A Recap of 2017 and the Work Still Ahead

For MBPC, like many of you, 2017 has been a fast-paced, intense year, and 2018 is already looking to be another busy one. As we reflect on this past year and the work ahead, we also want to thank the many Montanans who have supported our work. We have witnessed a state budget crisis, which led to massive cuts in our collective investments in education, health care, and other critical public services. We have weathered repeated federal attacks on the Affordable Care Act. And finally, we recently saw the restructuring of our federal tax code, which will primarily benefit the wealthiest and corporations.

To be sure: we have a lot of work ahead of us in 2018. But while we reflect on the many challenges this past year brought, we also want to reflect on some of the successes we shared together and how we can continue to make progress in 2018.

State Earned Income Tax Credit

We want to start with the positive. After over a decade of work by legislators and advocates, Montana became the 28th state to enact a state Earned Income Tax Credit (EITC). Throughout the session, we heard from working parents who have accessed the federal credit during difficult times. Enacting a state earned income credit is an important step forward to and helping 80,000 low- and moderate-income working families better make ends meet while also making our tax system fairer.

State Budget & Revenue

Without a doubt, our work on the state budget will continue to be challenging in the aftermath of a severe revenue shortfall and deep budget cuts. We are analyzing the real-life impacts of these cuts and also how federal tax cuts may impact state revenue moving forward. Throughout 2018 we will continue to lift up the stories of Montana families hurt by budget cuts, and we intend to return to the 2019 legislative session with revenue proposals to build a stronger state budget.

Affordable Care Act

Congress came close to repealing and replacing the ACA with several bills this past year. All of them would have caused millions to lose health coverage, weakened protections for people with pre-existing conditions, and effectively ended Medicaid expansion to low-income adults over time. Given that seniors, people with disabilities, and children comprise about two-thirds of Medicaid beneficiaries, ACA repeal would have taken away coverage from some of our most vulnerable Montanans. Although we were successful in preventing the repeal of the ACA, the individual mandate repeal in the federal tax plan is a blow to the integrity of the ACA. We must continue to stay diligent defending and strengthening access to affordable health care coverage and stabilizing the marketplace.

Extend Medicaid Expansion in 2019

Looking ahead to 2019, we are working with partner organizations to prevent the repeal of Montana’s successful Medicaid expansion, which has provided health coverage for 86,000 Montanans. Expansion has injected over $700 million in federal funds into our local communities and has saved the state over $30 million in general fund dollars in the first 18 months of enrollment. Hospitals, especially in rural communities that treat higher numbers of low-income patients, are seeing a greater number of patients with insurance and lower uncompensated care costs. Montana’s Medicaid expansion has been a success, and our state legislature will need to ensure this health care coverage for tens of thousands of low-income Montanans is maintained.

The Federal Tax Bill Passed, But It’s Not Over Yet

The federal tax bill is an expensive giveaway to major corporations and wealthy households, which offers little or nothing to most Montana families –and ultimately hurts many. While corporations are gifted permanent tax breaks, the rest of us will actually see our taxes go up in the long run. This tax cut bill increases the deficit by a whopping $1.5 trillion over ten years, and GOP leadership are already aiming for far-reaching budget cuts to food assistance, Medicaid, and college assistance next year that could make it much harder for struggling families to buy food, see a doctor, afford college, or otherwise make ends meet.

In other words, our hardest work to is yet to come.

At MBPC, we believe all Montanans deserve strong, healthy, and safe communities, so we will continue advocating for a sound state budget that prioritizes investments to create opportunity for everyone and ensure our children and grandchildren have a bright future.

Our success would not be possible without the many supporters across the state who recognize the value of this work to lift up the voices of those who are often struggling to get by. There is still time to give in 2017 to make our work even more meaningful in the coming year!

If you believe that we need to invest in this state that we love and invest in our families and communities, please support us in the work we do. 2018 – here we come!

Happy Holidays to the Super Wealthy & Multi-National Corporations…but not the rest of us

President Trump and GOP leadership in Congress got their Christmas wish to have the final tax legislation passed and signed before the holiday break.

But the changes to our tax code, threat to health coverage, and the risk to other safety net programs as a result of this bill were not on the vast majority of Americans’ wish lists. This tax plan is not what working families asked for, and it is certainly will not deliver smart, fair tax policies that support working low- and middle-income folks.

The only ones who are excited to receive their gifts this holiday season are the wealthiest 1 percent and multinational corporations because they get the biggest presents of all, while millions of Americans are handed a lump of coal that ends health care for millions of people, increase taxes on low- and middle-income families, and increases the national deficit.

Regardless of how you celebrate this time of year, there is good reason to be worried.

On the heels of this massive giveaway to the wealthy and corporate interests, many members of Congress have said that they intend to come back next year and seek deep cuts that would likely take away health care, food assistance, and supports for people with disabilities from families that struggle to afford the basics.

At the Montana Budget and Policy Center, we believe that Montanans deserve strong, healthy, and safe communities. To continue to grow Montana’s economy and ensure our children and grandchildren have a bright future, we need to invest in our people. The backbone of this investment is a fair tax structure that provides adequate revenue to properly invest in necessary public services while also preparing for the future demands of an evolving economy and changing demographics.

We opposed this tax bill because it severely limits our ability to invest in our communities. Instead of strengthening our state, it will break the backs of working people and give an extra boost to special interests, the wealthy, and out-of-state corporations. To read about the winners and losers of the final tax bill, go to our blog posted last week.

Winners & Losers of the Final GOP Tax Plan

The final legislative text of the federal tax bill was released Friday, December 15th. The U.S. House and Senate both passed this bill on Tuesday, December 19th, with the House voting again on Wednesday, December 20th to fix procedural errors. It is headed to President Trump’s desk before the end of the week.

All in all, it is nothing more than an expensive giveaway to major corporations and wealthy households that offers little or nothing to most families and ultimately hurts many. It is no surprise that this is the most unpopular tax legislation in three decades.

Here is what the winners – the super wealthy and corporations – get this holiday season:

  • Permanent corporate tax cuts. The biggest tax cut in the bill is the reduction in the corporate income tax rate from 35 percent to 21 percent. The corporate tax cut will mainly benefit those who own shares in American corporations. While some middle-income people own shares, high-income Americans and foreign investors own most. This is the largest one-time rate cut in U.S. history for the nation’s largest companies.
  • Reduction in the top personal income tax rate. The final plan lowers the top tax rate for top earners. Under current law, the highest rate is 39.6 percent for married couples earning over $470,700. The GOP bill would drop that to 37 percent and raise the threshold at which that top rate kicks in, to $500,000 for individuals and $600,000 for married couples. This amounts to a significant tax break for the very wealthy, a departure from repeated claims by Trump and his top officials that the bill would not benefit the rich.
  • Estate tax. Another break that favors the wealthy is the bill’s provision to double the amount of assets that can be left to heirs without triggering the estate tax from $11 million for a married couple to $22 million. Under current law only 0.2 percent of estates are taxed, which means reducing the estate tax can only benefit the very wealthiest families.
  • Pass-through business benefits. The bill includes a 20 percent deduction, with certain limits, for income from pass-through businesses, which are businesses with profits subject to the personal income tax instead of the corporate income tax. Most pass-through income flows to the richest one percent of Americans.
  • No corporate Alternative Minimum Tax (AMT): The final GOP bill gets rid of the corporate AMT, a big relief to the business community.  This is a separate tax calculation, used to make sure that businesses are forced to pay at least a base level of federal taxes and can’t totally avoid taxes by taking various deductions and credits.

Here is what the losers – the rest of us – get:

  • Temporary tax relief with tax hikes down the road. While corporations are gifted permanent tax breaks as outlined above, the rest of us will see our taxes increase in 2027. Eighteen percent of taxpayers who earn less than $69,860 annually will see a tax hike in ten years from now. The tax plan would go into effect in 2018 but the provisions directly affecting families and individuals would all expire after 2025, with the exception of one provision that would raise their taxes.
  • Token increase in the Child Tax Credit. The last-minute changes to the Child Tax Credit (CTC) in the final tax bill do not change the fundamental fact: low-income working families still would largely miss out on the full CTC increase from the current $1,000 per child to $2,000.
  • An imploding individual health insurance market. The health insurance market is almost certain to implode next year, and rates are likely to skyrocket for many, because of the repeal of the individual mandate. The Congressional Budget Office estimates that this change alone will lead to 13 million more uninsured Americans a decade from now.
  • Getting deeper into debt. The final bill costs $1.46 trillion, and there is no realistic scenario in which these tax cuts generate enough economic growth to pay for themselves.
  • Cuts to programs that help families of limited means afford food, housing, health care, and other basic needs. It’s increasingly clear that the tax bill is the first step of a likely two-step plan: pass costly tax cuts for the wealthy and corporations that drive up deficits by $1.4 trillion, then use higher deficits to justify calls for program cuts mainly affecting low- and middle-income families. On the heels of a tax bill that is a giveaway to the wealthy at the expense of everyone else, this would be a one-two punch for working families, children, seniors and people with disabilities.

Congress Needs to Give Families the Gift of Security & Fully Fund CHIP

‘Tis the season for the sniffles.

As the mom of three kids – two preschoolers and a baby – we see our fair share of colds, stomach bugs, and other wintertime illnesses. It’s simply impossible to keep everyone healthy year round.

But even when I’m up to my elbows in tissues and chicken noodle soup, I am thankful that I can take my kids to the doctors when necessary. Maybe the toddler needs medicine to stop wheezing during a bad case of croup, or the baby has to go to the Emergency Room for a high fever. Our health insurance means that no matter how unpleasant childhood illnesses are, we don’t have to worry about the financial stress that can too often accompany them.

But the 23,000 Montanan children who receive insurance through Healthy Montana Kids, also known as the Children’s Health Insurance Program (CHIP), might soon lose that stability. Back in September, Congress allowed funding for CHIP to expire and has yet to reach a compromise. Some states are already starting to run out of money to fund their programs, Alabama will freeze CHIP enrollment in two weeks if Congress does not extend funding, and Montana will run out by the end of January.

So what’s the hold up on renewing funding for this historically bipartisan program? Democrats and Republicans disagree on how to pay for it. The current “continuing resolution” bill in the House funds CHIP by shortening the grace period for people who miss an insurance payment to sign up again from 90 days to 30. This change would result in nearly 700,000 people losing their insurance across the country. Robbing Peter to pay Paul is no way to fund such a vital program.

Last week, all three of my kids came down with colds simultaneously and I crossed my fingers that we would all be healthy before the holidays. No kid wants to be sick while waiting for Santa, lighting the menorah, or ringing in the New Year. And no parent wants to worry about how they will pay their bills if those sniffles turn into something more serious.

Before heading home for the holidays this Friday, Congress needs to give families the gift of security and fully fund CHIP. Montana families can’t keep waiting.

The Truth Behind the “Expanded” Child Tax Credit for Montana Families

Meeting behind closed doors, the U.S. Senate and House conference committee reached agreement last week on the final GOP bill to massively overhaul the nation’s tax system. Congress is expected to cast votes on the tax plan today.

The Child Tax Credit (CTC) received a lot of attention last week as last minute changes were made to (almost) meet the demands of Senator Marco Rubio.

With the final bill ready for a vote, it is clear that the last-minute changes to the Child Tax Credit (CTC) that Republican leaders put in their final tax bill do not change the fundamental fact that low-income working families still would largely miss out on the full increase from the current $1,000 per child to $2,000.

In a previous fact sheet, we explained how the Child Tax Credit works. The CTC as it stands is a tax credit that provides up to $1,000 for households with a child 16 years or younger. In 2015, 49,050 Montana families claimed the Additional Child Tax Credit (ACTC), which is the refundable portion of the CTC. This means that if the value of the CTC exceeds the amount of federal income tax a family owes, the family may receive part or all of the difference in the form of a refund check.

The CTC is an effective way to lift children and families out of poverty. This credit frees up additional income that working families need to make ends meet. CTC helps families achieve that goal by supplementing wages when parents’ do not earn enough to meet basic needs, like paying the rent, putting food on the table, and buying diapers or a winter coat for their children.

The final GOP tax bill would increase the maximum Child Tax Credit (CTC) from the current $1,000 to $2,000 per child under age 17 – up from $1,650 in the prior Senate version — with $1,400 of that refundable, but low-income working families would largely miss out on this expansion.

While doing virtually nothing to strengthen the CTC for the lowest-income working families, the plan calls for raising the income level for CTC eligibility, thereby making the credit available to families earning six-figure incomes. Under the final tax plan, filers may claim the full credit to $200,000 for single parents, up from $75,000 today; and to $400,000 for married couples, up from $110,000.

These changes mean:

Under the Senate Republicans’ proposal, more than 30 percent of children in working families in almost every state would receive less than the full increase. The CTC changes in the Senate bill will ultimately benefit higher-income households, whereas single parent or two parent families working minimum wage jobs will receive less of the CTC than they currently do.

At every step in the process, House and Senate Republicans have tilted their tax bills against working families. The conference committee should address these inequities, but instead they dole out even bigger tax cuts for the wealthy and corporations.

Congress must ensure that the 31,000 children in low-income families in Montana receive more than just a token $75 or less from the CTC increase. 

Ultimately, the revisions to the CTC does not change the true winners and losers. Low- and middle-income folks, working families with children, and Montanans with health care needs will not benefit if the GOP’s plan to overhaul our tax system becomes law.

Guest Post: Fix the Funding Cliff Now

The waiting room of Montana’s Community Health Centers are thousands of miles from the U.S. Capitol, but what happens under that dome is hurting the health of thousands of Montanans.

Right now, Montana Community Health Centers are experiencing a federal funding cut of 70 percent that took effect October 1. Centers across the state are making hard choices to trim costs, save jobs, and keep doors open. Our health centers are not alone. The federal Department of Health and Human Services (HHS) has projected that the impact of the funding cliff will result in the closure of 2,800 health center locations, elimination of more than 50,000 jobs, and a loss of access to care for more than 9 million patients. The disruption is already evident. Many health centers in Montana are already making the tough choices about cutting costs amid a massive funding shortfall – implementing hiring freezes, cutting back on programs and deciding whether to close rural sites. In rural areas, where people typically drive miles in any direction to a provider, site closures will pose a significant hardship.

Why should this matter? Because we save lives. In Montana, 17 community health centers in 48 locations are part of a nationwide network that started more than 50 years ago to provide quality primary care in places where doctors and services were scarce or non-existent. We are the family doctor to more than 106,000 Montanans in communities all across the state, almost 1 in 10 Montanans receive their healthcare in one of our health centers. We provide affordable access to primary care and help reduce the incidence of chronic disease in the most economically challenged rural and urban communities all over Montana. Our patients have a more affordable option for preventive care than a hospital emergency room, a fact which allows us to generate millions in health care cost savings in Montana. We are also innovators, working with community partners to respond to public health crises, such as the opioid epidemic and the recent wildfires that raged this summer in Lincoln and Seeley Lake.

There is little doubt that health centers have contributed significantly to cost savings for the American taxpayer. Not only do most Republicans and Democrats support our program, they also want a funding cliff fix. So why can’t Congress get the job done? We are up against a host of factors that include a ticking clock and a busy legislative calendar that is focused on dollars, not doctors or the people who need them.

Congress must act now and turn their attention to fix the community health center funding cliff. Let’s hope they act before it’s too late.

Cindy Stergar

CEO, Montana Primary Care Association

MPCA is the association of Montana’s community health centers, and works to support and increase Montanans’ access to excellent, patient-centered health care. The Mission of the Montana Primary Care Association is to promote integrated primary healthcare to achieve health and well-being for Montana’s most vulnerable populations.

This tax bill is a health care bill too.

We anticipate that the House and Senate will vote on the final GOP tax plan early next week. While this proposal is first and foremost a give-away to the super wealthy and corporations, it’s important to remember that it is also a direct attack on the health care coverage of Montanans.

We briefly explained in an earlier post about why the Senate tax bill would hurt Montanans with health care needs. Today we are going to take a closer look at how this tax bill is a health care bill too:

If the Affordable Care Act’s individual mandate were repealed, 13 million more Americans would go uninsured. While the Congressional Budget Office (CBO) notes that the magnitude of the coverage effects is uncertain, it concludes that there’s no doubt that “the number of uninsured people would be millions higher.”

In Montana, 146,717 people are enrolled in Medicaid as of September 2017, and 86,000 people are enrolled in Montana’s Medicaid expansion as of November 2017.

And, thanks to the Affordable Care Act, Medicaid and the Children’s Health Insurance Program (CHIP), 92 percent of Montana’s children now have health insurance coverage.

With over 232,000 Montanans insured through Medicaid and Medicaid Expansion, cuts to Medicaid would be devastating for our state. Montana is already grappling with an opioid epidemic, as well as major funding cuts to support rural health care needs and Montanans with disabilities. As recent media has reported, Medicaid and Medicaid Expansion has been a critical lifeline for Montanans.

Without the ACA individual mandate, individual market premiums would also increase 10 percent. Fewer healthy people would sign up for individual market coverage with no mandate, which would increase average costs and therefore premiums in the individual market as less healthy and young people enroll and more people with expensive medical needs tilt the cost of health care needs.

The Congressional Budget Office (CBO) estimates that repealing the mandate would permanently raise premiums by 10 percent, and some major insurers have projected larger effects. As Senator Collins has noted, these premium increases would likely erase — or more than erase — the Senate bill’s tax cuts for millions of people who buy coverage in the individual market. Unaffordable premiums should not be a barrier to folks who need coverage.

The individual mandate is also critical to keeping the individual market stable. As the American Academy of Actuaries commented in its recent letter to Senate leaders about repealing the mandate, “increased uncertainty and instability regarding future enrollment, premium rates, and risk pool profiles if coverage incentives are eliminated would increase the risk of insurers incurring losses. Insurers would likely reconsider their future participation in the market. This could lead to severe market disruption and loss of coverage among individual market enrollees”

And last, but not least, if repealing the individual mandate is included in the final federal tax plan, it would also result in the loss of $5.5 million in general fund revenue per year for Montana. Since it is predicted less Montanans would enroll, the state would lose revenue from no longer collecting the health insurance premium tax from enrollees.

Affordable health care coverage for Montanans is a value that we all share. Our Montana congressional delegation should work to advance tax policies that strengthen the state of Montana and invest in our working families. Equally, our congressional delegation should support health care legislation that strengthens the Affordable Care Act—not provisions that work to cut it down.

Get Ready for the One-Two Punch: Anticipated Cuts to SNAP, Medicaid, and Possibly More

As the U.S. Senate & House conferees are crafting the final GOP tax plan behind closed doors in conference committee, we already have a strong sense of who wins and who loses under this bill. Any changes that happen before the chambers vote during the week of December 18th will not repair the devastating provisions of either the House-passed or Senate-passed bills.

As we anticipate the passage of this final tax legislation, we want to turn toward the details of the future implications of a tax bill that adds $1.5 trillion to the national deficit over ten years.

Get ready for the one-two punch: anticipated cuts to SNAP, Medicaid, and possibly more.

As we expected during the federal budget resolution process in the fall, the tax bill that congressional Republicans are finalizing is just step one of a likely two-step tax and budget agenda. The plan looks like:

  1. Cut taxes now that are heavily skewed toward wealthy households and profitable corporations.
  2. Then decry the enlarged deficits that those tax cuts fuel — and insist that they require cuts to programs for mainly low- and middle-income families.

Republican leaders have repeatedly said in recent weeks that after enacting a tax bill, they will turn to budget cuts — particularly “welfare reform,” long a code for cuts to SNAP (formerly known as food stamps), Medicaid, Medicare, among others that help families of limited means afford food, housing, health care, and other basic needs.

Approximately 1 in 8 Montanans struggle with hunger, including 45,000 children living in food insecure homes. Cuts to SNAP would hurt families with kids, seniors, and people with disabilities. As for health coverage, about 232,000 Montanans are insured through Medicaid and Medicaid Expansion as of September 2017. Cuts to Medicaid would be devastating for our state, which is already grappling with an opioid epidemic, as well as major funding cuts to support rural health care needs and Montanans with disabilities.

The budget resolution that Congress approved in October, which created the process and set the parameters for the current tax bill, also calls for $5.8 trillion in budget cuts over the coming decade, including deep cuts in Medicaid, Medicare, and other health care programs; basic assistance including SNAP; and non-defense discretionary funding, the part of the budget that funds education and training, transportation and other infrastructure, medical research, child and elder care, and other important priorities.

GOP leaders appear already poised to seek large budget cuts next year before the final tax legislation makes it to the President’s desk.

Ultimately, the true winners and losers of this federal tax proposal and the subsequent plan to cut services that hundreds of thousands of Montanans rely on haven’t changed with small tweaks to the proposals. Low- and middle-income folks, working families with children, and Montanans with health care needs are all set up to fail if the GOP tax proposal becomes law.

Federal Tax & the State Budget: More Revenue Problems to Come?

As Congress reconciles the differences between the House- and Senate-passed versions of their tax bills this week, here is our next installment of combing through the details of this terrible tax bill.

Both chambers’ tax plans provide large tax cuts to the wealthy and corporations, raise taxes for many low- and moderate-income people, boost the number of uninsured Americans by millions, and expand deficits.

But did you know that the federal tax proposal would also shoot a hole through our Montana state budget?

For today: Federal Tax & the State Budget – More Revenue Problems & Cuts to Come?

Based on the Senate tax bill, the Montana Department of Revenue estimated that the federal tax changes could impact the State General Fund to a tune of $122.5 million per year in 2018 and 2019. The estimated revenue changes as a result of corporate and individual income tax provisions are shocking to say the least.

That $122.5 million per year figure breaks down along four different tax categories:

  • The Senate provisions for individual and pass-through income tax result in $80 million lost in general fund per year.
  • The Senate provisions for corporate income tax result in $13 million lost in general fund per year.
  • The repeal of the ACA’s individual mandate in the Senate bill will result in the loss of $5.5 million in general fund revenue per year. Since it is predicted less Montanans would enroll, the state would lose revenue from no longer collecting the health insurance premium tax from enrollees.
  • The Senate bill could also cause Montana to lose $24.0 million in federal mineral royalty payments each year. This revenue loss would impact Montana counties that depend heavily on coal and oil production.

Just last month the state legislature held a special session to address the budget crisis in our state and find answers to solve the $227 million revenue shortfall on top of $218 million in present law reductions already taken during the regular legislative session and through triggered cuts in SB 261.

Montana cannot weather another hit like this.

Senator Daines and Representative Gianforte should work to advance tax policies that strengthen the state of Montana and invest in our working families. A vote for the federal tax bill would be a vote to send Montana spiraling back into a budget crisis.

 

Pass-Through Provisions Are Not for Main Street

By now you have heard that the tax bill Congressional Republicans are rushing to get to the President’s desk by Christmas will be a costly new giveaway to the very wealthy and major corporations at the expense of working families in Montana.

Last week we outlined who wins and who loses under the U.S. Senate tax plan. Now we want to dive deeper on the details through a blog series over the next several days.

First up: Pass-Through Provisions Are Not for Montana’s Main Street

Racing to pass a tax bill last week, U.S. Senate Republicans made this bad bill even worse by rushing to include a few provisions that skewed the bill even more toward the rich.

One of the last minute edits sweetened the pot for owners of unincorporated businesses who declare their profits as “pass through” income on their personal tax returns — income from businesses such as partnerships, S corporations, and sole proprietorships that owners claim on their individual tax returns and is now taxed at the same rates as wages and salaries.

The version that passed the Senate Finance Committee would have let business owners deduct 17.4 percent of their pass-through income from their taxable income, meaning that it would be tax free (subject to certain restrictions). That deduction is heavily skewed to the most profitable businesses and wealthiest business owners, who receive a greater share of their income from pass-throughs and enjoy a larger tax break per dollar of deductions since they are in higher tax brackets.

To secure the vote of Senator Steve Daines, GOP leadership agreed to raise the deduction percentage by nearly a third, to 23 percent.

Although Senators Daines claimed that he was trying to help owners of small businesses, the fact is that nationally the richest one per cent of households receives more than half of all pass-through income the economy generates.

Because Montana allows all deductions permitted by federal law, the 23 percent deduction to federal income taxes in the passed Senate bill would be taken out again at the state level. According to the Montana Department of Revenue, this pass-through deduction combined with other changes to income tax, would result in a state revenue loss to $80 million.

While sold as a benefit to Main Street, this revised pass-through provision is a sham. As we have explained before, it does not help Montana’s small business owners. It is just one more give-away to the super wealthy in Montana, it increases pressure on Montana’s already strugging budget, and it leaves the average working family high and dry.