You may have heard that the Senate Democrats took up the issue of Medicaid expansion this week. I thought now is a good time to address the myth that expanding Medicaid doesn’t cost Iowa taxpayers any money because the federal government pays 100% of the expansion. This is a myth.

Expanding Medicaid the way Democrats have proposed has two fundamental problems:
1-It costs more every year for the same services.
2-It doesn’t make Iowans healthier.
Currently Iowa has 400,000 people enrolled in Medicaid. The FY 14 estimate is that this will cost $ 1.2 billion in state dollars which is $88.5 million more than last year. This cost grows every year because the number of Iowans who qualify grows, if expansion is approved or not. Since 2000, Medicaid enrollment has gone up 88% and Medicaid expenditures are up 226%. With or without Obamacare, the cost of Medicaid is going up.

Additionally, there are between 52,000 and 81,000 people who qualify for Medicaid but are not enrolled. The cost of providing Medicaid to these Iowans over the next seven years is estimated at between $327 million and $564 million of additional state funds. Under Obamacare, these people have to be enrolled in Medicaid because they are not eligible to receive health insurance. The state is required to pay for these people at the current rate. These people ARE NOT among the new enrollees which the federal government promises to cover at 100% for three years. Once again, the cost on Iowans goes up again.
Finally, you have 150,000 people who will become newly eligible for Medicaid under Obamacare. The federal government promises to pay 100% of the cost for these people for three years. After three years, the federal share decreases.

We believe it is irresponsible and foolhardy to believe the federal government will live up to its funding promises. Just last week the U.S. Senate decided to repeal one of the key revenue generators for Medicaid expansion when it repealed the medical device tax. With that revenue stream gone, the feds are forced to find it elsewhere. A logical and easy place to go is lower the percentage they will reimburse states for the newly-eligible Medicaid recipients.

It is a myth that expanding Medicaid doesn’t cost the hardworking taxpayers of Iowa any money. Medicaid costs are going up, even if it’s not expanded. But Medicaid is going to cost EVEN MORE if we DO expand.

We need an Iowa solution. Right now we have a Medicaid program that people on both sides of the aisle believe is broken. That broken system treats Iowans over and over for the same chronic diseases and the same medical issues while Iowa taxpayers keep paying for it, over and over. At the same time, none of these Medicaid recipients are getting healthier. With an outcomes-driven program, like the Governor’s Healthy Iowa Plan, we have hope of containing costs or making Iowans on another Medicaid program healthier.

Once Iowa decides to jump into Medicaid expansion with both feet, there is no backing out. The Supreme Court reaffirmed our right to decide if we want in, but it also did not stipulate a right to leave once we’re in. Regardless, this would leave needy Iowans out in the cold – we need an Iowa program now.

The hardworking taxpayers of Iowa are not interested in ceding control of the fastest growing portion of the state budget to Washington, DC.

I will continue to work for an Iowa solution that:
Improves the quality of care — Provides a benefits package similar to private care that includes in and outpatient services, prevention services, prescription drugs, home health, durable medical equipment, therapies and some transportation.
Lowers costs — Implements personal responsibility mechanisms that have worked in other states and the private sector to encourage members to be cost-conscious consumers of health care as well as healthy behaviors.
Makes Iowans healthier — Rewards health care providers for helping make Iowans healthier.

As always, please let me know if you have any questions or concerns – you can contact me at my office at (515) 281-3521 or by email at kraig.paulsen@legis.iowa.gov.

Two years ago, Iowa faced a $900 million budget shortfall. Today, we have an ending balance of $688 million and our budget reserves are full. This is a fundamental change in legislative decision making, driven by Iowans. This is a significant departure from how government operated in the past where every dollar was spent, even some we didn’t have.

House Republicans have instilled a fundamental culture change and we will not retreat now. As we began moving budget bills through the House this week, we have remained committed to the principles used to get our fiscal house in order:
• We will not spend more money than the state takes in;
• We will not use one-time money to pay for on-going expenses;
• We will not intentionally underfund entitlement programs to balance the state’s budget;
• We will return unused tax dollars to Iowa’s taxpayers.

As a reminder, the overall amount of revenue that is available to be spent in Fiscal Year 2014 is $7.1822 billion. This amount includes the $688.1 million in the ending balance that is an overpayment by Iowa taxpayers. The amount of ongoing revenue that is available is $6.5377 billion. The Fiscal Year 2014 proposal by House Republicans spends $6.4139 billion. This is a 3 percent increase over last year’s spending level and it protects priority services in the areas of education, health and human services and public safety.

This budget proposal includes the funding necessary to maintain our commitment to education; including the funding necessary to allow the Regents universities to freeze tuition, $10 million increase to the community colleges, $1 million increase for Iowa Tuition Grant needs, and a two percent increase in supplemental state aid for our local schools.

The House Republican budget spends 98 cents for every dollar of state revenue.

While revenue growth is currently ahead of projections, there is a great deal of uncertainty about future revenue due to the on-going drought conditions, slow economic growth, and the federal sequestration.

This week we passed the first of our budget proposals on the House floor – the Transportation, Administration and Regulation and Education budgets. With these bills we remained committed to the budgeting principles that put the state on solid ground and bring certainty to Iowa taxpayers and employers.

Here are links to the analysis of each of these budget bills:
http://www.iowahouserepublicans.com/wp-content/uploads/HF-602-Transportation-Budget.pdf
http://www.iowahouserepublicans.com/wp-content/uploads/HF-604-Education-Budget.pdf
http://www.iowahouserepublicans.com/wp-content/uploads/HF-603-Administration-and-Regulation-Budget.pdf

As always, if you have any questions or concerns, please feel free to contact me at my office (515) 281-3521 or by email at kraig.paulsen@legis.state.ia.us

On Wednesday, the House passed House File 478, a bill that leaves more money in Iowans’ pocketbooks and reduces Iowans’ income taxes.

House File 478
• Gives Iowans a choice when paying their income taxes, either the current system or a 4.5 percent flat tax with zero deductions or credits. No one will pay higher income taxes under this plan.
• Makes Iowa’s tax system simpler, flatter, and fairer.
• Raises the filing threshold so that the first $6,235 (or $12,450 for married couple) would not be taxed.

The nonpartisan Legislative Services Agency (LSA) predicts that with the House proposal, close to 492,000 taxpayers will see their taxes reduced. With the flat tax option, the greatest number of taxpayers who benefit fall in the $30,000 to $40,000 income bracket.

The bill also creates a permanent mechanism to return any overpayment of taxes back to Iowans. Currently, Iowans are paying too much in their taxes. Once the legislature and the governor set budget priorities and reserve funds are full, the taxpayer trust fund collects anything leftover. This bill sends any leftover money back to the taxpayer through a credit on their tax forms. This reduces the tax liability of any Iowan paying income taxes when the state collects more than it needs.

Both the amendment and the bill are consistent, fair and simple. Every Iowan is treated the same. Every Iowan is given the same choice between the current system or the new flat tax system. Every Iowan is given the same credit if the state does not spend everything it collects.

To see the full staff analysis of the bill, you can click here:
http://www.iowahouserepublicans.com/wp-content/uploads/HF-478-Flat-Tax.pdf

And to read the full bill, you can click here:
http://coolice.legis.iowa.gov/Cool-ICE/default.asp?Category=billinfo&Service=Billbook&menu=false&hbill=hf478

The bill passed the House on a party-line vote and was sent to the Senate for their consideration.

There is a fork in the road – should the legislature take the path of spending limited one-time revenues on recurring expenses growing government or should the legislature send this money back to Iowa taxpayers? House Republicans believe any overpayment of tax dollars belongs in the pockets of Iowans, not as a pot of money for the politicians to spend and brag about in the short term knowing full well that the budget cuts will be necessary in the future.

As always, please feel free to contact me if you have any questions or concerns – my office phone number is (515) 281-3521 or by email at kraig.paulsen@legis.iowa.gov

This week was the first legislative funnel. This is a self-imposed deadline that the legislature sets to help narrow bills – all non-money bills must clear a House committee by Friday in order to remain alive for the rest of the year. Those bills that do not survive the funnel are eligible to be debated again next year.

To view an updated list of bills that remain eligible, please visit the House Republicans’ webpage at www.iowahouserepublicans.com

While much attention was given to the funnel this week, two bills of great importance to Iowans began working their way through the process but did not receive much attention. The governor’s property tax bill and the House Republicans’ property tax relief and reform bill both cleared subcommittees this week. They are now eligible to be considered by the full Ways and Means committee.

For over a decade, property tax reform has eluded legislatures. Last year, the Senate Democrats, House Republicans and Governor Branstad set out to come to resolution on Iowa’s property tax problem. Once again, real reform and relief was not accomplished. As we begin the debate on property taxes this year, the need for change is growing more desperate.

Now is the time for relief
–If we do nothing, the hardworking taxpayers of Iowa are staring down the barrel of a $2.6 billion property tax increase over the next 10 years, with the majority of that falling to homeowners. Homeowners have been and will continue to be shouldering much of the burden as the rollback turns into the roll up.

–Property tax reform affects Iowa’s economy and the lack of it is an impediment to putting people back to work. Our uncompetitive property tax system is a burden on job creators and prohibits businesses of all sizes from expanding, hiring or even settling in Iowa.

– ALL Iowans deserve to see relief in their tax bill. Additionally, we must not shift the burden to any other class of property. As local governments increase their collections by $2.6 billion, the average growth for all classes of property will increase by 4.4 percent each year. It is the Legislature’s job to ensure property tax relief is permanent, predictable and significant.

Proposals on the table
–House Republicans’ proposal is a simple, modest approach to start a larger discussion about relief and reform. The plan:
• Holds harmless property taxpayers anytime the state sets supplemental state aid (formerly known as allowable growth) funding.
• Eliminates additional property tax levies associated with supplemental state aid, reducing the share of money that is put on the backs of Iowa property taxpayers. On average, this would save Iowa taxpayers $2.70 per $1,000 in property valuation when fully implemented.
• Is supported by: the Iowa League of Cities, Iowans for Tax Relief, and the Iowa Farm Bureau.

–Governor Branstad’s proposal takes into account concerns for hurting cities’ revenue while offering close to $400 million in relief once fully implemented. The plan:
• Contains a 20% rollback of taxable value on commercial and industrial property
• Assessment growth limitation moves from 4% to 2% on ag and residential taxes immediately, while keeping the ag & residential tie in effect.
• After the 20% commercial rollback is fully implemented, all four classes of property (Ag, Residential, Industrial, and Commercial) are tied together with a 2% assessment growth limitation.
• Includes a standing unlimited appropriation to backfill revenue loss to local governments.

–Senate Democrats’ proposal is similar to their previous proposals and includes a tax credit on commercial property taxes. The plan:
• Is a $250 million tax credit once fully implemented.
• Taxes commercial properties valued at $324,000 or less the same as residential properties.
• Only operates when the state has a revenue growth greater than 4 percent.

If this General Assembly is going to be successful at property tax relief and reform, there must be willingness to come to the table with new ideas and be open to discussing various options. To that end, House Republicans are not drawing lines in the sand on this issue. Instead, we remain committed to achieving relief and reform that is permanent, predictable, significant, and affects all classes of property.

As usual, if you have questions or concerns please do not hesitate to contact me at kraig.paulsen@legis.state.ia.us or at my office at (515) 281-3521.

This week, the House and Senate both released their budget targets for the year. This is a general number indicating how much each party is willing to spend along with a number for each specific budgeting area. These numbers give direction to the budget subcommittees on how much money they have to begin allocating to specific programs.

For Fiscal Year 2014, the House Republicans have proposed a budget that is both balanced and sustainable. It meets the four principles established by House Republicans that I have been discussing over the past few weeks. Our budget:
1. Spends less than the state collects;
2. Prevents the use of one-time money to fund on-going needs;
3. Balances the budget by without intentionally underfunding entitlement programs;
4. Returns unused tax dollars to Iowa’s taxpayers.

The overall amount of revenue that is available to be spent in Fiscal Year 2014 is $7.1822 billion. This amount includes the $688.1 million in the ending balance that is an overpayment by Iowa taxpayers. The amount of ongoing revenue that is available is $6.5377 billion. The Fiscal Year 2014 proposal by House Republicans spends $6.4139 billion. This is a 3 percent increase over last year’s spending level and it protects priority services in the areas of education, health and human services and public safety.

Also of note is that this budget proposal includes the funding necessary to maintain our commitment to education; including the funding necessary to allow the Regents universities to freeze tuition, $10 million to the community colleges, and a two percent increase in supplemental state aid for our local schools.

The House Republican budget spends 98 cents for every dollar of state revenue.

While revenue growth is currently ahead of projections, there is a great deal of uncertainty about future revenue due to the on-going drought conditions, slow economic growth, and the federal budget situation.

To read more information, see the spending areas broken out by budget subcommittee or to view the balance sheet visit: http://www.iowahouserepublicans.com/house-republican-budget-targets

Senate Democrats also rolled out their plan for the Fiscal Year 2014 budget. Their proposal spends $6.9010 billion which is $487 million more than the House proposal. Additionally, this is $301.7 million more than the state has in ongoing revenue.

The Senate Democrats’ budget spends $1.05 for every dollar of state revenue.

This is a nearly 11 percent increase in state General Fund spending over last year’s level. To sustain this amount of spending requires a minimum of 6.2 percent growth in revenues in Fiscal Year 15 (not including Medicaid growth). To give you some perspective, annual revenue growth has averaged 3.34 percent over the past twenty years.

We will begin the process of working through the budgeting process while remaining committed to sticking to the budgeting principles that put the state on solid ground and bring certainty to Iowa taxpayers and employers.

As always, please feel free to contact me if you have any questions or concerns. My office phone number is (515) 281-3521 or my email is kraig.paulsen@legis.iowa.gov