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F I S C A L I M P A C T R E P O R T
SPONSOR Fox-Young
DATE TYPED 1/25/05
HB 214
SHORT TITLE Daily Bed Surcharge Repeal
SB
ANALYST Taylor
REVENUE
Estimated Revenue
Subsequent
Years Impact
Recurring
or Non-Rec
Fund
Affected
FY06
FY06
(4,750.0)
(19,500.0)
(20,000.0)
Recurring
General Fund
(Parenthesis ( ) Indicate Revenue Decreases)
Relates to HB 77, HB 213, SB44
SOURCES OF INFORMATION
Responses Received From
Human Services Department (HSD)
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
HB 214 repeals the daily bed surcharge imposed on nursing homes, intermediate care facilities
for the mentally retarded and residential treatment centers. Also, the bill repeals the sections of
law pertaining to the distribution of the associated revenues to the general fund for purposes of
funding the Medicaid program.
The bill carries an emergency clause, making it effective upon approval by the governor.
FISCAL IMPLICATIONS
The general fund revenue losses shown for FY05 and FY06 simply reflect consensus revenue
estimate developed in December. These revenue estimates are based upon the initial full-year
fiscal impact estimate of $22.5 million developed during the 2004 session adjusted for collec-
tions to date.
The FY05 fiscal impact estimate assumes the repeal takes effect on April 1. Based on the FY05
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House Bill 214 -- Page 2
revenue estimate of $19 million for the bed tax in FY05 and the assumption that the emergency
clause ends the tax in April, the revenue impact is $4.75 million, or one fourth of total estimated
revenue. The FY06 impact of $19.5 million reflects the entire amount estimated for this revenue.
ADMINISTRATIVE IMPLICATIONS
HSD reports that bed rates for nursing homes and intermediate care facilities, which were
changed effective July 1, 2005, would need to be reduced.
TRD indicates that repealing the bed tax would result in administrative savings to the depart-
ment.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
HB 213 is nearly identical to HB 214. The only difference is that HB 214 carries an emergency
clause.
HB 213 also relates to HB 77 and SB 44 (duplicate bills). These repeal the bed tax and the in-
come tax credit provided to private pay beds.
SUBSTANTIVE ISSUES
Bed tax revenues are earmarked to the Medicaid program. HSD’s analysis notes that the federal
government’s Centers for Medicare and Medicaid Services (CMS) does not have a concern with
bed surcharge revenues per se; their concern relates to the income tax credit. Unless the tax
credit is repealed, CMS will not allow bed surcharge revenue to be used as a state match to
Medicaid program. The federal government pays for approximately 73 percent of the Medicaid
program. Thus, a net loss of $19.5 million in general fund revenues in FY06 implies a loss of
approximately $53 million in federal funds for Medicaid unless other revenues from the general
fund are used to replace bed surcharge revenues. The impact in FY05 would be approximately
one fourth the full year impact.
HSD says that revenues lost from the repeal of the bed surcharge “would result in the enforce-
ment of additional cost containment measures”.
BT/lg:yr