Monday, April 20, 2015

Monday, April 20, 2015

The great tax debate begins; Another red state embraces Medicaid expansion; Film subsidy bills get their first hearing and; The incredible shrinking hospital

The great tax debate begins

After months of talk, the legislative debate over how to plug Louisiana’s $1.6 billion budget deficit moves into an action phase this week. A Senate committee will meet today to consider a bill to eliminate the state inventory tax – which would wipe out the $400 million – $500 million a year that parishes collect from the tax (and which the state reimburses through a dollar-for-dollar tax credit). Nola.com’s Julie O’Donoghue explains why a $500 million tax cut is the centerpiece of a budget-balancing strategy by the odd rules that govern this administration:

 

It costs Louisiana’s government between $400 million and $500 million every year to issue such refunds. But if there is no inventory tax in the first place, then the state doesn’t have to cover those refunds. It could use that $400 million to $500 million to help pay for higher education or health care. Additionally, since the governor would be signing off on a $400 million or $500 million tax cut, the Legislature would then have the freedom to raise revenue by as much money — under the Americans for Tax Reform guidelines. Lawmakers would not be risking a Jindal veto.

 

The AP’s Melinda Deslatte looks at the ways Louisiana’s self-inflicted budget problems have changed the conversation among normally tax-averse legislators.

 

Republicans who traditionally have defended business tax breaks have started describing the credits, rebates and exemptions as “government expenses,” a distinction that allows them to frame possible changes not as tax hikes but as cuts to state spending. Even Jindal, who has rigidly guarded his anti-tax reputation as he considers a likely presidential campaign, has targeted a set of tax breaks for scale-back in his budget recommendations. He’s describing those tax credits, in which businesses get checks from the state treasury above their state tax liability, as “corporate welfare” and “excessive spending” to justify his proposal to lessen $500 million in tax breaks while also saying he’s not proposing a tax hike.

 

Another red state embraces Medicaid expansion

The list of GOP-dominated states that are using available federal dollars to extend health coverage to low-income adults continues to grow. The latest is Montana, where the Legislature last week sent a bill to the governor’s desk that would cover an estimated 45,000 people in the Big Sky state. As the Huffington Post reports:

 

Montana is set to become the second state this year to adopt the Medicaid expansion, following Indiana’s action in January. Debate continues on the issue in states including Alaska, Florida, Missouri, Tennessee and Utah, but the chances of more states signing on are steadily decreasing amid staunch opposition from Republican legislators, even in states with GOP governors who want to broaden Medicaid eligibility. Federal officials must sign off on the Montana Medicaid expansion plan, because it includes new requirements for enrollees, such as monthly premiums.

 

While Medicaid expansion in Louisiana appears inevitable – the financial incentives are simply too good for the next governor to pass up – it is anybody’s guess at this point what shape the expansion will take. When that debate happens, a new report from the Center on Budget and Policy Priorities provides some helpful perspective on policies that work (expanding access to primary care and targeting interventions to frequent users of emergency-room services) and those that do not (premiums, co-pays and work requirements for the newly covered).

 

Film subsidy bills get their first hearing
The Legislature this week gets its first chance to debate Louisiana’s film subsidy program, which has cost state taxpayers more than $1 billion the past five years. More than two dozen bills have been filed to change the program, including several that would cap its cost. The Advocate’s Tyler Bridges has an overview:

 

First up for the Louisiana House’s tax-writing panel, the Ways and Means Committee, will be the measure that most concerns the film industry. House Bill 276 would cap the state’s film subsidy program at $50 million in the fiscal year that begins July 1 and stop issuing any more tax credits beginning in 2019. That bill is scheduled to be heard Tuesday. State Rep. Lance Harris, the bill’s sponsor, said he would rather have the government give the money spent on film tax credits to the state’s colleges and universities, whose budgets the Legislature and Jindal have cut repeatedly in recent years. These institutions are facing another $211 million cut in state aid under Jindal’s proposed budget for next year. “Every study shows we spend more than we take in,” said Harris, R-Alexandria, who is also chairman of the House Republican delegation. He said it’s time for the film business to operate on its own, without continued subsidies. The film association is calling upon supporters to attend Tuesday’s committee hearing to oppose Harris’ bill and stand out by wearing red shirts.

 

The incredible shrinking hospital

Budget cuts included in Gov. Bobby Jindal’s executive budget are shrinking the capacity of the new academic medical center in downtown New Orleans, which state and federal taxpayers have spent $1.2 billion to build. The governor’s budget includes $88 million less than hospital executives say they need. Jeff Adelson of the New Orleans Advocate reports:

 

At stake at a minimum is whether the complex, the successor to Charity Hospital, will be at full capacity and resources on opening day. At worst, the budget shortfall may be enough to cause LCMC to walk away from the deal, something it can do on short notice. For now, Gov. Bobby Jindal’s administration and officials with LCMC, which also runs Children’s Hospital and Touro Infirmary, are talking about how to come up with the missing money. While they have been optimistic that a solution can be found, LCMC officials also have been clear that the money is needed to run the hospitals as intended.

 

Number of the Day

$142 million – Amount needed to operate the public-private charity hospital partnerships next year which was not included in the governor’s budget recommendations (Source: The Advocate)