WisPolitics.com: Doyle Proposes $1.8 Billion Health Care Expansion Funded by Hospital and Cigarette Tax Money
By JR Ross
Gov. Jim Doyle, in his first post-re-election budget, proposed a $1.8 billion health care expansion Tuesday night to insure more Wisconsin residents, reduce the number of smokers, increase reimbursements for hospitals that serve the state’s poor and continue existing programs.
To pay for his proposal, the Democratic governor advocated a new 1 percent assessment on net hospital revenues, reaffirmed his call for a $1.25-per-pack increase in the cigarette tax and proposed a $175 million transfer from the state’s malpractice fund.
Doyle’s health care plans call for expanding BadgerCare to cover some 71,000 low-income, single adults and allowing parents to purchase coverage through the program for their children, regardless of income.
All told, Doyle says his plan would make it possible for 98 percent of Wisconsinites to have some form of health coverage.
“My budget says every child, every family, should have a chance to get ahead and live the American dream,” Doyle told a joint session of the Legislature in the Assembly chamber. “This is not a budget for the big oil companies or the big tobacco companies. It is a budget for the middle class and for those trying to get there.”
Republicans immediately branded Doyle a taxer and spender -- a post-re-election retreat on his no-tax-increase pledge. But Doyle aides contended the governor was keeping to his promise because he wasn't proposing to raise general tax rates and because he was still keeping limits on property taxes. Doyle said the tax burden was the lowest in 35 years.
Republicans claimed Doyle’s proposals added up to $1.7 billion in tax increases -- $310 for every man, woman and child in the state.
“At a time when we are one of the highest taxed people in the country, I can not understand how the governor thinks this is the answer, and that we should go back to those people and say we need another $310 for every individual in this state,” said Assembly Speaker Mike Huebsch, R-West Salem.
Listen to Huebsch's comments: http://www.wispolitics.com/1006/070213huebschbudgetreax.mp3
Doyle’s two-year budget plan, which now goes before a split Legislature, totals $57.7 billion in spending from all funds, an increase of just more than $4 billion from the 2005-07 budget. Of that, $27.2 billion is general fund spending, a $580 million increase over the current budget.
The plan calls for relaxed property tax limits, an additional $225 million for the UW System, two-thirds funding for public schools, the repeal of the qualified economic offer for teachers, new positions to carry out tracking of sex offenders, $4.6 billion for highways and roads, and what Doyle said were $1.7 billion in tax cuts that would take affect over the next four years.
A key to funding his health care plan is the hospital assessment. Under his plan, state hospitals would pay $418 million over the next two years on gross revenues of more than $19 billion. The move would generate $575 million in matching federal funds.
Of that money, $702 million would go back to providers, while the other $291 million would go into other Medical Assistance programs. The move would mean, on average, hospitals would be reimbursed for 83 percent of the costs to treat MA patients. Currently, they are reimbursed 63 percent of the costs.
The administration estimates more than 90 of the state's 130 hospitals would receive more money than they would pay in assessments. The hospitals that would fare better are largely those that treat a large number of MA patients. Some rural hospitals considered critical access care points would also benefit.
But Steve Brenton, president of the Wisconsin Hospital Association, complained some $290 million of the money raised through the assessment was going to fund other MA programs and feared that chunk would get larger in future years as others saw the tax as a way to raise money for other programs.
"It will never get better than it was in year one," he said. "We will constantly be a pinata for other governors and legislators to take whacks at to pay for other programs."
His cigarette tax proposal is projected to bring in $480 million over the biennium, while the interest on his plan to refinance the state’s tobacco bonds is expected to generate another $100 million in interest over the next two years.
Doyle has twice been rebuffed in his attempts to transfer money out of the Patients Compensation Fund, the fund which health care providers pay into for help in covering the costs of large malpractice claims. But Republicans controlled both houses of the Legislature each time. Now, Doyle has a Senate controlled by fellow Dems.
The Office of the Commission of Insurance estimates the fund has net equity of $59.9 million. But Doyle’s administration insists the $175 million transfer he is now proposing would still leave more than enough money in the fund to cover potential liabilities in malpractice decisions.
Rep. Kitty Rhoades, the GOP co-chair of the Joint Finance Committee complained Doyle is proposing "expanding the medical assistance program that we currently can't afford."
"(The Medicare program) is going to run out of money, but yet we're building programs that rely on that more rather than moving away from that as other states have done," said Rhoades, R-Hudson.
Listen to Rhodes' comments: http://www.wispolitics.com/1006/070213RhoadesBudget.mp3
The budget as Doyle proposed would leave the state with a structural deficit of $675 million going into the next budget, less than half of the advanced commitments the state has had going into this budget and the last one. That would be the lowest structural deficit in the state in a dozen or more years, according to the Doyle's Department of Administration.
At the close of the 2009 fiscal year, the state’s ending balance would be $130 million, double the current amount.
Doyle’s budget also would dramatically reduce the amount of “one-time” money borrowed from programs to fill budget holes. In this budget, Doyle is proposing $246 million in one-time borrowing over the biennium, with the majority, $175 million, coming from the Patients Compensation Fund. In the 2005-07 budget, nearly $600 million in one-time money was used to fill budget gaps, and in 2003-05 the amount was nearly $1.9 billion.
Here are some highlights from Doyle's proposal:
The budget maintains two-thirds state funding of K-12 public schools, and provides more than $20 million for the Milwaukee Parental Choice Program. In all, the state would chip in more than $675 million in new funding for K-12, under the governor's plan.
In addition, the schools budget includes:
* $235 million in general school aid and a new $100 million credit to exempt the first $5,545 of home value from school property taxes.
* A proposal to repeal the QEO, and to provide up to $5,000 in bonus pay for teachers who obtain a master’s degree and work in the “most challenging school environments.”
* $54 million to assist school districts with federally mandated special education costs.
* More than $21 million for small class sizes in early grades, $3 million to help school districts 4-year-old kindergarten; and $3.3 million to increase school breakfast programs.
* $15 million directed at improving math scores in low achieving Milwaukee schools.
* Up to $25,000 per 500 high school students for school safety personnel.
* A proposal to require a third year of math and science to graduate from high school.
* An increase in the revenue limit for low-spending school districts and an increase in the reimbursement rate for school transportation costs for students traveling more than 12 miles.
* $225 million in new state tax dollars for the UW System, including $21 million for the UW System Growth Agenda, which will be allocated by the UW System Board of Regents.
Doyle’s administration says his commitment to the UW System would mean tuition increases of about 4 percent each of the next two years. The exact amount would depend on increases for staff salaries.
* Via the Wisconsin Covenant, a guarantee of access and financial aid to students who maintain a certain grade level and behavior requirements.
The state will add a total of 791 positions under Doyle’s proposals. Of those, 220 would be in the Department of Corrections with 120 needed to help the state monitor the GPS tracking of sex offenders approved in legislation during the last session.
During his first bid for governor more than four years ago, Doyle pledged to eliminate 10,000 state jobs over eight years. But he has softened that stance since winning re-election in November, and the new positions he is proposing would leave him with a net reduction of 2,674 state jobs since 2003, according to the DOA.
Levy limits for local governments would be capped at 4 percent or the rate of economic growth, whichever is higher. Doyle created a cap in the current budget allowing municipalities to increase their property tax levies by 2 percent or the rate of growth, whichever is higher. In addition, the state would increase the amount of shared revenue to local governments by $15 million.
Doyle's aides estimated his property tax limits would mean an increase of about $75 for the median-valued home on the December bills and $26 on the bills that go out in December 2008.
Republicans said that amounted to a $350 million property tax increase.
The budget includes $1.7 billion in proposed tax cuts over the next four years. They include:
* Full exemption of health insurance premiums.
* A 32 percent increase in the college tuition tax deduction.
* Expansion of angel investor and early state seed investment, renewable fuel, dairy facility modernization, medical records technology and biotech equipment.
* Over $700 million for additional property tax credits, including a new $100 million credit focused on reducing property taxes on residences, and expansion of the homestead credit for senior citizens.
* Full exemption of Social Security income, which was approved in the budget Doyle signed two years ago but takes effect during the upcoming biennium.
* Full implementation of the single sales factor in corporate income tax, totaling $41 million over the biennium, and the exemption of fuel utilities used in manufacturing, an $8 million tax break over the next two years.
Doyle’s proposal includes $4.6 billion in road and highway funding over the biennium, an increase of 8.7 percent over current levels. To achieve that increase, Doyle has proposed a 2.5 percent assessment on oil company earnings and a $20 increase in vehicle registration fees. The oil company assessment would include penalties for corporations who turn the cost of the increase back on consumers, according to the DOA.
The registration fee would generate $170 million for the biennium.
In other transportation and economic development initiatives, Doyle’s budget includes:
* $140 million in additional funding for highway construction and maintenance.
* $241 million for the I-94 North-South Corridor and $24 million for the Zoo Interchange project.
* An increase to local transportation and transit aids at the rate of inflation.
* $1 million for the Kenosha-Racine-Milwaukee commuter rail project, and $32 million to help leverage federal funding for passenger rail expansions.
* $30 million in development grant and loan funding for renewable fuels.
*A $10 increase in the state's drivers license fee. Doyle's administration says the increase would go largely to pay for new federal requirements under the REAL ID Act.
Sen. Russ Decker, the Dem co-chair of the Joint Finance Committee, praised Doyle's decision to go "after big oil."
"They've been gouging us long enough and taking money out of us at the gas pump and now it's our turn to have some of that money returned to keeping our roads up to standards," said Decker, D-Weston.
Listen to audio of Decker's comments: http://www.wispolitics.com/1006/070213DeckerBudget.mp3
Huebsch said he would look at the proposal, but was skeptical Doyle could prevent oil companies from passing the tax onto consumers.
Senate Minority Leader Scott Fitzgerald, R-Juneau, said it was "preposterous" for Doyle to propose putting oil executives in jail for six months if they do try to pass on the tax.
Listen to Fitzgerald's comments: http://www.wispolitics.com/1006/070213fitzgeraldbudgetreax.mp3
Assembly Minority Leader Jim Kreuser, D-Kenosha, questioned how Republicans would find money to increase the transportation budget if they oppose the oil assessment.
“We have a transportation budget that needs to be funded. Are they (Republicans) saying we shouldn’t fund it?” Kreuser asked. “Infrastructure is a significant part of our economic growth, which creates jobs, which grows our economy. Now are they against any infrastructure growth? Apparently they must be.”
Listen to Kreuser's comments: http://www.wispolitics.com/1006/070213kreuserbudgetreax.mp3
On the economic front, the budget includes:
* $5 million in additional angel and early stage seed investment tax credits and funding fort a new Wisconsin Venture Center.
* The creation of a dairy manufacturing facility investment tax credit.
* A four-fold increase for worker training efforts and assisting manufacturers with LEAN manufacturing efforts.
The Doyle budget proposal creates a new Department of Children and Families and invests $85 million in GPR over three years to cover for federal reductions on child care development and Temporary Assistance for Needy Families block grants.
As with last budget, Doyle is also proposing the creation of a child care quality rating system, pledging $2.8 million of state funds for its development. The budget also would provide $2.4 million to assist child care workers to obtain early childhood education degrees, and to increase the salaries of individuals who obtain their degrees.
In addition, Doyle proposes to:
* Provide $100,000 to support state Boys and Girls Clubs, with another $500,000 directed at the Boys and Girls Clubs of Greater Milwaukee to expand sites and implement literacy programs.
* Provide $1.5 million for the Educare Program in Milwaukee.
* Provide $7.8 million to extend from 12 to 26 weeks the time parents may stay at home with newborn children. $1.4 million in cash assistance will be provided to unmarried, pregnant women with no other custodial children and who are participating in the state W-2 program, are in the third trimester of a medically verified, at-risk pregnancy and are unable to work.
* Provide $9.3 million to meet increased demand for emergency assistance payments to low-income individuals and families affected by fire, flood, natural disasters, energy crisis, homelessness or impending homelessness.
* Provide funding to increase foster care rates by 5 percent in ’08 and an additional 5 percent in ’09.
Senate Majority Leader Judy Robson, D-Beloit, called the budget “very progressive” in terms of social programs, but “fiscally conservative.”
She praised the hospital assessment for the additional federal dollars it would bring in.
“I think that it’s a strong program because we are going to be able to leverage more federal dollars so we can in fact reimburse the hospitals for their Medicaid costs. So there are major winners under that proposal,” she said.
Listen to Robson's comments: http://www.wispolitics.com/1006/070213robsonbudgetreax.mp3