House takes up private option
Senate to weigh tax-bill revision
This week, the Arkansas House of Representatives will decide the fate of the private option for the fiscal year starting in July, while the Senate will consider sending Gov. Asa Hutchinson a bill cutting income-tax rates and repealing part of a capital-gains tax cut enacted in 2013.
Lawmakers also will dive more into the details of the governor’s proposed $5.2 billion budget for fiscal 2016 and try to develop a legislative package to help the state with its prison crowding.
Today is the 22nd day of the 90th General Assembly’s regular session. Legislative leaders are aiming to complete their work in 85 days; the previous regular session lasted 101 days.
“We are kind of getting into the meat of the session,” said House Speaker Jeremy Gillam, R-Judsonia.
Through Arkansas’ private-option program, the state uses federal Medicaid dollars to purchase private health insurance for low-income adults.
But the state will have to start picking up 5 percent of the tab in fiscal 2017 and gradually increase its share to 10 percent in 2020. By that point, Arkansas would be spending more than $200 million a year to keep the program going, Hutchinson said.
That prompted the Republican governor to call on the Republican-controlled Legislature to reauthorize funding for the private op-
tion through the end of 2016 and create a legislative task force to recommend changes to the state’s entire Medicaid program, including an alternative program for private-option participants.
Last week, the Senate approved Senate Bill 96 to create the 16-member legislative task force and Senate Bill 101 to reauthorize funding for the private option in fiscal 2016 as part of the appropriation for the Medical Services Division.
This week, it’s the House’s turn to deal with the future of the private option — a term that Hutchinson has called “politically toxic.”
The private option deeply divided Republicans on the campaign trail last year and during the 2013 and 2014 legislative sessions.
Both years, the Legislature barely reached the threefourths vote required to authorize funding for the program.
This time, the Senate voted 29-2 to continue the private option another year.
Hutchinson’s call for ending the program at the end of 2016 has divided private-option opponents.
Foes call the private option “Obamacare” because funding for the program is made available under the federal Patient Protection and Affordable Care Act that was signed into law by President Barack Obama in 2010.
Supporters say the private option isn’t “Obamacare” because the program was created and operated by Arkansans and differs substantially from the federal model. Arkansas had to get federal waivers to use federal Medicaid funds for the private-option program.
The program extends insurance coverage to adults who have incomes of up to 138 percent of the poverty level — $16,105 for an individual, for instance, or $32,913 for a family of four. More than 180,000 Arkansans have enrolled in private health insurance through the private option, according to the state Department of Human Services.
House Public Health, Welfare and Labor Committee Chairman Kelley Linck, R-Flippin, said the committee on Tuesday will consider SB96 by Sen. Jim Hendren, R-Sulphur Springs, that creates the legislative task force to recommend changes in the Medicaid program.
“We’re confident that we have votes for the funding bill [SB101]” in the 100-member House, where 75 votes are required for approval, Linck said Friday.
“We think enough people are going to come on board with this task force to the point of commitment that we think they are going to vote to commit the money,” he said.
“Why vote for that [task force] bill if you are going to kill the whole thing without funding it anyway? If you believe in that bill, you believe in funding it. I believe we have plenty of votes to do it,” Linck said.
Asked whether there are at least 75 votes lined up in the House to approve SB101, Gillam said, “I feel like there is a lot of support.
But he said, “We are going to work through that [this] week. We’ll see where we are at.”
Both Gillam and Linck have voted to authorize funding for the private option in the past.
Numerous Republican lawmakers, particularly in the freshman class, campaigned against the private option in their fall campaigns, so they’re reluctant to reauthorize it, even if it’s what Hutchinson wants.
Rep. Laurie Rushing, R-Hot Springs and chairman of the House Freshman Caucus, said it “goes back to where we started with our campaigns. There was a big majority of the freshman class that did run against the private option.”
Rushing said several freshman members have asked if they could hold a caucus meeting before SB96 and SB101 reach the floor to discuss some of their concerns and talk about the possibility of delaying a vote to get questions answered if they need more time.
In addition to the private option, tax cuts also will be at the top of this week’s legislative agenda.
Last week, the House and Senate approved Senate Bill 6 by Senate President Pro Tempore Jonathan Dismang, R-Searcy, to grant the income-tax rate cuts that Hutchinson campaigned on in 2014.
But the House changed SB6’s repeal of all of the capital-gains tax cuts enacted in 2013 so only part of the tax cuts would be repealed. The Senate Revenue and Taxation Committee will consider the House’s amended version of SB6 this week; it’s expected to forward it to the full Senate.
Dismang said he hopes the Senate tax committee will consider SB6 today and that the Senate will consider sending it to the governor Tuesday.
If SB6 becomes law, the income-tax rate for Arkansans with taxable incomes between $21,000 and $75,000 would drop. The rate would drop from 6 percent to 5 percent on incomes between $21,000 and $35,099, starting next year. The rate on incomes between $35,100 and $75,000 would fall from 7 percent to 6 percent.
The Senate-approved version of SB6 would repeal Act 1488 of 2013, which increased the net capital-gains exclusion from the state income tax from 30 percent to 50 percent, starting this tax year. Act 1488 also provided an income-tax exemption for that part of capital gains received by a taxpayer in excess of $10 million starting last tax year. The law would be repealed retroactive to Jan. 1 of this year under the Senate-approved version of SB6.
The House tax committee Tuesday changed the capital-gains provisions of SB6, allowing it to remain at 50 percent for capital gains in January 2015 before falling to 40 percent this month.
Dismang said he’s asked some senators to focus on the prison crowding and recidivism, and “hopefully they will be able to make presentations on at least the framework of the bill sometime [this] week.”
Senate Judiciary Committee Chairman Jeremy Hutchinson, R-Little Rock, said, “we are meeting with Asa [this] morning to present the bill that we have all been working on, including his staff.
“But it is going to be a big bill and there might be other ones, too,” he said. “It will include some funding for bed space, among a lot of the reforms on probation and parole.”
Asked how he would finance the additional prison space, Jeremy Hutchinson said, “I have got ideas.”
But he said he doesn’t want to share details in advance of his meeting with Asa Hutchinson, his uncle.