During the second week of the legislative session, the House began moving a bit faster as the first few bills came out of the committee system. We voted on three measures on the House floor, the most important of which by far was SB 24, the Hospital Medicaid Financing Program Act, also known derisively as the "bed tax." This tax, which was first passed three years ago, will reach the end of its authorization in July. It is a levy hospitals must pay as a percentage of revenue. The proceeds are then used, in combination with federal matching funds, to cover hospital health care obligations that the state has incurred through Medicaid.
Many hospitals end up with roughly the same amount back from the state as they paid into the tax, some come out way ahead, and some come out behind. By the time all is said and done, this amounts to a roughly $450 million net flow of revenue into the industry. It is so critical for some hospitals that its termination would force between 10 to 15 institutions out of business. And with the state still struggling to compose recession budgets, there is no way such a sum could be made up for out of other revenues.
In short, we are between the proverbial rock and a hard place: either re-authorize the tax or face terrible fiscal disarray and damage to Georgia's health care system. SB 24 proposes to re-authorize the tax, but with a twist. It would give the state Board of Community Health the power to assess the tax as "provider payments" for a period of four years. This way the board would set and adjust the amount to be collected, subject to certain restrictions. While not a very complex measure, consideration of the bill did see a fair number of speakers. Because it involved delegating the responsibility of levying a tax, a power the state constitution assigns to the Legislature, I voted no. The bill nonetheless passed by a bipartisan 147-18.
The week also saw the appropriations committees really getting down to work. They had spent the previous week absorbing information about the state of the economy and consequent revenue trends, along with requests from various arms of the state government for funding. The "big picture" data about the economy held some interesting points: Georgia's economy continues to grow at a very slow pace, with income and corporate taxes providing most of the state's revenue growth during the last year (sales taxes grew little if at all); our unemployment rate is still a bit higher than the national average, but our rate of employment growth is beginning to outperform the nation; the housing market is showing signs that it may finally turn the corner, both in Georgia and nationally, but that won't preclude continued difficulty in some local markets; there is still a wide cost gap for bond interest at ratings lower than the top AAA rating, which means a significant continued payoff from our efforts to retain that rating; and finally, uncertainty due to slowing global growth, combined with that drawn from ongoing federal spending and debt problems, will keep growth from increasing much this year. With all this in mind, it appears that the state government won't return to pre-recession levels of revenue for perhaps another two years. Even then, six years of population growth and inflation will keep the real, per capita revenue well below previous levels.
On Monday, Lace Keaton, director of the Newton County Public Library, was at the Capitol for a library event, and I had the chance to say hello. On Wednesday, I was able to visit with Danny Stone, Roger Harrison and Ray Cheek at the Georgia Economic Developers reception. That evening, Troy Drummond, Larry McSwain, Janis Tidwell and Cynthia Abbott were all at the Capitol for a state retirees reception, and I enjoyed catching up with them.
State Rep. Doug Holt can be called at 404-656-0152. His email address is Doug@DougHolt.org.