Trouble brewing over revenue
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share thisHARRISBURG - Pennsylvania will rely on a variety of revenue sources to support $27.8 billion in spending this fiscal year. A portion of this revenue will come from new taxes. Transfers from special state funds will also provide needed revenues for the all-purpose General Fund.
A potential exists for trouble with two of these revenue sources, however.
Pennsylvania plans to levy a gross receipts tax on managed care organizations to replace a state assessment that expired last month. Under the plan, the state will draw additional hundreds of millions of extra federal Medicaid dollars as a result of levying this tax. The managed care organizations will be reimbursed later by the state for the taxes they pay.
The gross receipts tax will generate $528 million for state coffers this year. State officials estimate they will receive an additional $317 million in federal Medicaid matching funds as a result of having this tax.
It sounds like a simple way to take money from the MCO's up front to cover state spending and then repay them.
But implementation of this plan hinges on approval from Washington. If the federal government determines a gross receipts tax can't be used to draw additional Medicaid dollars, then the tax will be eliminated and lawmakers will have 60 days to enact a law providing replacement revenue, according to a House Appropriations Committee analysis.
In the second situation, spending is being balanced with $800 million in transfers from two state funds. About $700 million will come from the Health Care Provider Retention Fund, supported with state cigarette tax revenues, and $100 million from the MCare Fund, supported through assessments on doctors and hospitals. Both funds were created earlier this decade to reduce medical malpractice premium costs.
The Pennsylvania Medical Society and Hospital and Health System Association filed a lawsuit in Commonwealth Court last year over previous transfers from the provider retention fund. A similar lawsuit may surface over the MCare fund.
"A ruling in support of the doctors would leave the commonwealth with a budget hole of as much as $800 million," said Rep. Kate Harper, R-61, Blue Bell.
The state has earmarked $240 million since 2003 from a special assessment on speeding tickets for malpractice relief so the legal issue also involves how public revenues are used, said Rep. Kathy Manderino, D-194, Philadelphia.
Budget finale
One resolution brought a wry smile to House Speaker Keith McCall's face as the House took a pause Thursday night from voting on a final $27.8 billion budget bill. The chamber approved a resolution declaring Oct. 15 as "Conflict Resolution Day" in Pennsylvania, a hoped-for conclusion to the months of partisan wrangling that has marked the budget stalemate.
ROBERT SWIFT is Harrisburg bureau chief for Times-Shamrock Communications newspapers, of which The Daily/Sunday Review is a part. E-mail: rswift@timesshamrock.com.
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