Friday, May 8, 2009

Education & Health Care/Tax Bill & Legacy Funding Bill (May 8, 2009)

The House and Senate are voting today on a new education and health care bill that would raise about $1 billion in revenue and use the funds for K-12 education, nursing homes and similar facilities, and hospitals.

Here's the breakdown. There would be three accounts set up: E-12; Nursing Homes & Long-Term Care; and Hospitals.

* K-12 Education: The bill would generate $585.7 million in the next two year budget cycle for an E-12 account. If we were to cut $500 million from K-12, it would break down this way.

Centennial School District
: Loss of $3.8 million, or $566 per student
White Bear Lake: Loss of $4.7 million, or $580 per student
Mounds View: Loss of $5.5 million, or $584 per student

Statewide, 12,000 teachers would lose their jobs.

* Nursing Homes & Long Term Care: The bill would generate $287.5 million in the next two-year budget to a specific account. The bill passed today would have us cut 30% less than the Governor to our nursing homes. Many rural nursing homes in particular are in danger of closing. The funding would also avoid deeper cuts to services for Minnesotans with disabilities. We have a lot of group homes in our district and families with disabled children so this is of particular interest to our area.

* Hospitals: A hospital account in this bill would receive $114 million in the next two years. Support from the state comes in different forms including General Assistance Medical Care (GAMC), which serves indigent Minnesotans who do not have health care and often have other major mental health or chemical dependency issues; Medical Assistance (MA) which usually supports health care for the disabled; Minnesota Care, health coverage for low-income adults who have a job but no coverage; inpatient mental health treatment that is cheaper than institutionalization, and others. Under the Governor's proposal, our hospitals would be cut significantly. Here's how our area's hospitals would be affected under the Governor's budget proposal:

Unity (Fridley) cut of 7.3%
HCMC (Minneapolis) cut of 15.1%
Abbott Northwestern (Minneapolis) cut of 4.1%
Regions (St. Paul) cut of 9.9%
Bethesda (St. Paul) cut of 7.2%
St. Joseph's (St. Paul) cut of 5.9%
St. John's (Maplewood) cut of 5.0%

These cuts all get passed along to the rest of us who have health coverage through private plans, so this bill would help lessen the impact of the cuts on our premiums.

Where the revenue comes from:
* A 9% income tax rate on joint filers with $250,000 in taxable income a year (2.3% of all filers), raising $516.3 million. This provision would sunset in four years.
* An increase in the alcohol tax, raising $240.9 million.
* Surtax on credit card companies on interest penalties charged on rates above 15%, raising $216.3 million.

The amount of revenue raised equals what the Governor is proposing should be raised through appropriation bonds. Our proposal chooses taxes over borrowing, and I voted in favor of this bill.

Legacy funding bill: The other bill taken up this evening is the Cultural & Outdoor Resources Finance Division finance bill, HF1231. This bill allocates the funding derived from the new dedicated sales tax approved by the voters in November. There are four funds in the bill: outdoor heritage (for habitat); clean water fund (including money for drinking water); parks and trails fund; and the arts and cultural heritage fund. There is some controversy with the bill among hunting and fishing organizations because they want the legislature to adopt 100% of the recommendations of the Lessard Outdoor Heritage Council, which recommends projects to be funded by the outdoor heritage fund. We actually are likely to pass all of the PROJECTS recommended by the council, but the House has cut the amount of administration money that the council wants. We also are requiring that there be a web site for the public to see where the money is being spent, and some folks don't like that apparently. We are still in the middle of debate, but I plan to vote for this bill.