Bed tax sore spot

A battle between state and federal governments over a bed tax is putting nursing home residents in the middle.

At stake is a nearly $9 a day tax on all occupied nursing home beds in the state. The tax was instituted in 2004 in hopes of drawing extra Medicaid funding. But the feds said the income tax credit that allowed nursing home patients to deduct the tax from their state income was illegal.

Rep. Jose Campos, D-Santa Rosa, said the surcharge would unfairly tax private-pay individuals who are often on fixed incomes. Campos supported the measure to implement the surcharge in the 2004 session, but now says it should be repealed altogether.

“The people on Medicaid, there is no burden on them,” Campos said. “It is the people on the private pay, their portion is not being covered and it has to come out of their pockets.”

A bill that calls for the repeal of the daily bed surcharge and the repeal of the tax credit has been introduced in the state House of Representatives and the Senate. The fiscal impact report produced in the Senate shows about an $18.5 million negative impact on state revenue if passed.

But according to Sen. Stuart Ingle, R-Portales, who said he supports the full repeal of the surcharge, the repeal bill may never get out of committee.

“I think the bill is basically tabled now,” Ingle said.

Ingle said the bed tax just took the tax rate too high for those in nursing homes, who are already paying a sales tax for the services.

Federal officials have said to receive federal funding, nursing-home residents cannot receive tax breaks from the surcharge, said Betina Gonzales McCracken, a spokeswoman for the New Mexico Human Services Department.

“The feds don’t have a problem with the bed surcharge, they have a problem with the tax credit” that benefits between 1,500 and 1,800 individuals statewide, she said. “The federal government has made it clear that if the tax credit is repealed they will continue to fund our Medicaid.”

She said the federal government has reimbursed the fund so far, but if the tax credit is not repealed this session they could quit reimbursements and recoup funds already allocated.

At Retirement Ranch, approximately 35 out of 104 residents are considered private pay since they pay for their stay from their own pockets. The rate for private residents recently jumped from $120 to $132 a day, in part to make up for the surcharge, said Retirement Ranch Administrator Marv Schultz.

“Unfortunately private pay people took the brunt of that increase. All they end up doing is using up their resources much quicker and then they have to apply for Medicaid,” he said.

Andrew Chitwood, 95, has been in the Retirement Ranch for about the last 20 months.

“It’s an unfair tax anyway you look at it. It’s on sick people who aren’t making any money,” Chitwood said. “It’s just like throwing a rope on a group of people, and saying all the blue eyes are going to pay a tax to keep the brown eyes eating.”

Bills the local legislators have introduced so far (Editors note: None of these bills have passed yet):

Sen. Stuart Ingle, R-Portales

Senate bill 379 — Provides an additional judge for the 9th Judicial District and allocates $312,400 for salaries and benefits, furniture, supplies and equipment for on additional district judge and support staff.

Senate bill 221 — Provides limitations on certain civil penalties that can be assessed against violators of certain environmental acts, such as the Environmental Improvement Act or the Hazardous Waste Act. Civil penalties would be capped at $250,000.

Sen. Clint Harden, R-Clovis

Senate bill 578 — Allocates $1.7 million to the energy, minerals and natural resources department for the expansion of five existing state parks, including $250,000 for the operation of the proposed Vietnam veteran’s memorial state park in Colfax County.

Senate bill 91 — Provides authority to do criminal background checks for those applying to work at the Children, Youth and Families Department.

Senate bill 94 — Makes income received by veterans tax exempt in New Mexico.

Sen. Gay Kernan, R-Hobbs

Senate bill 138 — Provides $400,000 to the Public Education Department to provide grants to schools that want to implement core curriculum frameworks.

Senate bill 137 — Allows any law enforcement agency in the state the discretion to send students to certified regional law enforcement training facilities.

Rep. Anna Crook, R-Clovis

House bill 784 — Allows disabled people to get special motorcycle registration plates by showing severe mobility impairment. It also redefines severe mobility impairment from one who has lost limbs to one who can’t walk 100 feet without stopping, can’t walk without a brace or is restricted by a lung disease.

House bill 271 — Authorizes the New Mexico Finance Authority to make loans or grants for certain water projects, such as to the Eastern New Mexico rural water system in Curry County.

Rep. Jose A. Campos II, D-Santa Rosa

House bill 163 — Creates a tax credit to encourage high-wage jobs in rural communities. The credit can be 10 percent of the wages and benefits of the high-wage job holder, but may not exceed $12,000 in total.

House bill 164 —Allows for an income tax deduction for survivor benefits from a peace officer, firefighter or member of the armed services killed in the line of duty. Deductions claimed can be equal to survivor benefits received.

Rep. Brian K. Moore, R-Clayton

House bill 75 — Appropriation of $22.5 million to fund an eight-county regional alcohol treatment center from 2006 to 2010. Curry, Quay and Roosevelt counties would be included.

House bill 783 — Requires participation in a sex offender treatment program as a condition of probation for sex offenders.

House bill 47 — Removes cougars from the list of game animals regulated by the Department of Game and Fish.

Source: New Mexico Legislature Web site