Jan. 30: Fees, but no taxes in special session

Jan. 30: Fees, but no taxes in special session

Gov. John Bel Edwards told lawmakers Friday that he will not be asking for new general tax revenues during the special legislative session he plans to call next month to address Louisiana’s $304 million mid-year budget shortfall.

Gov. John Bel Edwards told lawmakers Friday that he will not be asking for new general tax revenues during the special legislative session he plans to call next month to address Louisiana’s $304 million mid-year budget shortfall. Instead, he will ask that they use a mix of budget cuts and $119 million from the state’s rainy-day fund to plug the shortfall, though he will leave them the option of using new or increased fees. Nola.com/The Times-Picayune’s Julie O’Donoghue has details:

While legislators will be allowed to consider new fees, new taxes to deal with the midyear deficit will be completely off the table, according to Edwards. The governor gets to set the parameters of all legislation introduced during a special session. He told lawmakers Friday (Jan. 27) that he won’t allow new tax bills to even be filed for the special session held. … His detailed budget-deficit plan will be unveiled Feb. 6, though he gave a few hints about what he will be proposing in a meeting with the Legislature’s budget committees Friday.

Spared from cuts will be K-12 schools and the departments of Corrections and Children and Family Services. That means health care services, higher education and the offices of other statewide elected officials are likely to feel the pinch.  

 

Across-the-board cuts raise alarms

A proposal by GOP House leader Lance Harris to solve the $304 million midyear budget shortfall with a series of across-the-board budget cuts has raised alarms among state hospital executives and advocates for children with severe disabilities. The AP’s Melinda Deslatte spoke with Angela Lorio, whose 3-year-old son, John Paul, breathes with the aid of a tube and gets cared for at home through a state Medicaid waiver.

“All we’re asking for is to not have to bury some of our children because of budget cuts,” Lorio said. “I am so tired, and I am road weary, battle weary, whatever you want to call it. It’s beyond frustrating. It’s unconscionable.” Parents like Lorio are readying to pack House and Senate committee rooms, urging lawmakers not to cut those health programs as they look for ways to rebalance Louisiana’s budget and eliminate a $304 million deficit. They’re among an array of advocacy groups, business organizations, lobbyists and others who use state programs that are worrying about what the budget rebalancing will look like and who will end up on the chopping block.

 

“Aim high” on tax reform

The blue-ribbon panel that spent six months studying Louisiana’s tax structure released its final report last week, and The Advocate’s editorial page agrees with its key admonition: that failure to act is no longer an option for the state Legislature. Louisiana’s tax system is a regressive and complicated mess, and it’s time to make some fundamental changes.

But the bottom line for us is that the state must get rid of the emergency penny of sales tax, passed last year and expiring next. To make up that large a change, one in five pennies of the state sales tax, big new revenues must be generated, probably through the income tax. The reasons for skepticism that the lawmakers will act has to do in part with the mechanics of the process. It’s one thing to cut tax rates, an easy vote. But then several hard votes would be needed to raise other revenues to offset the losses. Each hard vote represents, in the minds of politicians, the opportunity for an unscrupulous attack ad denouncing lawmakers voting for a new system, even if overall the state is far better off with a new system entirely.

 

Health insurance markets on the brink

Last week’s decision by President Donald Trump’s administration to pull the plug on TV ads urging people to sign up for health coverage is prompting speculation that the new administration is trying to throw the insurance market into turmoil as part of an effort to undermine the landmark 2010 reform law. The Los Angeles Times’ Noam Levey reports that this could jeopardize the affordable health coverage that millions of Americans have come to depend on, and includes this unfortunate tidbit:

Senior Republicans have been pressuring health insurers to publicly declare that Obamacare is failing, according to industry officials. A number of health plan leaders told congressional Republicans that they would not say that, said the officials, who asked not be identified for fear of antagonizing the GOP.

The $5 million ad campaign planned for the final week of the January open enrollment period had already been paid for when the administration canceled the ads. The problem?

Insurers worry that Trump’s action will deter enrollment by younger, healthier consumers who are key to the markets’ sustainability. ”Everyone knows that this last week of the enrollment period is critical for getting young people signed up,” said Andy Slavitt, former head of the federal Centers for Medicare and Medicaid Services, which runs HealthCare.gov.

Under growing pressure, the administration backtracked in part, as The Washington Post’s Amy Goldstein reports:

According to two sources familiar with the reversal, administration officials were startled by a backlash that built swiftly on social media among proponents of the health-care law, which President Donald Trump is seeking to dismantle. The officials conferred overnight, the sources said, and by Friday morning had modified the directive. The new version allows the Department of Health and Human Services to continue to contact people eligible for ACA coverage by email, text and automated phone calls and revives use of a HealthCare.gov Twitter account that had been stilled the day before. And while the first action would have pulled several million of dollars worth of paid television and digital advertising – regardless of whether the money would be recovered – HHS now says ads will be aired only if the government would lose the money.

 

Number of the Day

54,000 – Number of Louisiana children who could lose health coverage if Congress repeals the Affordable Care Act under a reconciliation bill similar to one that was vetoed by President Obama in 2016 (Source: Urban Institute analysis)