Friday, December 4, 2015

Friday, December 4, 2015

EITC gets another endorsement; Food assistance considered; Budget ‘fix’ was only a stopgap and; $530 million projected Medicaid shortfall

EITC gets another endorsement
The Times-Picayune reported Thursday that Gov.-elect John Bel Edwards wants to double the state’s Earned Income Tax Credit (EITC). Now the paper’s editorial board has endorsed the policy, saying that while lawmakers need to eliminate tax credits that aren’t working, it makes sense to expand the EITC.

 

As the Louisiana Budget Project has argued, the earned income tax credit helps ease financial stresses for those families and puts money into the economy. More than 515,000 tax filers claimed the credit on their 2012 Louisiana tax returns. “The theory behind it is it’s always been a credit that encouraged work,” budget project director Jan Moller said. The annual credit for many families “is the biggest lump sum they get in a year. It’s a lot of money in the pocket (of people) who might be working really hard for $12,000, $15,000, $18,000 a year.” Even a couple of hundred dollars extra — which is what a qualifying family with two children could get under Rep. Leger’s proposal — can make a difference. “A lot of people who are poor, they may be managing to pay their bills, but if some disruption comes along, their car breaks down — that can be calamitous to them where it’s just a major annoyance to me,” Mr. Moller said.

 

The fact that the credit helps working families ought to make it attractive to lawmakers. Increasing the credit would come at a cost. Estimates are that doubling the credit would cost the state between $47 million and $50 million per year. But the money would ripple across the economy, and the price tag is far smaller than many tax credits the Legislature has handed out. The federal credit was enacted during President Gerald Ford’s administration and expanded in the Tax Reform Act of 1986 championed by President Ronald Reagan. That ought to increase the comfort level for the mostly-Republican Legislature.

 

Food assistance considered

Tens of thousands Louisiana adults will lose basic food assistance on New Year’s Day because the Jindal administration has decided not to reapply for a waiver that extends their benefits–and doesn’t cost Louisiana a dime to boot. But those 64,000 unemployed adults could get the help they need if Gov.-elect Edwards chooses to apply for the waiver when he takes office Jan. 11. His transition team is expected to take up the issue and make a recommendation.

 

Jan Moller, the director of the Louisiana Budget Project, has said making the call on reapplying for SNAP benefits should be an easy choice, given the program requires no state funds. Members of Jindal’s administration have said they wanted to end the state’s waiver because they want to encourage people to go back to work. “Our goal is to get people back to work across the state,” Grace Weber, a spokeswoman for the Department of Children and Family Services, told NOLA.com | The Times-Picayune in October. But Moller argues that many of the program’s beneficiaries who receive SNAP benefits after three months of employment would be working if they could find a job. He said across Louisiana, higher-than-average unemployment rates have been driven in part by falling oil prices. “It is a critical issue for the 64,000 people who receive benefits, and it’s something (Edwards) can do right away to make a big difference,” Moller said. “This is certainly a timely issue.” For anyone who was unemployed before Oct. 1, their benefits run out on Jan. 1 if they’re unable to find work. What’s not clear is how long it would take to restore benefits to those people if Edwards decides to re-apply for the waiver.

 

Budget ‘fix’ was only a stopgap

A major national credit-rating agency is not impressed with Gov. Bobby Jindal’s patchwork approach to plugging a $487 million mid-year gap in the state budget. As The AP’s Melinda Deslatte reports, Fitch Ratings said the governor’s plan is just a stopgap measure that could make things worse next year.

 

The credit agency said some deficit-closing actions worsen next year’s budget gap pegged at more than $1 billion, and the shortfall in this year’s Medicaid program. Fitch said it is looking for Gov.-elect John Bel Edwards and lawmakers to stabilize the state’s finances. Treasurer John Kennedy called Fitch’s statement a “warning shot” that Louisiana risks a credit rating downgrade if it doesn’t devise a long-term budget solution.

 

$530 million projected Medicaid shortfall

Marsha Shuler of The Advocate reports that 2,000 additional patients in the state’s Medicaid program has increased the program’s internal shortfall. The problem isn’t exactly a surprise: Analysts warned back during the legislative session that the Jindal administration’s proposed budget shortchanged Medicaid. The Department of Health and Hospitals had a plan back in October to solve the problem, until the Jindal administration intervened again:

 

In late October, state health officials said the agency was running a $516.1 million budget shortfall and said they had identified “internal solutions” to close the gap. At that time, it was attributed to more Medicaid recipients and health care inflation. The agency proposed using extra state dollars from state mental health hospitals and LSU hospitals that went unused in prior fiscal years. There also was an increase in provider fees paid to DHH by the Bayou Health plans, nursing homes, intermediate care facilities and pharmacists. Another smaller amount came from reduction of a hospital service district program because of privatization of West Jefferson Medical Center. The plan evaporated quickly as the solutions DHH had identified were instead used by the Jindal administration to plug budget holes because of revenue shortfalls. Now DHH is back at the drawing board searching for even more money to fix a $530 million hole.

 

Number of the Day
$114.7 billion – Savings by 2050 from better health and less crime if a national, high-quality, publicly funded prekindergarten education program serving all three- and four-year-olds is implemented in 2017 (Source: Washington Center for Equitable Growth)