February 16, 2011
Host: Ted Simons
- A mid-week legislative update with Arizona Capitol Times reporter Luige del Puerto.
- Luige del Puerto - Arizona Capitol Times
| Keywords: update
Ted Simons: it's been a big week at the state capitol. The governor called a special session to pass a job creation bill, and we get word from the feds that Arizona doesn't need permission to make massive cuts to Medicaid. Here with the details is Luige Del Puerto, legislative reporter for "The Arizona Capitol Times" and a regular on "Horizon's" mid week legislative update. Good to see you. Thanks for joining us.
Luige Del Puerto: Thanks.
Ted Simons: Let's get to this special session jobs bill. A done deal. An easy done deal?
Luige Del Puerto: Well, the legislature passed the bill with comfortable votes. It received 18 votes in the senate, it received more than 30 votes in the house. Was it easy? I think at some point there was some point when it looked like the momentum for the bill might have been ebbing just a little bit, but it did manage to get it through today.
Ted Simons: What were some of the concerns and some of the objections?
Luige Del Puerto: Well, you can look -- really the concerns are two. One is that the process, the way this bill has been for some critics rushed through the system, rushed through for a vote, and two, many Republicans -- many democrats and a number of Republicans have concerns about the merits of the bill. You have people like Ron Gould, Linda gray, who said that we have been stuck in committee meetings, and now we're passing it in three days. It's a 270-page bill, we needed more time to read it.
Ted Simons: We had speaker Adams on last night, I raised that point to him, and he said that's hogwash. There's nothing new here, everyone knows what's in there, and he said that those credits were unfounded.
Luige Del Puerto: Well, it's true that many of the concept and many of the provisions are not new, many of the provisions in this bill we saw in last year's jobs bill. The reducing -- reducing corporate income taxes, those are not new. But the bill itself, the package itself, the whole bill is new in the sense that many people haven't seen -- lawmakers like lawyer like Laurie Klein, john Smith, they're new to the legislature, so for them, some of these provisions may be novel.
Ted Simons: Real quickly, one more concern was the commerce authority and what was perceived as a lack of oversight on the commerce authority. Talk to us about that.
Luige Del Puerto: Many Republicans, a few Republicans, in the senate and in the house had concerns that the legislature would have little oversight about this new entity, because it's a private public partnership entity, its sole mission is to attract business to the state. They're saying we're giving this entity, this new agency money, and they have -- their mind complete or blanket control over how to spend that money. And to them, that's just not the way they should be doing things.
Ted Simons: Slush fund I think was a term tossed about today?
Luige Del Puerto: Ron Gould called it a slush fund. I'm not sure if Farnsworth called it corporate welfare on the floor, but he did mention the phrase in an interview after. But yes, basically giving an entity the authority to spend money is something that is causing some heart -- cost some heartburn among some few conservative Republicans.
Ted Simons: The governor is expected to sign this, and off we go, correct?
Luige Del Puerto: Off we go in the sense that this bill is done, it is done for now. There are talks that we might see some tweaks maybe in other bill at some point in the future. Certainly the discussion for this bill may be over, but the discussion over the merits of this bill, the contents of this bill I think those are going to continue.
Ted Simons: All right. Talk to us now about the feds basically saying Arizona, you're so worried about this waiver, what waiver? We don't care about -- you don't need a waiver. What's going on here?
Luige Del Puerto: Yesterday we got a call from the federal -- from basically the health department saying we're going to send this letter to the governor, and it's going to essentially say that look, Arizona, you actually don't need to ask for permission, if you want to cut 250,000 people off AHCCCS. In order to expand the coverage, which we did with prop 204, we had to ask the feds permission. We needed a waiver in order to do that. And that waiver is expiring in September of this year. The feds in this letter basically said, you don't have to reapply for that waiver. In effect they're saying you can go ahead and cut 250,000 people and you don't need to ask our permission.
Ted Simons: You don't need a waiver for the waiver.
Luige Del Puerto: You don't need a waiver for the waiver. And I think it was certainly a surprise to many people. We didn't expect that from the feds.
Ted Simons: Why was it -- you know, sitting back you wonder, didn't anybody see this or check into this or research this?
Luige Del Puerto: You know, I think that's a good question for the governor's office. Did we know this one? It's tough to say. What we know is that all these ideas -- this particular idea of cutting 280,000 off AHCCCS came about as a result of the budget crisis. And it came about -- so did we have time to look at every nook and corner and try to see whether -- whether we needed it or not? It's tough to say.
Ted Simons: But there is, this doesn't mean the governor and the legislature will get their way necessarily, because a lawsuit is almost certain, because of breaking of prop 204.
Luige Del Puerto: Right. And democrats have always been saying, we can get the waiver, we may not get the waiver, now we don't need it, the fact is this population is protected under prop 204, you cannot just cut them off AHCCCS without asking voters' approval, because they were the ones who created this program.
Ted Simons: The courts are next for this one.
Luige Del Puerto: It is very likely from what we've seen and heard that this will get challenged in court.
Ted Simons: Before we let you go, we've got a birther bill, a birthright bill, give us an update on both.
Luige Del Puerto: The birthright legislation was tabled, not tabled, it was postponed until next week. They didn't want to do this one and do the other at the same time. The birther bill surprisingly failed in the judiciary committee hearing on Monday. If you look at these two bills and where they are, where they are is they're not really moving that far right now. And it just goes to show you that there is certain reluctance in the state legislature, specifically in the senate, to alter or radically change how we do, for example, elections and how we -- or how we define who is an American citizen and who is not.
Ted Simons: These are the kinds of things that could pop up at any time, correct?
Luige Del Puerto: Yes. And next week we are going to hear this birthright legislation. The question is, well, we are -- pass out of the appropriations committee. The question is, does it have a vote to get out of the senate, and if it gets out of the senate, will Kirk Adams take it up?
Ted Simons: We'll keep in touch with that. Good to see you.
Luige Del Puerto: Thank you.
- Laurie Liles, President and CEO of the Arizona Hospital and Healthcare Association, discusses the state’s proposed cuts to Medicaid and possible ways to avoid, or limit, those cuts.
- Laurie Liles - President and CEO, Arizona Hospital and Healthcare Association
| Keywords: health
Ted Simons: The governor's plan to eliminate Medicaid coverage for 280,000 adults would save the state about $541 million. But Arizona would lose over $1 billion in federal matching funds. To keep some of that federal money and limit the number of people who would lose their Medicaid health coverage, Arizona hospitals are proposing to tax themselves. Here to explain is Laurie Liles, president and CEO of the Arizona hospital and health care association. Good to have you here.
Laurie Liles: Good to be here. Thank you for having me.
Ted Simons: Before we get too deeply into this, what are your thoughts with regard to the feds saying the state didn't need a waiver to begin with?
Laurie Liles: Well, this was a significant development today. It was the latest in a series of letters exchanged between Governor Brewer and secretary Sebelius, and it was sort of -- sort after new twist on the issue, since the whole focus up to now has been on the state seeking a waiver from maintenance of effort requirements associated with the health care reform bill. And now the secretary's latest message to the governor is that they don't need that type of waiver, they could get a different type of waiver.
Ted Simons: And real quickly, the director also said that the feds would be able to help the state in establishing some kind of provider tax. Let's get to the provider tax. What exactly are we talking about?
Laurie Liles: Sure. Well, provider assessments are mechanisms that a number of states use to generate additional federal dollars toward their Medicaid program. And the proposal that we are prepared to support is very similar to some that have been enacted in other states. We think it's a great alternative to the AHCCCS eligibility cuts, because we're very concerned about people losing their health care coverage.
Ted Simons: How much of an assessment are we talking about here?
Laurie Liles: We have supported a proposal to assess the hospitals about $300 million, $200 million of that would go to support, AHCCCS eligibility as an alternative to the proposed eligibility cuts. We think it's important at this point, though, for people to have an open mind and be prepared to be flexible.
Ted Simons: What kind of time frame are we talking here as far as how long this assessment would be in acted?
Laurie Liles: We think it's important that it be temporary. The economy is starting to recover, we don't know what's going to happen with state revenues. So a temporary time frame is a really important concept.
Ted Simons: One year, two years?
Laurie Liles: I think -- again, very important for people to keep an open mind and be flexible, we want to make sure people do not lose their health care coverage and we think it's important for us to be flexible about how we get there.
Ted Simons: Talk more about that flexibility and what you're seeing as things that are on the table that can be moved around a little bit to get something done.
Laurie Liles: In terms of --
Ted Simons: the assessments.
Laurie Liles: We think it's really important for people to realize that hospitals are a major stakeholder in maintaining AHCCCS eligibility, but we're only one of several stakeholders. Very important for other provider groups. The plans that contract with health plans to step up and take a hard look at whether they could be part of a proposal as well.
Ted Simons: Talk about the impact to hospitals right now. What you're seeing right now, what could happen if the $541 million budget cut happens, and reimbursement is reduced. And these folks, there's so many things to ask. Reimbursement is one thing, what happens to these folks who are knocked off AHCCCS?
Laurie Liles: That's our primary concern. There is great human cost. Economic cost, certainly, but great human cost associated with the proposed eligibility cuts. Think about patients who may be undergoing treatment for diseases like cancer, or other chronic illnesses, they're right in the middle of their treatment, now they lose their coverage, we don't want to see that happen to anyone. So it's very important to keep our focus on the patients. And that's our primary concern. Beyond that, you mentioned what is the financial impact on hospitals, it's significant. Important for everyone to remember that when the state cuts $1, we lose $2 in federal matching funds. So the impact on hospitals and other providers and the economy as a whole is much greater. So your specific question, what is the financial impact on hospitals, we would lose $540 million in state and federal funds as a result of Governor Brewer's proposal to cut 280,000 people from the AHCCCS eligibility.
Ted Simons: OK. What happens in terms of the hospitals recouping some of that money? That's a lot of money that goes away, it's got to come back some way. How does it come back?
Laurie Liles: Right. So hospitals would be forced to make very, very difficult choices. They would have to look at their own work forces in this time when we are trying to retain and create new jobs. The legislature certainly very focused on that today. This would result in hospitals looking at their own work forces, making decisions about services they provide to their communities. And hospitals also have to shift those costs when they lose funds from state and from government payers, they have to shift those costs on to private payers. So you and I, all of us who purchase private health insurance, we end up paying more. It's a hidden health care tax.
Ted Simons: When you mentioned these kinds of things to lawmakers, what kind of response do you get?
Laurie Liles: We are talking about all of these things with legislators. And I think there is a recognition that the proposal to cut eligibility does have a direct impact on the economy. A number of legislators have expressed concern about the loss of jobs associated with that. Economists that have looked at the proposed eligibility cuts say that it would result in the loss of 30,000 jobs in the private sector. 13,000 of which would be in health care alone. So legislators are concerned about that. As they should be. There is a mixed reaction to the proposal that we've brought forward this essential assessment on hospitals. I think there is everything from appreciation that there's another alternative to, well, we need to learn more about this, and some folks who have criticized it, too little, too late is the comment we've heard. We just ask everyone to keep an open mind. We think it's a viable alternative, we'd like to see other provider groups join and be part of that as well. We need to make sure we keep eligibility. Where it is.
Ted Simons: So basically what you're telling us is that all ideas, again, are on that table, and everything is being considered. Is there a best way for Arizona to handle this situation? The governor and lawmakers say, we simply can't afford these folks that are on the expanded Medicare -- Medicaid rolls, and other folks are saying, we can't afford these people don't get help. what's the best way?
Laurie Liles: Well, you put your finger on it. There's no free lunch. Every choice that the legislature and the governor make has consequences. So what we're asking is, the fact-based look at the whole big picture, what's the human cost, what's the impact on health care providers. What is the cost in terms of jobs, and let's all come together, all stakeholders need to be a part of this process. We've again, we believe we have a very viable alternative, we just ask that people take a hard look at it.
Ted Simons: As far as other issues regarding the hospitals in Arizona, what are you seeing? What is the major concern? Obviously this is a biggie. What else is going on?
Laurie Liles: Well, while we're dealing with all of this, we're still struggling through the recession, like every other business in the state is, hospitals have already absorbed significant costs -- cuts from AHCCCS, some $700 million since the recession began. So they've had to make very hard choices up to now. Beyond that, while we're dealing with this latest challenge, with AHCCCS, and the recession, and those ongoing challenges, we have to implement health care reform. And so hospitals are very busy positioning themselves and partnering with other players and making sure that assuming health care reform goes forward as it's currently written, we need to be prepared to take care of our patients in that new environment.
Ted Simons: I was going to say, that new environment will look a lot like this environment coming up in just a few years, 2014, correct?
Laurie Liles: Right.
Ted Simons: So basically get ready then by seeing what's happening now and working toward it.
Laurie Liles: Yes. Well, we appreciate that the federal government kind of built in some ramp-up time, but in the meantime, everyone is just working very hard to make sure that they're in the best position to take care of their patients.
Ted Simons: It's a complicated topic, and there's so much going on. Thank you very much. Good to see you here. We'll hope to have you back again.
Laurie Liles: Thank you.
- Tax filing season is upon us. Find out about any changes in tax laws that might affect your return from IRS Spokesman Bill Brunson and Anthony Forschino of the Arizona Department of Revenue.
- Bill Brunson - IRS Spokesman
- Anthony Forschino - Arizona Department of Revenue
| Keywords: taxes
Ted Simons: It's time once again to file your state and federal tax returns, but before you send them off, you might want to check out what our next guests have to say. I recently spoke with Anthony Forschino of the state department of revenue, and Bill Brunson of the internal revenue service about recent tax law changes and tips that can help you with your tax return. Thank you so much for joining us tonight on "Horizon."
Ted Simons: we got a few extra days this year --
Bill Brunson: three.
Ted Simons: How did that work out? Just calendar?
Bill Brunson: Kinda sorta. The district of Colombia has a federal holiday that affects tax laws, so it falls on a Friday, which then pushes the 15th date to Monday, April 18th. So folks have three additional days to file and pay any taxes due. There's also a change in the extension due date. Normally that falls on October 15th, it's going to fall on October 17th because it falls on a Saturday, a non business or banking day, gets pushed forward to the next Monday. So people have three additional days this year to submit and pay any tax.
Ted Simons: Let's talk about some other changes here. In Arizona, we've got this, I didn't pay enough fund. What's that all about?
Anthony Forschino: It's a new check-off. We've always had lots of check-offs where you can check off, give to the wildlife fund, or whatever. This is a new check-off which means you can give part of your refund or actually pay some money into it, it's, I didn't pay enough fund. If you check it and give money, it goes to the general fund.
Ted Simons So the lawmakers can do whatever they want with your refund.
Anthony Forschino: Yes.
Ted Simons: And I'm supposed to check that.
Anthony Forschino: Please, check it. We need money.
Ted Simons: OK. Standard deduction, now, correct me if I'm wrong, same for Arizonans, but different for out of state folks?
Anthony Forschino: Two things. It's -- the standard deductions remaining the same for Arizona taxpayers, and usually is increased each year by an index. This year the index, the consumer index went down, so it stays the way it was. The change for nonresidents is that they used to get a full standard deduction on their returns. What's happening now is they have to prorate it just like they prorate their income, they prorate their deduction.
Ted Simons: One more thing, it's a private school tuition tax credit. That's interesting in that the dates, you can do it now and still apply it then?
Anthony Forschino: What's changed this year is that you can give between January 1st and April 15th, an elect to take it in the prior year.
Ted Simons: OK. Back to the federal side now, what is the IRS free file? It.
Bill Brunson: allows all Arizonans to submit online through the IRS's website, their tax return. So everybody can file electronically online through IRS.GOV by clicking on the "free file" icon. There's two forms, traditional free file, which is based on $58,000 or less of income, and then there's fillable forms. But it allows all Arizonans to submit your tax return on online for free.
Ted Simons: Wow. Interesting. The earned income tax credit, again, I think -- it confuses a lot of folks. What -- even the title is confusing. Tell us what this is.
Bill Brunson: Basically for workers who work and don't make a lot of money, $49,000 or less. You can have children or not have children on the return that you're feeling, it will cause a refund, increase the refund, or reduce the tax liability, moneys that you owe. You have to file a tax return, you have to have a valid social security number, have earned income, and that's pretty much it. If you earn around $49,000 or less, it's money that is there for people who are in that tax bracket or that area.
Ted Simons: There's also a payroll tax cut that changes a little bit here? What's that all about?
Bill Brunson: 2% from 6.2 to 4.2 on social security taxes withheld on wages paid to the worker, so that over the course of the year if you earn $50,000, then you'll see a small portion of that reduction in each pay period, which will equate to a thousand dollars out of $50,000 salary. Now, will this affect your social security benefits later on? No, it will not.
Ted Simons: It won't?
Bill Brunson: It will not. So this year folks will see a minor change in the income if as a wage earner, and it's based on a maximum of $106,800. And that's where social security taxes stop for the worker.
Ted Simons: Unemployment compensation. What's changed there?
Bill Brunson: 2009, the first $2400 was not includable in your income. 2010, unemployment compensation, all of it is includable in income. That's the way it was in prior years. And it is subject to tax. And some people have withholdings, some people don't. But this year in 2010 if you received unemployment compensation, all of it goes on the return.
Ted Simons: All right. Arizona did not adopt some federal provisions. Correct?
Anthony Forschino: Last year. What happened was the Arizona didn't adopt the $2400 deduction for unemployment, so they had to add it back. To be taxed in Arizona, there was the -- there was a deduction for -- sales tax paid on new vehicles that was not taxed for federal, had to be added back in Arizona. That only affected the 2009 year. However, people are needing to file an amended return if they had already filed their 2009. The department has created a form that they can apply -- they can file their amended return by October 15th of this year, and they will have no penalty and interest on the additional tax.
Ted Simons: OK. Withholding rates, changes there?
Anthony Forschino: Yeah. What happened was, last year, July we changed our withholding rates to break away from the federal government. We were a percentage of the federal. We broke away from that and have our own percentages. That started in July of last year. This year in January we created a new form, same percentages that were in July but we've created one more lower percentage for taxpayers.
Ted Simons: Am I to understand the IRS is now gotten into the smart phone app business?
Bill Brunson: Exactly. Individuals can download for free from the Android marketplace or the apple App store an -- app store, an application for their smart fund that will allow them to check on their refund 72 hours after they file it. They can also get tax law updates. If you have a smart phone, you've electronically filed your tax return, 72 hours later you can check to see where that money is at.
Ted Simons: And we should by now, as of this week, we should have our W-2s, right?
Bill Brunson: January 31st was the due date these items are to be made available to the taxpayer, which generally means they're mailed to them. So if you haven't received that W-2 or that 1099 information return, go to the source, ask that it be provided to you. And if you don't, then you can talk to the IRS and we'll work with you as well the issuer and make sure you get this idea or substitute and file on time.
Ted Simons: In these times of economic, just craziness out there as far as jobs are concerned, what do you tell folks who see their incomes changes radically? They get a job, they lose a job, that kind of thing. What advice -- things to watch out for out there?
Anthony Forschino : Not really. I don't know that -- there's nothing really to look for in tax purposes. Hopefully everybody who's got a job or didn't get a job I don't know is still getting the withholding the same way and not having to worry about paying at the end. That's very important that you don't -- don't start to think you should reduce your withholding and then you end up with a big in April.
Ted Simons: I guess that's my point. Some folks do that, they think withhold can stays the same, but it could really mess things up.
Bill Brunson: It changes on the fact of circumstances of the individual. But if an individual has a payment arrangement with the internal revenue service and they are experiencing financial difficulties, we can hold up a payment so that they can skip it, or we can reduce the payment, or we can put it in a hold status for them. It just depends upon them -- the individual communicating with the IRS on the this issue, if they are on a payment arrangement.
Anthony Forschino: The state is in the same situation. We have our collection have held payments up and based on hardship.
Ted Simons: All right. Very good, gentlemen. Thanks for joining us. We appreciate it.