Health care advocates are picking through the tax plan that received tentative approval in both the House and Senate Tuesday to see who wins and loses.
By Rose Hoban
Members of the North Carolina Hospital Association breathed a collective sigh of relief as Republicans lawmakers rolled out their budget plan on Monday afternoon.
The tax plan agreed upon by Gov. Pat McCrory, Senate leader Phil Berger and House Speaker Thom Tillis restored a sales tax refund for not-for-profit organizations.
Several hospitals are the largest not-for-profits in the state and would have lost tens of millions of dollars in tax refunds under plans proposed by the Senate.
“We appreciate the fact that the House understands we do our fair share for our communities by our actions and that taxing us isn’t necessary,” said Hugh Tilson, vice president for governmental affairs for the North Carolina Hospital Association.
But Tilson said hospitals can’t exactly breathe easy.
“On the other hand, there is a cap in the refund at $45 million,” he said, and that therefore the sales tax refund could continue to be a political football for years to come.
Tilson’s attitude was echoed by many in the health care advocacy community as they pored through the new tax plan that seems certain of passage by the end of the day on Wednesday and waited for the budget bill, which has yet to emerge.
The tax plan spares many people from pain, cutting the personal income tax rates for almost everyone, even if only by a marginal amount, but eliminates a number of tax exemptions.
And the reductions in overall state revenue contained in the plan have many health care advocates wary.
“Our biggest concern is just the amount of money that’s no longer going to be able to fund important priorities for children,” said Rob Thompson, head of the Covenant with North Carolina’s Children, a consortium of child advocacy groups.
“We’re going to be looking at a loss of over $600 million a year in revenues.”
Thompson also bemoaned the loss of the Earned Income Tax Credit, which was eliminated in a separate bill in March and was already signed into law by Gov. Pat McCrory.
“Thousands take advantage of the Earned Income Tax Credit, many of whom are parents working hard,” Thompson said. “Without it that job’s going to get a little bit harder and more are going to drop below the poverty line.”
The plan presented by legislative leaders Monday would cut $86 million from the budget for the current fiscal year, which began July 1. But in subsequent years, that cut would grow, as long as the state meets revenue projections, to as much as $650 million by fiscal year 2017-18.
“You can’t take out $2 billion over five years and not have it impact your budget,” said Mary Bethel, a lobbyist for the AARP.
“We’re still at a recession-level budget; it’s still less than it was when the recession started,” Bethel said, “And if you’re looking at still reducing a recession-level budget when you have growth in population and increased services and infrastructure needs, something’s got to give.”
Bethel said her organization is pleased that a proposed tax of Social Security benefits on prescription drugs and food were not included in the final bill. But she said there are still places where seniors are likely to see some pain, in particular low-income seniors.
“We’re still trying to check on the 6.75 percent combined state and local tax on electricity,” Bethel said, referring to a new utilities tax that will replace a 3 percent franchise tax on electric bills currently in effect.
“What does that mean fro the average consumer?” Bethel asked. “That has implications for someone on limited or fixed income.”
She also expressed concerns about repeals of tax exemptions for pensioners and people with disabilities.
But House and Senate lawmakers argue those tax repeals are more than made up for by increased standard deductions for most taxpayers.
Folks i represent and that I talk to want that money in their pockets, and they’ll decide where to spend it,” said Sen. Jerry Tillman (R-Archdale). “But if your mantra is we need more money to run the government, you’re not going to get it while we’re here. We’re gonna get a billion dollars less and we’re gonna make due with that.”
Many advocates also say they’re warily awaiting the state budget bill that will appear now that legislators have revenue projections completed.
“The biggest parts of the budget are education and health care, and there’s already not enough money for kids who need special education,” said Jennifer Mahan, director of advocacy and public policy for the Autism Society of North Carolina.
“Special ed has been underfunded for a long time,” Mahan said. “The reality is that this state is responsible for educating children, regardless of what challenges they have. The more challenges they have, the more burden there is on schools.”
She also worried about a tax credit for educating children with disabilities that has been repealed, while a partner law creating a scholarship program to replace the credit has not yet passed.
“We have growing needs on the part of kids with autism,” Mahan said. “There’s more of them, they’re going to school, becoming adults. How are we going to ensure that they’ll be able to live and work and learn?”
Image courtesy of Images of Money, flickr creative commons