home care, child protection, and care for the disabled and veterans, to Louisiana’s most vulnerable populations, including the poor, disadvantaged minorities, and the elderly. LBP is concerned that these proposed changes may negatively impact these vulnerable citizens.

To address this, the Louisiana Budget Project (LBP) has written a letter to the Chair of the Commission, Jack Donahue and an opinion editorial in The Advocate, to make public all financial information prepared in conjunction with the Commission’s recommendations.

Many of the Commission’s recommendations have specific cost savings attached. But only by providing the fiscal notes to the Commission’s recommendations can the public and the media see where cuts are being proposed and who is bearing the impact of them.

Posted in Budget, Letter to Editor, Outreach/Advocacy | No Responses »
Tags: fiscal note, streamlining commission, transparency

Congressman Cao Introduces Bill to Help Solve Louisiana’s Looming Medicaid Funding Crisis

Friday, November 13th, 2009

On November 6, 2009, Congressman Anh “Joseph” Cao, joined by Louisiana Congressmen Steve Scalise, Rodney Alexander, Bill Cassidy, and Charles Boustany introduced House Bill 4047 calling for the use of historical average per capita income to calculate the Federal Medical Assistance Percentage for the Medicaid program in states affected by federally declared disasters.

The purpose of the bill is to mitigate the effects of the inflow of federal disaster recovery money on the calculation of per capita income used to determine the level of federal Medicaid matching funds.

Absent relief on this issue, Louisiana and other states hit by large disasters face the loss of hundreds of millions of dollars of federal Medicaid matching funds, resulting in the loss or reduction of critical healthcare programs for low- to moderate-income families.

LANO and the Louisiana Budget Project will keep you updated as events unfold.

Below is the language of House Bill 4047:

SECTION 1. FMAP CALCULATION FOR DISASTER-AFFECTED STATES

(a) In General- With respect to a State, for purposes of calculating the Federal Medical Assistance Percentage for a State under section 1905(b) of the Social Security Act, the Secretary shall substitute the average historical per capita income for such State for a year in any instance for which the Secretary, without regard to this section, would use the per capita income for such State for such year if–

(1) in such year, the per capita income for a State exceeds the average historical per capita income by at least 8 percent; and

(2) during such year or any of the 2 previous years, a major disaster was declared in such State by the President under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.).

(b) Average Historical Per Capita Income Defined- For purposes of this section, the term `average historical per capita income’ means, with respect to a State, the average annual per capita income for the period beginning with the first year in which the Federal Medical Assistance Percentage was calculated for such State under section 1905(b) of the Social Security Act and ending with the year prior to the year during which the average historical per capita income is applied under subsection (a).

Posted in Health Care, News/Updates | No Responses »
Tags: FMAP, Health Care, Medicaid

Perfect Storm Awaits Louisiana Medicaid Funding

Thursday, November 12th, 2009

State Nonprofit Association and Budget Watchdog Warn Congress of Pending Healthcare Crisis

BATON ROUGE—In a letter to Louisiana’s nine-member Congressional delegation, the Louisiana Budget Project (LBP) and its parent organization, the Louisiana Association of Nonprofit Organizations (LANO), warn a combination of economic and legislative conditions is set to decimate the safety net for Louisiana’s most vulnerable populations.

The state’s Medicaid program, a key provider of healthcare to Louisiana’s poor, elderly and other disadvantaged citizens, is supported by federal funding at a rate pegged to per capita income. Louisiana’s current match rate is 80%, meaning the federal government pays 80% of the cost for services provided under Medicaid. Unless changes are made, this support will soon be drastically reduced.

Due to an influx of billions of dollars in one-time federal hurricane relief, Louisianan’s average income increased 17% between 2005 and 2007. This would have decreased significantly the federal share of Louisiana’s Medicaid program, except that provisions in the American Recovery and Reinvestment Act of 2009 (ARRA) suspended any decrease and provided additional funds to the state’s program.

When ARRA stimulus funding expires at the end of 2010, the federal match rate for Medicaid support in Louisiana will drop from 80% to approximately 63%, crippling the state’s ability to provide vital human services.

“Louisiana is facing the largest decrease in federal Medicaid matching in the nation’s history,” wrote Edward Ashworth, LBP Director and co-author of Monday’s congressional letter.

According to the LBP and LANO, Louisiana will lose an estimated $1.3 billion in federal Medicaid funding in state fiscal years 2011 and 2012, with an on-going, annualized reduction of $900 million. This comes at a time when the state projects severe shortfalls in state general fund revenues due to the effects of the recession and the decline in the price of oil and natural gas.

If forced to absorb this reduction in funding, the Louisiana Department of Health and Hospitals (DHH) has announced it may reduce or eliminate such programs as Pharmacy Services, Intermediate Care Facilities for Persons with Developmental Disabilities (ICF-DD), Personal Care Services, Program for All Inclusive Care for the Elderly (PACE), and various waivers that expand services or reduce costs for needy recipients. Additionally, up to 125,000 children from low and moderate-income families could lose health insurance currently provided under Louisiana’s LaCHIP program.

“Thousands of Louisianans will continue to need vital assistance” provided through Medicaid funding, said Ann S. Williamson, LANO President and CEO. “The nonprofit sector can ease the burden, but no single sector can meet this need alone.”

Williamson stated that a steep decline in federal support would impact the nonprofit sector by raising demand for its services without increasing resources. Louisiana nonprofits, many of them small and locally focused, are already stretched thin by current economic conditions.

According to LANO and LBP, three Congressional remedies are needed to prevent widespread loss of healthcare coverage in Louisiana:

1. Have the federal government spread out the lowering of the match rates (that were increased under ARRA) over a two-year period, beginning January 1, 2011.

2. Discount the effects of one-time federal hurricane relief funds in the calculation of Louisiana’s average income.

3. Change the method of calculating the average income for states by using median income rather than the mean income.

If effected soon, these changes will give the state breathing room to secure new sources of revenue for Medicaid (e.g., by removing antiquated exemptions to the severance tax and realized savings from streamlining efforts) without leaving thousands of Louisianans unprotected in the interim. Furthermore, these federal changes will provide relief to neighboring Gulf Coast states facing similar consequences from 2005 and subsequent disaster relief scenarios.

But time is critical. Louisiana’s budget for fiscal year 2011 is being drafted now and will be finalized in February 2010 for presenting to the Legislature in March.

For more information on this and other issues facing Louisiana’s nonprofit sector and the citizens it serves, contact the Louisiana Association of Nonprofit Organizations at 225.929.5266 or visit http://www.lano.org/.