State Net Capitol Journal – June 3, 2013

State Net Capitol Journal – June 3, 2013

Budget & Taxes

CA RELEASES HEALTH EXCHANGE RATES: Last month, California released details about the insurers that will offer plans through the state's newly created health exchange and the premiums that millions of residents can expect to pay for that coverage.

Thirteen companies will sell policies through the state marketplace, including three of the state's largest insurers, Anthem Blue Cross, Blue Shield of California and Kaiser Permanente. Premiums will vary based on age, household size, region and type of coverage, categorized into five tiers: bronze, silver, gold, platinum and catastrophic coverage. A 40-year-old San Francisco resident who earns over $46,000 a year will be able to choose from five plans ranging from $221 to $501 per month, while a 40-year-old Fresno resident who earns about $15,000 a year and qualifies for federal premium-lowering subsidies will have four plans to choose from and pay between $53 and $102 per month for mid-range silver coverage.

"We've hit a home run for consumers because we have affordable rates, we have better coverage and real choice for consumers across the entire state," said Peter V. Lee, director of Covered California, the state agency managing the exchange.

Lee also said that although rates will likely go up for many higher wage earners when coverage through the exchange begins next year in accordance with the Affordable Care Act, not by the 30-percent average the Milliman consulting group estimated in March.

"What we see in the rates submitted to us...are rates going up far lower than the best estimate of what Milliman thought might happen - and way below the worst-case estimates of doom and gloom," he said.

But others found fault with California's insurance marketplace. California Insurance Commissioner Dave Jones, for instance, was troubled by the fact that three of the state's major insurers - Aetna, Cigna and United Healthcare - will not be selling policies on the exchange's individual market.

"There are only three statewide health insurers selling in Covered California," he said, "which means less statewide competition than we'd hoped to see in the new marketplace."

Some of the state's 5 million residents who aren't insured through employers but whose incomes make them ineligible for the federal subsidies that would lower their premiums also fear they may be in for a little sticker shock next year. Katharine King, a 59-year-old, self-employed concert and event producer in Santa Monica, calculates that her monthly premium could jump more than $100 a month, from $497 to nearly $600.

"The Affordable Care Act is still not all that affordable unless you qualify for a federal subsidy, which I will not," she said. "It will likely be another case of the middle class kind of getting screwed." (SACRAMENTO BEE, LOS ANGELES TIMES, SAN FRANCISCO CHRONICLE, ASSOCIATED PRESS)

MAJOR TAX RELIEF DEAL REACHED IN IA: Negotiators from Iowa's Republican-controlled House and Democrat-controlled Senate reached agreement last month on a sweeping tax relief plan that represents a merger of initiatives proposed by members of both chambers and Gov. Terry Branstad (R). Among other things Senate File 295 would create a $50 million business property tax credit that would gradually increase to $125 million by fiscal year 2017, lower the property tax assessment growth cap for residential and agricultural property from 4 percent to 3 percent, and increase the Earned Income Tax Credit from 7 percent to 14 percent in 2013 and 15 percent in 2014.

The property tax proposal alone is expected to cost the state $136 million in fiscal year 2015 and nearly $384 million by fiscal 2024 to "backfill" local government revenues.

"I would say that this is not our perfect bill," said Senate Majority Leader Michael Gronstal (D). "We would have focused this differently. We would have focused more resources on small businesses."

But Gronstal added that the state's voters had chosen to put both Democrats and Republicans in charge of the government and "we think that behooves all of us to work together." (DES MOINES REGISTER, STATE NET)

KS GOV'S 'GRAND EXPERIMENT' SUFFERS SETBACK: The Kansas House rejected Gov. Sam Brownback's (R) $857 million tax proposal last week, throwing the governor's so-called "grand experiment" - an income-sales tax swap to try to stimulate the state's economy - into turmoil with the legislative session already five days beyond its scheduled adjournment date.

House GOP leaders urged their super majority caucus to approve the plan, which would have set the state sales tax at 6 percent, which is scheduled to fall to 5.7 percent on July 1; phased out itemized income tax deductions; and lowered the top income tax rate from 4.9 percent to 3.5 percent and the bottom rate from 3 percent to 2.3 percent.

House Speaker Ray Merrick (R) told the caucus that if the plan didn't pass, "Look to be here a long time. We start at ground zero."

But the plan fell on a bipartisan 42-71 vote, with numerous freshman Republicans elected on an anti-tax platform opposing it. It probably didn't help matters that Senate Majority Leader Terry Bruce (R) said a week earlier that freshmen House members were having trouble understanding tax policy because they had "spent half the session trying to find out where the bathrooms are."

Senate President Susan Wagle (R) said the next move might be to focus on the state budget and have the House vote on an appropriations bill agreed on by House and Senate GOP leaders. (LAWRENCE JOURNAL-WORLD)

MN ENACTS $2.1B IN TAXES: In contrast to the moves to cut or eliminate individual and corporate taxes in much of the country, with Republicans controlling nearly half of the nation's statehouses, Minnesota Gov. Mark Dayton (D) signed legislation last month imposing $2.1 billion in new taxes, mostly on wealthy residents. The tax package, backed by the Democratic-Farmer-Labor Party, which controls both of the state's legislative chambers along with the governor's office, is intended to provide funding for expanding early-childhood education programs, freezing tuition at state universities, and providing jobs initiatives and property tax refunds, as well as closing the state's budget hole.

"It is just what government should be doing, and just what Republicans refuse to acknowledge government should be doing," Dayton said of the plan. (WALL STREET JOURNAL, STATE NET)

BUDGETS IN BRIEF: The WISCONSIN Legislature's Joint Finance Committee signed off last week on giving Gov. Scott Walker (R) broad authority to sell state property without seeking competitive bids. But it stipulated that lawmakers would still have to approve any sale (LAWRENCE JOURNAL WORLD). • FLORIDA has paid back the $3.5 billion federal loan it took out to pay weekly unemployment benefits during the recession. The final payment of $9.2 million last week went toward interest, which totaled $99.5 million (TAMPA BAY TIMES). • NEW JERSEY Gov. Chris Christie (R) announced a $300 million federally funded program to buy 300 flood-prone homes along the Passaic River and 1,000 homes damaged by superstorm Sandy (NORTHJERSEY.COM)

- Compiled by KOREY CLARK

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