Week In Review

State Capitol Week in Review

            LITTLE ROCK – The legislature and the governor appear to have reached the broad outlines of a compromise on how to enroll an additional 250,000 low-income Arkansans into the state Medicaid program.

            At the beginning of the session the governor proposed expanding Medicaid by adding about 250,000 working class Arkansans.  They are adults making up to 138 percent of the federal poverty level.

            A strong faction of the legislature opposed the expansion for a variety of reasons, but among the most important concerns has been the potential long-term cost of increasing a government program.  Opponents of Medicaid expansion held a strong hand because expansion would require approval from a 75 percent majority of both the Senate and the House of Representatives.

            The governor met with the federal secretary of Health and Human Services, whose approval is needed for major changes to the state Medicaid program because about 71 percent of the cost of Medicaid is paid for with federal funds.  The governor went to Washington and presented the federal officials with some ideas that had been tossed around the Capitol in Little Rock.  The federal officials accepted those ideas, which are now the basis for the Medicaid compromise.

            The proposal to simply expand Medicaid has been replaced with a plan that brings in private insurance companies. Using federal dollars, Medicaid would help the 250,000 working poor to buy health coverage in the private market. They will be required to buy health insurance in 2014 anyway under the federal Patient Protection and Affordable Health Care Act.

            Hospitals and physicians benefit because they will not have to provide as much unreimbursed care to low-income patients, whom they treat even though they have no insurance and cannot pay.  Under the Medicaid compromise 250,000 more Arkansans will have health insurance coverage.

            There are still numerous issues of fiscal policy left to resolve.  The Committees on Revenue and Taxation have on their agendas a series of tax cut bills that amount to an estimated $ 2 billion.

The Senate has approved SB 463 to exempt members of the armed services from the state income tax.  It would reduce their taxes by $7.2 million a year.

Other tax cuts include HB 1039 to create a sales and use tax exemption for utilities used in agriculture, aquaculture and horticulture.  It would reduce taxes by more than $11 million when it takes full effect in Fiscal Year 2017.

Another measure, HB 1218,  would reduce the sales and use tax on natural gas and electricity used by manufacturers, from  2.75 percent to 1.625 percent the first year it takes effect, and in the second year it would exempt state and local taxes except for the conservation sales tax and the new highway sales tax.  In the first year the tax savings for manufacturers would be $13.1 million, and in the second year $25.4 million.

 Another tax cut is in SB 334, which would reduce the sales and use tax on replacement parts and equipment used in manufacturing. The first year tax savings would be $6.54 million.

The Senate approved and sent to the House SB332, which would require school districts to contribute at least $150 per for each teacher who gets health insurance.  About 100 districts already contribute $150 a month for each participating teacher.