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Garry Rayno's State House Dome: Gas tax increase still a political hot potato

State House Bureau

February 15. 2014 10:59PM

Raising the gas tax is often the political third rail for those seeking higher office, including former Republican gubernatorial candidate Jim Coburn in 2006.

Early in his campaign against incumbent Democratic Gov. John Lynch, Coburn voiced his support for increasing the gas tax. Lynch's campaign pounced and brow beat the poor guy with the issue for the next six months.

Coburn's thrashing sent many gas tax supporters into hiding for years.

Last year was the first serious attempt since 2006 to raise the levy, which has not budged from 18 cents since 1991, although inflation has more than doubled since then and gas prices have more than tripled.

Rep. David Campbell, D-Nashua, the House Public Works and Highways Committee chairman, proposed increasing the tax 15 cents, but the House Ways and Means Committee knocked it down to 12 cents over three years.

It barely passed the House and was killed resoundingly in the Senate, where the leadership backed casino gambling and using 45 percent of the state's take for highways and bridges, including finishing the Interstate 93 expansion between Salem and Manchester.

When the Senate was debating the issue, Senate Transportation Committee Chairman Jim Rausch, R-Derry, made an impassioned plea for lawmakers to do something for the state's crumbling infrastructure and later was given the go ahead by then-Senate President Peter Bragdon, R-Milford, to put together a proposal lawmakers would look at this year.

Rausch developed a plan that uses a consumer price index formula to bump up the state's gas tax and keep it current with inflation.

Under the formula, the state's 18 cent gas tax would increase about 4.2 cents a gallon, raising about $30 million in new revenue dedicated to transportation projects. Some of the gas tax would be siphoned off by the Department of Safety (state police), the courts and the Attorney General's Office, among other state agencies.

Rausch's formula would be reapplied every four years to adjust the gas tax to more align with inflation.

"I'm trying to restore the purchasing power that has been eroded since the last tax increase in 1991," Rausch said when he explained his proposals to reporters. "I want to be very clear this is a small step."

Rausch is also a sponsor of House Bill 1633, which would establish the regulatory framework for a casino.

On Tuesday, the public will have an opportunity to let lawmakers know what they think of the idea. Senate Bill 367 has a public hearing before the Senate Ways and Means Committee beginning at 9 a.m. in Room 103 in the State House.

Before the notice of the public hearing was published, one group that has vehemently opposed any increase in the gas tax, the NH Motor Transport Association, made up of truckers, slammed the tax.

The association's president, Robert Sculley, said the bill would allow the tax to go up every four years without a public hearing or lawmakers debating the issue.

Any attempt to have a similar automatic increase for the business profits tax, or the rooms and meals tax or the real estate transfer tax would face certain defeat, he noted.

"I seriously doubt the average New Hampshire citizen would approve of their voice being taken away from them when it comes to the legislative body debating a tax increase that will impact them," Sculley said. "In fact, I believe most of them would be outraged."

Last year, Gov. Maggie Hassan said she supported efforts to reach an agreement to provide additional money for the state's highways and bridges, but did not endorse Campbell's bill.

This time, Hassan voiced support for the efforts by Rausch, a Republican state senator, and last week said on New Hampshire Public Radio's "The Exchange'' that she would sign the bill.

The governor's support is good, but the key supporter Rausch needs is not on board. Senate President Chuck Morse, R-Salem, continues to oppose any increase in the gas tax and continues to support carving out some of the gambling revenue for roads and bridges.

It is hard to see SB 367 passing the Senate, which it needs to do before the House can approve it or Hassan sign it.

Meanwhile, Department of Transportation Commissioner Chris Clement continues to beat the drum for more revenue to fix the state's roads and bridges and tackle needed turnpike projects, such as finishing the I-93 expansion, making upgrades to Spaulding, widening the F.E. Everett and adding overhead tolling around the Bedford Tolls, and redoing Interstate 293 exits in Manchester's Millyard.

The turnpike projects will mean a toll increase, and lawmakers can relax and take a deep breath because that decision rests with the Executive Council.

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Medicaid Expansion: Three Republican state senators and three Democratic state senators last week unveiled their proposal to expand the state's Medicaid program under the Affordable Care Act, but they - mainly the Republicans - don't want to call it Medicaid expansion.

Instead, we have the New Hampshire Health Protection Program, which works in much the same way as the proposal last fall that grew out of the Medicaid expansion study commission, with a few tweaks to break the stalemate between the Democratically controlled House and Republican-controlled Senate.

As is always true, the devil is in the details.

When the two sides last faced off, the key sticking points were when the expanded coverage would begin and how quickly newly eligible recipients would have to move to private insurance.

Under the bipartisan plan, Democrats got more of what they wanted: The new coverage could begin without the state first receiving a federal waiver - as soon as July 1 - and the newly eligible would not have to join a private insurance plan through the state's health insurance exchange until Jan. 1, 2016.

All along, however, Republicans have insisted the financial risk for expanding coverage to about 50,000 low-income adults should be carried by private insurers, and that is certainly what the program does.

Most of the talking points will be about providing federally funded health insurance to the state's working poor, but the compromise does a delicate dance that involves health care providers, insurance companies, state obligations and the newly eligible recipients.

All state residents who have employer provided or individual health insurance have seen their premiums increase consistently, and one big reason is what is called uncompensated care, or health services that aren't paid for, either by individuals or by the government, which pays about 50 cents on the dollar for care through the Medicaid program.

Senate Majority Leader Jeb Bradley, R-Wolfeboro, calls uncompensated care the state's largest hidden tax.

The hospitals and providers recoup their lost uncompensated care money by charging those of us with health insurance more, or what is called cost shifting. That is one of the reasons New Hampshire - one of the healthiest states in the country - has some of the highest premiums.

The state recently moved to a managed care program for Medicaid and hired three private companies to administer the program. When the contracts were negotiated, the three companies expected to pick up the 50,000 or so newly eligible Medicaid patients under the Affordable Care Act.

But the Supreme Court, in ruling that the ACA was constitutional, also said Medicaid expansion could not be mandatory for states.

With the state's plan to use private insurers to cover about 75 percent of the newly eligible Medicaid recipients, the managed care companies are looking at a much smaller pool of people than they envisioned when they signed the contracts.

The companies probably had their legal departments at work in case the state went ahead with its plan.

Instead, the new proposal would allow the companies to automatically enroll the newly eligible recipients - who would be on the managed care program for at least six months and probably 18 months - in private plans offered through the state's health insurance exchange.

Also, the companies' contracts with the state will be renegotiated beginning July 1 - the starting date for the newly eligible recipients - which will allow the state to increase its Medicaid reimbursement rates at no cost to the state because the federal government is paying 100 percent of the cost for the first three years of expansion.

That allows Medicaid rates to approach Medicare rates, which are about 100 percent of cost, and private rates, which are above 100 percent of cost.

That not only does away with a potential lawsuit, but also makes a major reduction in hospitals' uncompensated care costs.

And if the three managed care companies want to automatically enroll the new recipients, they will have to offer plans on the state's health insurance exchange.

That will increase competition in the individual health insurance market, which everyone has sought for years.

Increased competition should lower costs and force Anthem Blue Cross Blue Shield - the only carrier on the exchange this year - to broaden its provider network to include the nine hospitals that are not now in it.

That is why Senate Bill 413 will sail through the Senate when the senators vote on it after they come back from their February vacation.

Hassan backed the proposal during her State of the State address.

The House is bound to make some changes to the bill in order to capture a little more of what members want, but before April is done, New Hampshire will join the ranks of states expanding Medicaid eligibility under the ACA.

A public hearing on the bill will be held at 9:15 a.m. Tuesday in Room 100 of the State House before the Senate Health, Education and Human Services Committee.

Some conservative groups opposed to Medicaid expansion have scheduled a news conference for 8:30 a.m. Tuesday to remind Republicans they face primaries if they vote for the new plan.

There may be an bipartisan agreement, but that does not mean there will not be controversy.

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