The 2013 Legislature: It's about tax reform, spending and health care

AARP Nebraska Legislative Update - January 18, 2013

By Mark Intermill - Advocacy Director

This is the first of AARP's legislative updates that we'll be providing throughout the session.  Next Wednesday is the last day for a Senator to introduce a legislative bill.  2013 is shaping up to be the session of three big-ticket items.

Tax Reform

The first one is tax reform, including the proposal that Gov. Heineman mentioned in his State of the State address. The broad outline is to eliminate individual and corporate income taxes by doing away with sales tax exemptions. Additionally, at least five bills have been introduced that would limit the state income taxation of Social Security or other retirement benefits.  There is also a very interesting bill that would provide a tax credit for caregivers. These questions come to mind:

-           How much revenue do we lose from the existing sales tax exemptions?

-           How certain are we that the revenue gained from eliminating sales tax exemptions will equal the loss of revenue from elimination of income taxes in both the short and long term?

-           How will loss of exemptions affect businesses, families, churches, farmers or others who may lose them?

-           How will the change shift the burden of state and local taxation between families at different income levels?  Will it improve or exacerbate our regressive revenue structure?

-           Which, if any, of the bills that would reduce the state income taxation of Social Security benefits will garner the support of a majority of Senators?

-           Can we fit a caregiver tax credit into the discussion of taxation policy?

State Government Spending

The second big-ticket item is state government spending.  The parameters of that debate were set by the introduction of LB 195, the state operations appropriations bill.  The bill reflects Gov. Heineman’s budget recommendations.

-           Is the Medicaid budget request justified? Do we need a 13.2%, a 11.5% and a 9.1% increase in Medicaid in FY-13, FY-14 and FY-15 for a program that has averaged 1.4% growth over the past three years?

-           If there is funding that may not be needed to cover the cost of Medicaid, can it be redirected to useful purposes that support the health of Nebraskans?

-           Is a two and a quarter percent increase the best we can do for community aging services that have struggled to keep up with a growing demand for services?

-           Can the growing problems associated with ACCESS Nebraska be addressed in the appropriations process?

Affordable Care Act

The third big-ticket item is the implementation of the Affordable Care Act.  Most notably, Medicaid expansion will be outlined in a couple of bills that will be introduced next week.  The disposition of the bills will determine the degree to which the Affordable Care Act will be implemented in Nebraska.

-           How much will it cost Nebraska to match the federal funds that are available for Medicaid expansion?

-           Are there other state costs that will be offset if we participate in the Medicaid expansion?  If so, how much are they?

-           Who benefits from and who pays for a decision not to participate in the Medicaid expansion?

These are the questions that we will seek to answer over the course of the next 20 weeks.  The answers will shape the future of the state.

As always, we appreciate your thoughts and ideas as we seek to answer them. You can reach me at mintermill@aarp.org or 402-323-5424.