Taypayer Handouts and Ripoffs

Pennsylvania Counties Seek Long-Term Solution to Declining Tax Revenue

February 11, 2010

Daily American - Gov. Ed Rendell, state legislators and county officials are all wrestling with the same question: How do they balance the budget with declining revenue from tax collections.

In 2009 all 50 states revealed the sharpest revenue drop in 46 years, according to a state finances report by the Nelson A. Rockefeller Institute of Government in New York.

Earlier this week, Rendell proposed reducing the state sales tax from 6 percent to 4 percent and lifting the exemption status of 74 items to raise $531 million as part of his $29 billion budget proposal for 2010-11.

The County Commissioners Association of Pennsylvania is trying to determine what the governor’s budget proposal means to county employees and residents in terms of services and programs.

“Counties are calling on the General Assembly to adopt a fair and timely budget,” association Executive Director Douglas E. Hill said in a statement.

The association is a nonprofit organization representing all of the state’s 67 counties. Its membership includes county commissioners, council members, county executives, administrators, chief clerks and solicitors.

“A fair budget will maintain state funding to support services that benefit the health of local communities, including particularly human services, environmental programs and funding for courts and corrections,” he said.

According to Gary Tuma, press secretary for the governor’s office, Rendell’s 2010-11 budget holds down spending, but includes “fairly modest increases in education, public safety, health care and services for seniors and children.”

The bulk of the overall spending increase of 4.1 percent is for medical assistance, education and prisons, he said.

He said the governor’s proposal for 2010-11 will not require any new taxes, partly because of $2.7 billion in stimulus funds that will not be available the following fiscal year.

The change in sales tax is to address an anticipated state revenue crunch in 2011-12 with the loss of stimulus funds and an increase in pension costs in 2012, Tuma said.

County officials said the plan does not address the trend of declining revenues.

“If revenue is declining, how do we pay for state and county services?” said Commissioner Pamela Tokar-Ickes.

The counties’ perspective is a broad view.

“We have mandated services we must provide,” Tokar-Ickes said.

To provide those services the counties need to have adequate funding from the state and federal governments, she said.

“We still are not where we were in 2003,” she said.

State funding has fallen short even in better economic times, according to Hill.

“The result has been an erosion of the state’s commitment to fund mandated and necessary core government services, and a greater burden passed to local taxpayers,” he said.

There is only one way for the county to fill in the financial gaps created by the state’s lack of funding for these services, and that is through property taxes.

“Raising property taxes is the only way we have to make up for the state’s five-year trend of reducing funds to counties,” Tokar-Ickes said ...

Tennessee Hospitals to State: Tax Us, Please!

February 8, 2010

BNet - Have you ever heard of hospitals asking to be taxed? That’s what’s happening in Tennessee, where proposed cuts in the Medicaid program known as TennCare have hospitals begging the state legislature to enact a new tax on hospital revenues. The reason is this: With the federal government paying for 65 percent of Medicaid costs in Tennessee, the providers stand to lose two to three times as much as the state would save through the budget cuts. If Tennessee, like 44 other states, taxed providers, the hospitals would expect to receive significantly more in Medicaid reimbursement than they paid in taxes.

Here’s how the math breaks down: The 9 percent cut in TennCare’s 2011 budget would save the state about $380 million, but the loss to the healthcare system would be nearly $1 billion, according to an analysis by the University of Tennessee Medical Center. A funding reduction of that magnitude would “devastate” the system and could lead to the closures of some facilities, says Craig Becker, president of the Tennessee Hospital Association. That’s why the association’s board of directors has approved the idea of a one-year assessment that they hope will raise $200 million.

A sales tax on Tennessee hospitals, imposed in 1992, was repealed in 1994 after vociferous complaints from the healthcare industry. But the situation of the hospitals is apparently different now. Back then, too, the sales tax was 6.75 percent, whereas the new hospital tax could not be higher than 5.5 percent under federal regulations. Under the hospital’s association’s proposal, it would be between 1 and 2 percent of revenues. The hospitals would like the state to guarantee that the additional Medicaid spending would go to them, but that is against federal law.

The legislature last year approved a 15 percent cut in TennCare, but the program was spared for 12 months because of the federal stimulus program, which is providing extra Medicaid funds to all of the states through the end of 2010. President Obama has proposed extending that bonus for six more months.

Last year, as the recession dragged down state budgets across the country, five other states enacted statutes related to new provider taxes. Among them were Colorado, which expected to generate as much as $1.2 billion in state and matching federal money; Arkansas, which imposed a 1 percent hospital tax anticipated to garner $105 million; Oregon, which figured its new provider tax would net $700 million; Arkansas, which broadened its existing provider assessment; and Iowa, which repealed a law that barred the state from imposing a provider tax.

It’s entirely reasonable for states and hospitals to take advantage of the multiplier effect of federal contributions to state Medicaid programs. But one wonders where the buck will stop.

Tennessee has already cut TennCare from one-third to one-quarter of the state budget since 2004, and it still can’t afford its Medicaid program. Many other states are in the same position, and the federal government cannot afford to plug their shortfalls for too much longer. If national healthcare reform were passed, there would be new sources of funding for Medicaid expansion. But if that doesn’t happen, the poor will once again see their access to care diminished as fewer providers than ever are willing to take care of them. Those who do-or who are legally required to-will see their revenues decline further.