Minnesota Showdown Over Tax Fairness

With a stroke of his veto pen, Minnesota Governor Tim Pawlenty blocked one of the most progressive tax plans in the nation: tax cuts for 90% of the state's homeowners to be paid for by an income tax increase on the wealthiest 28,000 taxpayers in the state. 

Analysis by the Minnesota Budget Project had shown that the wealthiest 1% of Minnesota households (those married families making more than $354,758 per year) paid only 9% of their income in state and local taxes, far less than the 12% of income paid by most middle class families in the state. 

To rectify this regressive tax system (unfortunately all too common in states), the Minnesota legislature approved a budget that created a new income tax rate of 9% of income to be levied on incomes over $226,230 for single filers and incomes of $400,000 or more for married couples.  This revenue would be used to limit property taxes to no more than 2 percent of family income, returning the difference in refund checks.  Polls showed that 72 percent of voters favored the higher tax rate for the wealthy as a way to lower property taxes, but Gov. Pawlenty chose to protect his wealthy campaign contributors rather than allow property tax relief for the middle class.

Responding to Pawlenty's veto, the legislature is preparing a pared down budget without the income tax increase, but also without the property tax relief or planned increases for early childhood programs that had also been part of the program. 

It's unfortunate that Minnesota had a chance to enact model tax fairness legislation, but instead will likely end up with a status quo budget due to the Governor's veto.

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Health Care Progress in Connecticut and Oregon

While comprehensive health care reform proposals in California, Illinois and Pennsylvania are getting most of the attention, Connecticut and Oregon are host to their own debates which could influence reform elsewhere.

Connecticut: Surprising skeptics and despite being the insurance capital of the country, single-payer legislation - Connecticut Saves Health Care - continues to make it through legislative committees.  The Human Services Committee, for instance, sent it out with a joint favorable report by a vote of 12-7.  This followed favorable reports in two other committees. 

Elsewhere in the insurance industry haven are at least three bills making it through committees:

• HB 7314 includes an individual mandate, an employer assessment of 11% of payroll, and the State Health Insurance Purchasing Pool, a "connector"-like entity that would act on behalf of enrollees by contracting and negotiating rates with insurers to offer aggressively subsidized health care for the uninsured. 
• SB 1 is a collection of incremental reforms including SCHIP and Medicaid expansions, electronic health records, increased outreach and consumer education, and a commission to look at alternatives for covering the uninsured and under-insured with a report due for 2009.
• Receiving significant bi-partisan support in committees, including a unanimous Appropriations Committee report, SB 1127 would create the Charter Oak Health Plan, offering health care to uninsured residents with sliding-scale subsidies up to 300% of poverty.

Working to build the political will for reform, Health Care 4 Every1 organized a rally in Hartford that brought thousands of people to the statehouse to rally for reform. 

Oregon:  The requirement to gain a three-fifths super-majority for any tax increase has derailed Gov. Ted Kulongoski's proposed "all-kids" expansion - Oregon Health Kids - which would be funded in part by an 84 cent increase in the cigarette tax.  This should caution any state considering such super-majority requirements.  Regardless, comprehensive reform is still moving in the state.

The Healthy Oregon Act, SB 329, which was created by a special senate commission, would offer every resident in the state a health card to obtain health insurance from approved insurers.  The Act includes cost control and quality improvement measures.  The Oregon AFL-CIO has endorsed the legislation, which is on its way to the Ways and Means Committee.

Additionally, the Oregon Better Health Act, SB 27, which is pioneered by former Gov. John Kitzhaber and his Archimedes Movement, made it through committee and will join SB 329 in the Ways and Means Committee.  SB 27 would seek a federal waiver to pool state and federal dollars, including Medicaid and Medicare dollars spent in the state, and reallocate the money in a way that provides quality health care to all residents. 

For his part, Gov. Kulongoski wants to focus on kids coverage and is wary of sweeping reforms, particularly ones that would end the employer-financed system of health care, as the Kitzhaber proposal would do.

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