Guinn, Buckley push for more
property-tax-funded programs
By Steven Miller
March 16, 2005
As Nevada’s property-tax crush bears down on homeowners, Gov.
Kenny Guinn and Assembly Democrats have quietly agreed to
expand State of Nevada spending obligations funded by the
property tax, BusinessNevada has learned.
Three
or four new social-service programs would be launched under a
plan developed by an interim subcommittee headed by Assembly
Majority Leader Barbara Buckley. At least two of the programs
have already been publicly endorsed by Gov. Kenny Guinn in his
proposed Medicaid budget.
Driving the entire campaign is the prospect of getting
millions of new matching federal dollars for state government
to spend. Under the Buckley plan, property tax revenues that
currently
support county indigent medical care
under two state accounts -- Indigent Accident Fund (IAF) and
Supplemental Fund (SF) -- would be directed elsewhere.
Instead, the monies in question would be earmarked for
purposes that, under Medicaid rules, could bring federal
matching dollars. Programs at the top of the list in a
December presentation by Buckley would:
-
Expand Medicaid coverage to pregnant women,
-
Subsidize health insurance coverage for low-wage employees
of certain small employers, and
-
Provide insurance coverage for people with high medical
expenses who do not qualify for Medicaid because their
income and resources exceed established limits.
Clark County's University Medical Center and Washoe County's
Washoe Medical Center, which receive the greatest share of the
IAF and SF monies, have expressed concern over their
prospective financial losses, should property tax moneys be
directed away from indigent care.
Although the New York-based consultants hired by the interim
subcommittee, EP & P Consulting, have estimated that much of
the prospective UMC and WMC losses could be made up through
the new Medicaid-subsidized programs, UMC's Peter Tibone told
the subcommittee's technical working group last May that UMC
would still experience a $20 million annual deficit. Tibone is
the medical center's director of reimbursement.
His boss, UMC CEO Lacy L. Thomas, told the group that if UMC
was not relieved of its legal obligation to provide services
to the medically indigent, there will need to be "more
pressure on the taxpayers of Clark County." At the same time,
Washoe County Legal Services advocacy director Jon Sasser
expressed concern that eliminating the IAF and the SF would
create a gap in legal responsibility. No one, he told the
group, would have legal responsibility for non-emergency but
medically necessary care, or for bills for medically necessary
care exceeding $25,000.
The IAF, or indigent accident fund, is supported by 1.5 cents
of the property tax, while the SF, or supplemental fund, is
supported by 1 cent of the property tax -- both assessed by
the counties.
The IAF -- dedicated by law to the medical care of indigents
hurt in motor vehicle accidents -- was established by the
state in 1941, before Nevada law made car insurance mandatory
and before the Medicaid program made matching funds available
under certain conditions.
One source told BusinessNevada that claims against the
IAF account only total about $3 million a year, yet the
account has recently been bringing in much more—about $12
million annually. Furthermore, it was stated, the recent
mushrooming of Nevada land valuations could push new revenues
even higher.
During the last biennial budget, state lawmakers—in view of
other tax increases being imposed on Nevadans—directed Nevada
counties to not assess that portion of the property tax during
the first year of the biennium. Now, BusinessNevada is
informed, the Guinn administration and Assembly Majority
Leader Barbara Buckley have agreed that in both years of the
new fiscal 2006-07 budget the tax will be assessed at the full
rate.
Nevada Association of Counties analyst Andrew List testified
to a senate subcommittee Friday that Gov. Guinn and Majority
Leader Buckley intend to re-earmark the property tax funds for
social purposes that, under Medicaid rules, can receive
federal matching funds. He was challenged by Sen. Bob Beers,
who pointed out that returning to the full statutory
assessment rate while changing the purpose of the property tax
fees would mean “You’re effectively increasing property tax to
start new programs.”
Other states' experiences
While states often attempt to increase the amount of federal
matching funds they can receive by reclassifying state and
local spending under headings that qualify under Medicaid
rules, the process can easily lead to additional burdens on
state taxpayers, according to the National Center for Policy
Analysis.
A 2003 NCPA white paper, Reforming Medicaid, points out
that in the late 1980s Texas made two such attempts. The first
did not increase the tax obligations of Texans but the results
of the second attempt “were immediate and dramatic. It had
taken about 20 years, from 1968 to 1988, for total Medicaid
spending in Texas to reach $2 billion a year. Medicaid
spending reached $7 billion—a three-and-one-half-times
increase—in just five more years,” reported the study's
authors.
In order to qualify for even more matching funds, Texas had
expanded Medicaid eligibility—primarily to pregnant women,
infants, and children—eventually increasing the demand for
state matching dollars.
One of the Buckley-Guinn social programs would similarly
expand the number of pregnant women who can receive Medicaid
services. Under an already optional program that Nevada
taxpayers now fund, women are eligible at an income level that
is 135 percent of the federal poverty level. Under the
proposed expansion of this program, pregnant women would be
eligible at an income level up to 185 percent.
Other risks facing the
Buckley-Guinn proposals include Medicaid itself. According to
a white paper released by the National Governor’s Association
this February, Medicaid spending has been accelerating “at
double-digit rates in recent years,” and has increasingly
“become too expensive for states to afford.” In just the past
five years, enrollment in Medicaid programs has jumped 40
percent, while Medicaid spending itself increased by over 50
percent.
“Over the past two decades,” says the NGA study, “the average
share of state budgets set aside for Medicaid spending
increased from eight percent in 1985 to 22 percent in 2003. In
2003, for the first time, total Medicaid spending surpassed
spending for elementary and secondary education as the largest
single item in overall state budgets.”
At the federal level, too, Medicaid costs are out of control.
For that reason, the Bush administration's current budget
proposes to reduce federal spending on Medicaid for states by
$40 billion, limit some payments, reduce the federal match on
some services and take aim at states that the federal
government says wrongly use Medicaid funds for other
government purposes.
On Valentines Day, February 14, Majority Leader Barbara
Buckley and representatives of 29 Nevada tax-consuming
organizations denounced the proposed cuts in the Bush
administration’s budget as "heartless" and "unconscionable."
“These are not luxury programs. These are not fluff programs,”
said Buckley.
But the incident underlines the growing possibility that
federal cuts to Medicaid could mean more of the financial
burdens of new programs could soon rest on the backs of Silver
State taxpayers.
