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Posted on: April 26, 2019

State Senate to cut taxes instead of fully funding Medicaid waiver for disabled children

NASHVILLE — After speculation over whether the state Senate would agree to fund a Medicaid waiver program to provide medical treatment for disabled children, the upper chamber has announced its plan: Pay for part of it, while using additional funds to reduce the state's professional privilege tax.

Speaking to reporters Thursday, Lt. Gov. Randy McNally described it as "'a budget that does what conservatives do."

The House has committed in this year's budget to fully funding the $27 million Katie Beckett waiver program, which covers medical treatment for children with disabilities and severe illnesses whose families wouldn't otherwise qualify for TennCare, the state's Medicaid program.

But the Senate has raised an issue over the House's plan to use revenue from a newly implemented online sales tax in order to fund the Katie Beckett waiver.

While Republican leadership in the Senate in recent days has said the projected $44 million in internet sales tax revenue wouldn't be a stable source of revenue to use to fund new programs, on Thursday Sen. Bo Watson, R-Hixson, chairman of the Senate Finance committee, confirmed that the Department of Revenue and Comptroller's office said the new stream of funding was "safe to budget around."

Instead, the Senate's budget allocates $15.6 million for the waiver program, funding that would cover roughly 300 of the state's 3,300 children who would benefit from the Katie Beckett initiative.

The waiver program is broken into two categories, Part A covering roughly 300 Tennessee children with the most severe disabilities, and Part B that would affect the remaining number, according to a legislative fiscal analysis.

The Senate plans to only fund Part A while ordering a study on how much it would cost to fund Part B in the future. Watson suggested the estimate that had been calculated by the General Assembly's fiscal review committee -- $27 million for both parts of the waiver program -- was not wholly accurate.

Katie Beckett: Funding for kids with severe disabilities in need of TennCare not in Governor's supplemental budget

Katie Beckett: Tennessee House, families celebrate funding for children with disabilities, but fight isn't over

Senate to fund cuts to professional privilege tax 

The Senate is calling for $23.4 million in cuts to the state's professional privilege tax, reducing from $400 to $300 the annual fee paid by doctors, lawyers, engineers, lobbyists and individuals in a number of other professions.

Instead of applying the online sales tax revenue to the Katie Beckett program, the Senate will use it to offset the privilege tax cuts. They're suggesting setting aside more than $20 million to further tax cuts next year, although the leadership declined to say in what ways.

"We don't want to use the money to pay for a new program that would continue into the future," McNally said.

Watson said that the Senate's position has always been to use the new sales tax to offset other taxes, and not to pay for new initiatives.

House special projects, appropriations not considered by Senate

Senate Majority Leader Jackson Johnson, R-Franklin, confirmed Thursday that the House's $18 million in appropriations requests -- funding for some of the bills it passed and for local projects in members' districts around the state -- were not accounted for in its budget.

The House, which approved its budget on Wednesday, had previously suggested it would use $18 million towards its own project and leave the Senate a remaining $24 million to spend how it chose.

"We didn’t really consider their budget as we were preparing our budget," Johnson said.

As for whether the two chambers would be forced to go to a conference committee over disagreements about the budget, McNally said "it may or may not."

"It’ll be bounced back and forth a couple of times," McNally said. "If we still don’t agree, it goes to conference."

House leaders stand behind budget, expect conference committee

Like the governor’s education savings account legislation, the two chambers have different views on what’s included in the budget.

House finance chairman Susan Lynn, R-Mt. Juliet, said while she was still studying the Senate’s budget proposal, she contended the lower chamber’s version was more conservative.

“The items that we chose to fund, we really felt were in keeping with the governor’s priorities,” she said.

Lynn and House Republican caucus chairman Cameron Sexton, R-Crossville, noted the Senate’s budget makes several changes to the governor’s initial proposal, including redirecting $15.4 million in capital funds and a $2.5 million development grant for the riverfront in Memphis.

The Senate’s budget also reallocates $6 million previously earmarked for legislative administration to be used for the Katie Beckett program, a point noted by McNally on social media. 

Among the other differences between the two chambers’ budgets, Sexton noted the Senate spent significantly more on legislative initiatives and funding legislation than the House.

A cursory view of the line item summary of the two different budgets highlights some differences between the chambers.

The Senate’s budget calls for using $41.8 million for legislation and $23.6 million for legislative amendments.

“It’s good to see what they prioritize,” Sexton said, arguing that the Katie Beckett waiver should be a priority.

The $41.8 million in the Senate’s budget for legislation, however, largely consists of the $15.6 million for the Katie Beckett funding and $23 million in tax cuts. 

The House’s budget allocates just $7.7 million for legislation and $10.5 million for amendments for a total of $18.2 million in legislative initiatives.

But those figures do not include the $27.3 million the House would spend on the Katie Beckett waiver.

Sexton said given that the Senate’s budget calls for $24.5 million in future tax relief, that money should instead be used to fully fund the waiver.

Overall, Sexton said he anticipated the two chambers having to work out their budget differences in a conference committee.

, Nashville Tennessean 
Published 5:00 a.m. CT April 26, 2019

Reach Natalie Allison at Follow her on Twitter at @natalie_allison.

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