State Net Capitol Journal – March 3, 2014; Public Employers Skirting ACA Part-Time Worker Mandate

Budget & Taxes

PUBLIC EMPLOYERS SKIRTING ACA PART-TIME WORKER MANDATE: It's unlikely the authors of the Affordable Care Act ever imagined the law would lead public-sector employers to restrict the number of hours part-time employees can work to avoid having to pay for their health insurance as the law requires. But state and local officials say that's exactly what's happening in cities, counties, public schools and colleges across the country. 
 
The work-hour restrictions have impacted police dispatchers, prison guards, substitute teachers and part-time professors, among others. Mark D. Benigni, superintendent of schools in Meriden, Connecticut and a member of the American Association of School Administrators' governing board, said the ACA was having "unintended consequences for school systems across the nation." But he suggested those consequences were unavoidable. 
 
"Are we supposed to lay off full-time teachers so that we can provide insurance coverage to part-time employees?" he said. "If I had to cut five reading teachers to pay for benefits for substitute teachers, I'm not sure that would be best for our students." 
 
President Obama has already twice delayed enforcement of the ACA provision subjecting larger employers to tax penalties if they fail to provide insurance coverage to employees who work an average of 30 hours or more per week. And the administration said last month it was also going to ease the coverage requirements for such employers. But many public employers said they'll still keep their work-hour restrictions in place because their part-time worker obligation under the ACA, which kicks in next year, will be based on the hours their employees work this year. 
 
Public employers seem more in need of a break than their private-sector counterparts. Since the ACA was signed into law in March 2010, the private sector has added over eight million jobs, while the public sector remains 698,000 jobs below its March 2010 level, according to the Labor Department. And as Daniel T. Tanoos, school superintendent for Vigo County, Indiana, pointed out, while corporations can pass along their additional costs to consumers, school systems have "no way to increase prices as a private business can." 
 
The public-employer, work-hour restrictions have only emboldened critics of the health reform law. U.S. Rep. Tim Griffin (R-Arkansas), for instance, said the authors of the law wanted more people to have insurance. 
 
"What did they get? No insurance and less pay. Genius! That's a genius federal program right there." (NEW YORK TIMES, STATE NET)

DETROIT EMERGENCY MANAGER PROPOSES TAXING REVERSE COMMUTERS: A single sentence tucked inside the 440-page bankruptcy restructuring plan released last month by Detroit Emergency Manager Kevyn Orr is probably going to attract some attention. It reads: "The city is considering the enactment of a local ordinance that would require employers to withhold city income taxes of reverse commuters." 
 
It's not the first time the idea of collecting income taxes from Detroit residents who work outside the city has been mentioned. The same plan was included in a consent agreement crafted by state and city officials in 2012. (A 2010 study commissioned by the city had estimated that only about 15 percent of its reverse commuters paid the city's income tax, costing it as much as $142 million a year.) But that plan didn't draw much support. And the city would need the state's help to compel other communities to collect the revenues it targets. 
 
Eric Lupher, director of local affairs for the Citizens Research Council, suggested that could happen if the same consideration were given to other communities. 
 
"We have 22 cities in Michigan that levy an income tax," he said. "Almost universally, they would all like to be able to collect those taxes, but they can't do it locally. They need the Legislature to come in and say, 'If you're employing people from Detroit or Hamtramck or Lansing, you need to withhold these taxes and remit them to those cities.'" 
 
A spokeswoman for Gov. Rick Snyder (R), meanwhile, said, "Details and particulars [of the plan] are in the early stages and will need to be worked out." (DETROIT NEWS, DETROIT FREE PRESS, STATE NET)

INTERSTATE TOLL BAN SOMETHING FOR CONGRESS TO CONSIDER: Congress banned most states from imposing tolls on interstate highways more than five decades ago when it created the national road system under President Dwight Eisenhower. States like Illinois with existing stretches of tolled highways were allowed to keep them, however. And states can also impose tolls on new highways and new lanes added to interstates, on the condition that the revenue generated from the toll is used for repair and maintenance of the tolled road. 
 
The idea behind the ban was that drivers shouldn't be taxed twice for the same road, once at the gas pump, by virtue of the federal gas tax, and again at the toll booth. But the struggle states are having with funding their transportation needs is spurring calls for Congress to lift the interstate tolling ban. 
 
"All we're asking for is giving the states the flexibility, if they want to take on that challenge, to see if they can sell it," said Jim Tymon of the American Association of State Highway and Transportation Officials. 
 
Congress has plenty of incentive to consider the idea this year. The federal government's primary transportation funding source, the Highway Trust Fund — fueled by a gas tax that has remained at 18.4 cents per gallon since 1993, while inflation and automobile fuel economy have continued to rise — is expected to be tapped out by August. 
 
But federal lawmakers will almost certainly face pressure to keep the ban in place from trucking companies, delivery companies and businesses along the interstates, which have fought off attempts to lift the ban in the past. Hayes Framme, a spokesman for the Alliance for Toll-Free Interstates, which counts UPS, FedEx and McDonald's among its members, calls tolling existing interstates "the least efficient, least effective mechanism to fund transportation in the long term." He said allowing tolling could increase costs all along the economic supply chain from manufacturers to customers. 
 
"What kind of harm are you doing?" he said. "Are you really getting the benefit out of the tolls that would offset any effects to the economy by putting truckers out of business...simply by trying to raise other money for transportation?" 
 
Lifting the toll ban is just one of many options Congress is considering, which include one proposed by President Obama: using a one-time $150-billion infusion from corporate tax reform to help provide $302 billion in transportation funding over the next four years. And at least one former top U.S. House transportation staff member thinks that's a good thing. 
 
"There are a lot of [funding proposals] already on the table," he said. "It's good that so many options are being discussed." (STATELINE.ORG, WASHINGTON POST)

BUDGETS IN BRIEF: In its first four months of all-electronic tolling last year, CALIFORNIA's Golden Gate Bridge missed out on $1.7 million in tolls. But it collected $2.95 million in fines from those motorists (SAN FRANCISCO CHRONICLE). • NEVADA and DELAWARE signed an agreement that will join the two states for online poker, the first authorized interstate Internet gambling pact in the nation (LAS VEGAS REVIEW-JOURNAL). • NEW JERSEY Gov. Chris Christie (R) proposed a $34.45-billion budget, the largest in the state's history. The spending plan also calls for a record $2.25-billion payment into the state's underfunded public employee retirement system (NORTHJERSEY.COM). • The production company behind the popular Netflix series "House of Cards" is threatening to move the show out of MARYLAND unless the state provides millions more in tax breaks (WASHINGTON POST). • COLORADO lawmakers — both Democrats and Republicans — have proposed more than $75 million in tax credits, exemptions and private grants this session, with statehouse elections coming in November (GAZETTE [COLORADO SPRINGS]). • The SOUTH CAROLINA House's main budget-writing committee approved a measure that would permit cities and counties to purchase some state roads (STATE). • NEW YORK'S Financial Restructuring Board has unanimously accepted Albany's financial restructuring application, which will make the city eligible for up to $5 million in state assistance, but likely with conditions concerning the city's operations and spending (TIMES UNION [ALBANY]).

- Compiled by KOREY CLARK

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