Spending Cuts and Tax Cuts

Details: 03 February 2012

As the Nebraska Legislature maneuvers its way through the 39 legislative days remaining in its 2012 regular session, the word "cuts" is again going to be a prominent part of the session-related vocabulary.

That’s "cuts" as in spending cuts, which has become a fairly common usage during the economic downturn of recent vintage. Then there’s the common, but now relatively new idea in the current mix, "tax cuts," which pops up as the state’s economic outlook brightens and achieving greater stimulation is argued.

On the spending-cuts side of the equation, much of the attention will likely be focused on Nebraska’s medical-assistance program, i.e., Medicaid and the Children’s Health Insurance Program, which helps pay for health care for low-income and medically needy populations, including adults, children, seniors and those with chronic illnesses and disabilities. On Dec. 1 last past, the state Department of Health and Human Services’ Division of Medicaid and Long-Term Care notified the Legislature, as required by law, of proposed cuts within its implementation of the Medicaid program, primarily in the form of increases to copayments for eligible recipients and limits on services.

State law requires DHHS to hold off on proposed administrative changes until after one regular session of the Legislature. The purpose is to provide the Legislature with an opportunity to consider the proposed actions, including cuts, and to overturn or modify them by legislation if there is enough support to do so.

Among the changes being proposed by DHHS—the essence of which amounts to cuts in coverage—are an increase from $1 to $2 in copayments on physical, speech and occupational therapies; an increase from $3 to $50 for non-emergency visits to emergency rooms; a limit of 240 hours per year on home health services (nursing and aides) for both adults and children; the elimination of private-duty nursing services, an increase in the level of care needed to receive personal care services; a limit on personal-assistance services to three-and-a-half hours per day and a 60-hour limit per month; elimination of oral nutritional supplements provided through the durable medical equipment program; a limit on behavioral health therapy visits to 60 per year. In addition, proposals are prepared to eliminate some items from coverage, e.g., eyeglasses, hearing aids and dentures for eligible adults, if federal Medicaid cuts happen.

Some costs would shift to other services or programs, but the net savings from the planned changes is projected to be $7.7 million for the second half of Fiscal Year 2013 and $15.4 million for Fiscal Year 2014.

In response to the proposals from DHHS, Omaha Senator Jeremy Nordquist introduced LB 952. It would prohibit implementation of the proposed changes, which amount to cuts in services. The bill was assigned to the Appropriations Committee, which held a public hearing Jan. 30.

On the other side of the "cuts" equation there’s LB 970. It was introduced by the chairperson of the Legislature’s Revenue Committee, Sen. Abbie Cornett, on behalf of Governor Heineman. The proposal has three facets. It would reduce the individual state income tax by lowering the tax rates and expanding the income brackets. It would reduce the top corporate income tax rate. And it would entirely repeal the inheritance tax, which is imposed on the beneficiaries of decedents’ estates and paid to the counties.

The fiscal note on LB 970 projects a drop in state revenue of $51.8 million for the budget year that ends June 30, 2013 and considerably more than that in out-years.

So, there is an interesting juxtaposition of proposals here. Cuts in medical-assistance spending on one hand; cuts in revenue on the other. It certainly seems to raise questions of whether or not the state can afford the tax cuts, or whether the cuts in medical assistance are really necessary and justified. What’s more, there are other pressing needs as well, such as child-welfare reform, meeting the needs of those with developmental disabilities and all components of education. Keep in mind, too, that last year the Legislature and the Governor agreed to ear-marking some General Funds for construction and maintenance of highways and roads.

It all boils down to decisions about priorities. These are tough decisions for the policy makers, which they will confront between now and mid-April. Stay tuned.

And finally…..

After about four hours of floor debate last week, LB 276, proposing to repeal the death penalty and replace it with imprisonment for life without parole, moved quietly to the side of the road, so to speak. Most likely it won’t be on the Legislature’s agenda any more this session. Regrettably, the votes aren’t there to pass it.

As long as the desire for revenge is a greater motivation for lawmakers and their constituents than a desire for effective justice and true concern for victims, legal authority for state-imposed killing of convicted murderers—answering violence with violence—will remain in place.