The
past week was full of new developments that possibly signals the start of a new
emphasis on the major pre-session issues of Medicaid and tax reform. Those are
the two key questions that everyone expected to consume the General Assembly in
2013, but which have not been the topic of much official debate. Although,
apparently, legislators have been hard at work behind the scenes on both issues.
the Medicaid front, Governor Mike Beebe met with federal Health and Human
Services officials to discuss the possibility of using federal Medicaid funding
to help subsidize private insurance premiums for Arkansans with incomes below
138% of the federal poverty limit. This option is finding quite a bit of
positive feedback from Republicans who hold the majority in the House and
Senate. Any decision to appropriate state funds for either adding Arkansans to
the Medicaid program or subsidizing private insurance will require 75% of the
House and Senate to agree.
By
helping these neediest of Arkansans obtain insurance coverage with federally
subsidized private insurance 250,000 Arkansans could receive insurance coverage
while the state would not grow its Medicaid rolls and hospitals will be able to
reduce losses from charity care.
state’s hospitals are facing reduced reimbursement rates from Medicare patients
and when this is coupled with continued massive losses from charity care, many
of our healthcare systems are struggling to survive much less expand and
improve care. Therefore, any efforts to reduce charity care by moving uninsured
Arkansans into an insurance plan will be a tremendous benefit to hospitals. In
Northwest Arkansas, our hospitals employ thousands and are a major quality of
life component and driver of the local economy. The Chamber strongly supports
efforts to reduce charity care losses for our hospitals, whether it is through
an expansion of Medicaid or supporting private insurance coverage for
low-income Arkansans.
this week, Speaker of the House Davy Carter told the Revenue and Tax Committee
that he felt the General Assembly could pass up to $150 million in tax cuts
during the session without cutting the state’s budget.
This
is the first person in legislative leadership to offer a value for total tax
reductions. Governor Beebe has proposed cutting the grocery tax, but only as
selected state funding commitments expire (like desegregation funding for
Pulaski County public schools).
changes to state income taxes were also addressed this week when Representative
Charlie Collins (R, Washington County) filed bills detailing his
recommendations. Collins has long argued that reducing the state’s income tax
would make Arkansas more attractive for new businesses. He has offered two
options for the legislature to consider. HB1586
would gradually lower all tax rates, including the highest bracket which kicks
in at $34,000. For residents earning more than $34,000 their income tax would
fall to 6% from the current 7% level. HB1585
proposes identical tax brackets as HB1586, but HB1585 would phase in the
reductions more quickly. So what would this mean for someone with
$50,000 adjusted annual income? Using a very simplistic analysis this may
equate to around $20 more per paycheck.
There
are a number of other tax cut options on the table as well. The Chamber
endorses two tax cuts that support manufacturing in Arkansas and we encourage
you to join us in advocating for their passage.
HB1218 – Eliminates the state sales tax on utilities used
by manufacturers. Only one of our surrounding states tax manufacturer’s
utilities, which places Arkansas at a competitive disadvantage in both
recruitment and retention of manufacturers. In order to have a diverse economy,
Northwest Arkansas must continue to support and protect its manufacturers by
creating an operating environment that allows them to be the most competitive
in the world. This bill continues a steady reduction in this tax and improves
our ability to recruit and retain jobs.
SB334 – Eliminates the sales tax on parts used to
repair or replace equipment used by manufacturers. This reduction is important
to retain industry in Northwest Arkansas since many of our local manufacturers
not only have competitors from around the world, they also have other
facilities in the United States When a company is looking to expand production
or make their facilities more efficient we want them to choose their Northwest
Arkansas location to improve and expand instead of moving production to
somewhere less costly. Reducing the sales tax on repair and replacement parts
and equipment gives the state an advantage that might save hundreds if not
thousands of existing jobs.
ACTION – I ENCOURAGE YOU TO JOIN WITH US AND CONTACT YOUR LEGISLATORS IN
SUPPORT OF HB1218 AND SB334. WE MAKE IT EASY TO SUBMIT AN EMAIL TO THE REVENUE
AND TAX COMMITTEE.
of committees, their members and pending legislation you can find that
information HERE.