Tax and health-coverage issues on Legislature’s horizon

Details: 03 January 2014

The Nebraska Legislature’s specially created “Tax Modernization Committee” met the December 15 deadline and issued a report ahead of the upcoming session.
A report on modernization and reform of a system as complex and broad in scope as taxation could have shaken some policy cores; it could have been stirring, a “wow” moment; an “ohmygosh” happening. It didn’t. It isn’t. It wasn’t. It’s relatively measured, perhaps even a bit underwhelming. And that’s probably a good thing.
After six months of analysis and discussion by a 14-member special committee of legislators, one of the report’s findings is that Nebraska’s overall tax system is “comparable in design to most states.” It’s reasonable to understand this to mean that there isn’t anything about Nebraska’s taxation that is desperately bad or embarrassingly out of whack. The system needs some adjustments, as identified and discussed by the report, but “does not require significant changes.” And further study is invited as well.
The report bears the signatures of its chairman, Senator Galen Hadley, and nine of its members: Senators Paul Schumacher, Kate Sullivan, Heath Mello, Kathy Campbell, John Harms, Burke Harr, Tom Hansen, Jeremy Nordquist and Kate Bolz. Four members of the committee declined to sign the report: Senators Pete Pirsch, Ken Schilz, Beau McCoy and Charlie Janssen. For them, apparently, the report doesn’t push forcefully enough or directly enough for relief on property tax and income-tax.
Senators McCoy and Janssen are candidates for Governor and both made it clear that they will be offering proposals for more impactful changes.
The TM committee’s report certainly doesn’t ignore the message that was heard the most during the committee’s process, which included public hearings in five locations across the state. By no surprise, the report’s findings include this: “Property taxes are too high compared to neighboring states.”
Correspondingly, the report recommends increasing state financial aid to local governments—public-school districts especially—to reduce local reliance on property taxes. There are other property-tax-specific recommendations as well.
The report’s treatment of sales tax caught our attention, because we were anxious about whether or not there would be specific recommendations for doing away with traditional church-school-and-charity exemptions. Such wrong-headed ideas aren’t presented. In fact, the tradition behind these exemptions is acknowledged.
The Tax Modernization Committee’s report is easily accessible through the Legislature’s website: www.nebraskalegislature.gov. Reading it probably won’t rock your foundation, but it is a comprehensive review of a major policy structure.
And then there’s health-care reform….
The little scrap of words and claims that has been playing out in the media between Governor Heineman and Senator Nordquist adds a bit of testy and zesty flavor to an otherwise intense public-policy issue. If this was not important, it’s unlikely the chief executive of the administrative branch and the legislative branch’s foremost proponent of universal coverage would be slinging barbs.
The component issue began as a key provision of the Affordable Care Act and then was turned inside-out by a ruling of the U.S. Supreme Court, followed by the stalled outcome on LB 577 in the Legislature’s 2013 session.
Now the issue is on the cusp of a new emphasis. It is likely to be prominent in the upcoming session; perhaps another donnybrook, with plenty of debate.
The carried-over issue is whether or not to expand eligibility for Medicaid in a relatively simple way as a means of enabling greater access to health-care coverage. But the context of the debate in 2014 might be more specifically focused on finding a way to fill an illogical, unjust gap in access to coverage.
In general, individuals and families whose household income is between 100 percent and 400 percent of the Federal poverty line are now eligible for subsidized health insurance made available through the government-facilitated marketplace. Other families are categorically eligible for Medicaid and meet income conditions that can be even somewhat above 100-percent FPL. But there are others, often childless adults and many who are legitimately the working poor, who have household incomes anywhere between zero and the Federal Poverty Line, who are not eligible for either Medicaid or the marketplace. They are impoverished; but current policy in Nebraska—albeit in part a result of both Obamacare and the Supreme Court’s ruling—has them in a coverage gap; perhaps better described as a hole.
Simply expanding Medicaid eligibility as proposed by LB 577 would repair that gap. Other, alternative ideas are surfacing, however. The State of Iowa has one that received federal approval on December 10. Arkansas had one approved earlier in 2013. Arizona has had one for even longer.
A new bill proposing a method other than Medicaid expansion is likely to be introduced. It will have a public hearing in front of the Legislature’s Health and Human Services Committee.