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Op-Ed: Historic tax reform achieved – Gov. Reynolds, Iowa Legislature deliver for taxpayers

From: The Center Square 

The Iowa legislature on Thursday passed a historic tax reform measure. Going into the 2022 legislative session, Gov. Kim Reynolds and the Republican-led legislature made tax reform a priority. The tax relief bill passed by both chambers phases in a 3.9% flat rate for individual income tax by 2026, a major reduction from today’s top marginal rate of 8.53%. Beginning next year, Iowans will no longer pay taxes on retirement income. And the reforms will also pare down Iowa’s corporate tax credits while lowering our top corporate tax rate of 9.8% to a flat 5.5%.

All taxpayers in Iowa will see tax relief in this package of tax cuts; Senate Majority Leader Jack Whitver estimates this will save Iowans an average of $1,326 on their taxes on an annual basis. This is real money and Iowans are looking forward to an improved tax code. An ITR Foundation poll released this week shows 57% of Iowans support a new, low flat tax, while only 24% of Iowans oppose the change.

One of the major economic lessons from the past few years can be gleaned from the population changes in high and low tax states. States with low, or even no income taxes, are gaining population and creating more economic growth. Conversely, states with high tax rates and a penchant for government spending are losing population and seeing poor economic growth.

Just how significant are these reforms? A brief examination of Iowa’s income tax history will demonstrate the magnitude of this victory for taxpayers. In 1934, the first income tax (and sales tax, for that matter) was levied in Iowa to provide property tax relief. The rates in 1934 ranged from 1% to 5%, spread over five tax brackets. The corporate tax was introduced at 2% that same year, and eventually grew to become the highest corporate tax rate in the nation at 12%.

Individual income tax rates continued to increase until they reached a high point of 9.98% in 1987. In 1998, a 10% across-the-board rate cut brought the top rate down to 8.98% with nine tax brackets.

During her first year in office (2018), Gov. Reynolds made tax reform a priority and the legislature responded by passing, at the time, the largest tax cut in Iowa history. The individual income tax still had nine brackets, but the top rate was immediately lowered to 8.53%, with additional cuts planned, subject to future revenue triggers. Iowa’s 12% corporate income tax rate was reduced to 9.8% in 2021 as part of those changes, along with a modernization of Iowa’s sales and use tax.

In 2021, the legislature passed another tax reform measure, which not only phased-out the obsolete inheritance tax, but it also repealed the revenue triggers which had been established in the 2018 law to guide further individual income tax rate reductions. By repealing the triggers in 2021 the top rate would be lowered to 6.5% in 2023.

While the reforms passed in 2018 and 2021 were great steps in the right direction, this year’s set of income tax reforms dwarfs them. Under the new tax reform measure passed by the legislature this week, individual income tax rates will be reduced as follows:

  • 6 percent (2023)
  • 5.7 percent (2024)
  • 4.82 percent (2025)
  • 3.9 percent (2026)

In 2026 the individual reforms will be complete with all Iowans paying a flat, 3.9% income tax. And of course, the aforementioned exemption on retirement income begins next year.

The path to corporate rate reduction is slightly different. In addition to reducing the amount of tax credits that can be refunded to a corporate taxpayer, the top rate corporations pay will be reduced as corporate tax revenues grow. This ratcheting down will be complete once a flat rate of 5.5% is reached.

A critical part of Iowa’s successful tax reform story is often forgotten. The reason why Gov. Reynolds and the Republican legislature have been able to enact meaningful pro-growth tax reform since 2018 is because they have adhered to prudent budgeting. By practicing fiscal conservatism and keeping spending growth restrained, tax reform was made possible. “So how did we get there? We stuck to conservative budgeting practices,” Gov. Reynolds said in addressing a room full of Iowans for Tax Relief and NFIB members just this week. “There is nothing more vital than seizing the opportunity to return taxpayer dollars back to Iowans.”

It’s no surprise that Gov. Reynolds was chosen to give the GOP response to President Joe Biden’s State of the Union speech next week. In addition to being an example of how conservative leadership works, Iowa is becoming a national leader on state tax policy. Our state’s progress is a story worth sharing.

Tax Rates Matter

From: ITR Foundation Tax rates matter. Whether it is allowing individuals to keep more of their hard-earned income or creating a more competitive economic climate, tax rates have a significant impact on a state. States are in economic competition with each other for both businesses and people. It is important for Iowa not to become complacent as numerous states are looking at reducing tax rates in 2022. Governor Reynolds and the Republican led legislature are making sure that Iowa does not become complacent by making tax reform a priority.

The Tax Foundation’s 2022 State Business Tax Climate Index provides a good overview of each states’ tax climate. Iowa’s ranking has improved and is ranked 38 out of 50. Previously, Iowa was in the top ten states for worst tax climate.  A reason why Iowa’s ranking has improved is the significant progress that is being made on reducing tax rates.

Since 2018, Iowa has been working to lower income tax rates to provide tax relief and create a more competitive economy. Last year, Iowa’s corporate tax rate fell from 12 percent, the highest in the nation, to 9.8 percent, which ties with Minnesota. In addition, the legislature passed a tax reform measure that will ensure that the individual income tax will be reduced to 6.5 percent in 2023 and it phases out the inheritance tax.

Governor Reynolds, who has made tax reform a priority, has recently introduced a pro-growth comprehensive tax reform plan. The proposal calls for lowering the individual tax to a flat 4 percent rate by 2026. Governor Reynolds is also pushing to lower the corporate tax to be reduced from 9.8 percent to a flat 5.5 percent. Finally, her proposal will eliminate taxes on retirement income.

Governor Reynolds is demonstrating that fiscal conservatism works. Prior to the pandemic, Iowa’s fiscal house was in strong condition. During the pandemic the Governor kept the economy going and Iowa’s economy was able to weather the economic impact of the pandemic. Currently, Iowa’s budget has a $1.24 billion surplus and revenue projections are healthy. The surplus is expected to continue to grow. Iowa’s Taxpayer Relief Fund, which already has a $1.8 billion balance is estimated to grow to $2 billion later this year.

Governor Reynolds is correct in calling for lowering both the individual and corporate income tax rates. Reducing corporate taxes are often mistakenly viewed as “tax cuts for the rich,” but high corporate rates impact jobs and productivity. In addition, high corporate tax rates are passed onto consumers. Having a lower corporate tax will also encourage more economic growth.

Taxes on income, whether individual or corporate, are the most harmful for economic growth. Income taxes punish work, investment, savings, and productivity. Tax rates have a significant influence on the economic decisions individuals and businesses make on a regular basis. Both lose incentive to work if their earnings are consumed by taxes.

A major lesson from the federal census demonstrates that an exodus is taking place as people are leaving high tax states. A significant economic challenge for Iowa is the need for more workers and a lower tax climate will help attract new residents.

This is especially true as more Americans, both workers and employers, take advantage of remote work or who are looking to escape the plethora of problems plaguing many cities across the nation. “The ongoing migration from high- to low-tax states, and particularly states with low income taxes, is likely to accelerate with the growing viability of telework,” argues Timothy Vermeer, a Senior Policy Analyst with the Tax Foundation.

This year has the potential to be a record setting year for state tax reform across the nation. Currently 30 states are considering some form of tax relief and or reform. These are not just Republican “red” states, but also Democrat “blue” states. In 2021, 15 states enacted tax reforms.

Governor Reynolds in her Condition of the State address made a crucial point when she noted that her tax reform plan rewards work. “All of these tax cuts have one thing in common—they reward work. Work to be done and a lifetime of work to be proud of,” stated Governor Reynolds.

Tax reform is about rewarding work, allowing individuals and businesses to keep their hard-earned income, and in return that creates a stronger and economically competitive Iowa. Governor Reynolds stated that allowing taxpayers to keep more of their income will result in more dollars being “spent every single day on Main Streets, in grocery stores, and at restaurants across Iowa. We’ll see it spent in businesses instead of on bureaucracies.”

Governor Reynolds, along with the Iowa House and Senate, have each introduced tax reform bills that will make Iowa more competitive. Iowa is demonstrating that prudent budgeting along with responsible tax reform is creating a more competitive economy, while unleashing opportunities.

 

With workforce still down, Delaware restaurants at ‘most vulnerable’

From: Delaware Business Times

WILMINGTON — For nearly two years, Delaware’s restaurants have struggled to keep food on the table and in take-out boxes. But now, the Delaware Restaurant Association President and CEO Carrie Leishman thinks that unless something is done fast, the First State could see many eateries close their doors for good.

During the pandemic, Delaware’s restaurant industry lost more than $1.2 billion in sales, according to figures from the DRA and the state finance department. That number has not been updated since mid-May.

“Restaurants are at the most vulnerable point of recovery, where the workforce still hasn’t come back and many establishments are making slim to no profit,” Leishman said. “One restaurateur told me recently that we should expect to see more restaurants close, up and down the state, in the next 18 to 24 months.”

Nationally, the restaurant industry has yet to hire more than the 650,000 jobs lost in the early days of the pandemic. In Delaware, the hospitality industry has shed 4,300 jobs between December 2019 and December 2021.

Leishman and the DRA are campaigning for new measures to ideally boost the restaurant workforce in 2022, namely loosening labor laws for teenagers and the re-entry workforce as well as subsidizing benefit programs.

In Delaware, minors 16 and 17 years old cannot work more than 12 hours in a combination of school and work hours per day and must have an 8-hour period of no work and no school in between.

For those who are incarcerated, the Carney administration established a blueprint last year to create apprenticeship programs and work with Delaware Technical Community College to expand opportunities for human services. Later that year, the National Restaurant Association awarded Delaware funds to establish a Hospitality Opportunities for People (re)Entering Society (HOPES) program, which is a job skills program for formerly incarcerated people looking to work in the restaurant industry.

“We’re grateful for the ARPA money from Gov. Carney, and it’s the first step in recovering our workforce. But there’s more that needs to be done, whether it’s raising the number of apprenticeships for re-entry or disability issues. There’re systemic issues at work here, and it’s just one more obstacle that restaurants have to overcome,” Leishman said.

A new DRA report shows that against the backdrop of the national labor shortage, Delaware restaurants are facing hard challenges between inflation and shifting consumer patterns. Inflation continues to rise at a record-setting pace, and 83% of 200 Delaware restaurant operators surveyed reported costs were higher in 2021 compared to 2019. In the same time period, 68% of restaurants said sales volumes were lower.

“Inflation can eat up about 3% to 5% of your profit margins, and restaurants are already operating on razor thin margins,” Leishman said. “Prices are at the highest we’ve seen in 40 years, and customers value their dollar, especially since it doesn’t have enough buying power as it used to. Restaurants are competing with groceries, streaming services, and other entertainment — there has to be a breaking point somewhere.”

Compared to 2019, 68% of restaurants said sales volumes were lower in 2021. It’s a trend that’s echoed across the country. The Morning Consult, a global business intelligence company, reported that 68% of adults are not eating at restaurants as often as they would like, the highest it has been before the omicron variant disrupted life starting in November.

More than half of nationwide restaurant operators say it will be a year or more before business conditions return to normal, according to the DRA report.

William W. Erhart, Elder Law Attorney Joins Board at A Better Delaware

FOR IMMEDIATE RELEASE: Wilmington, Del.William “Bill” Erhart has joined as an Advisory Board member at A Better Delaware, a non-partisan public policy and political advocacy organization that supports pro-growth, pro-jobs policies and greater transparency and accountability in state government.

Chris Kenny, Chairman and Founder of A Better Delaware announced the addition of Erhart to the board this past week. “William Erhart is one Delaware’s top experts in elder law and estate planning”, said Kenny. “ABD is fortunate to benefit from his extensive knowledge of Medicaid and Veteran benefit systems and expertise in financial planning. His deep understanding of the effects of rising costs in healthcare and living expenses on our aging population will be invaluable as we work to advocate for them.”

“I see my role at A Better Delaware as an extension of my work as an Elder Law Attorney, ministering to the elderly and veterans through advocacy on their behalf. I look forward to advising ABD as they help protect our most vulnerable citizens against the effects of fraud waste and abuse within Delaware’s healthcare system.”

Bill, a Certified Elder Law Attorney, became a lawyer in 1982 and focusses on estate and elder law exclusively. Bill’s time in the Marines after High School provided the foundation for his personal and professional path. Following his service, Bill entered the Reformed Episcopal Seminary, earning his Bachelor of Divinity degree in 1979. After graduation from Rutgers Law School, Bill served as law clerk for Superior Court and began his legal career as a prosecutor before entering private practice.

Throughout his career Erhart has helped thousands of individuals and families with estate planning, family trusts, veterans’ benefits, Medicaid planning and probate. Erhart’s professional associations include Delaware State Bar Elder Law Section Chair (2010-2012), National Academy of Elder Law Attorneys, and National Elder Law Foundation. Erhart has been recognized as a top Delaware Elder Law Attorney by Delaware Today Magazine, Super Lawyer Magazine, and Peers.

“In William Erhart ABD has a compassionate dedicated champion for improving senior and veteran’s quality of life. “He will be an invaluable resource as we advocate for senior and veteran tax reducing bills, reforming the Health Resources Board and a formal audit of Medicaid eligibility.”- Kathleen Rutherford, Executive Director, A Better Delaware.

   ABOUT A BETTER DELAWARE

A Better Delaware is a non-partisan public policy and political advocacy organization that supports pro-growth, pro-jobs policies and greater transparency and accountability in state government. A Better Delaware can be found on Facebook @abetterdelaware and at www.ABetterDelaware.org.

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Rent Availability and Cost by State

From:QuoteWizard  Americans are moving, and it’s changing the price of rent nationwide. Our team of analysts found that this reshuffling has dramatically changed the number of available apartments in almost every state, creating a significant issue of supply and demand that has reversed long-standing trends in the price of rent.

Key findings:

  • The number of available apartments has decreased by more than 50% in Nevada, Vermont and Delaware.
  • Indiana, New Jersey and Massachusetts saw their numbers of available rental properties increase by over 70% each.
  • Nationwide, 10 medium-sized cities had their numbers of available apartments decrease by 50% to 73%.
  • Major cities like New York, Los Angeles, Phoenix and Boston had 50% to 400% increases in their numbers of available rental properties.

Our team of analysts tracked changes in America’s rental market over the last two years. We found that while the number of available apartments has stayed the same nationwide, some states have seen their numbers of available rental properties drop by as much as 60% or increase by up to 175%.

The change in available apartments (vacancy rate) is strongly tied to both the state’s population and the average price of rent. Since 2019, the vacancy rate has gone down by as much as 60% in less populous states and risen by as much as 175% in more populous ones. Additionally, of the 29 states that had decreases in their vacancy rates, 23 of them also saw the average price of rent increase.

CHANGES IN AVAILABLE APARTMENTS BY STATE
Rank State Change in available apartments 2019-2021 Change in rent cost 2019-2021 Current vacancy rate
1 Nevada -59.2% 6.4% 3.1%
2 Vermont -56.1% -4.3% 1.8%
3 Delaware -54.5% 12.3% 3%
4 Kentucky -42.1% 1.6% 6.2%
5 Alabama -39.9% 5.2% 9.5%
6 Virginia -38.8% -7.8% 4.9%
7 Oregon -37.9% -1.6% 4.1%
8 Arkansas -36.4% 3.9% 7%
9 Maryland -33.8% 0.8% 4.7%
10 Oklahoma -32.5% 4.2% 7.9%
11 Mississippi -30.2% 5.3% 6.7%

Rental changes in certain cities have been even more dramatic. Our analysts looked at the 75 largest metropolitan areas in the country and found a consistent pattern. The number of apartments available to rent went up in large cities and down in smaller ones, indicating that people are moving out of larger metropolitan areas and moving into smaller ones.

CITIES WITH THE LARGEST INCREASE IN AVAILABLE APARTMENTS
City/metro Increase in available apartments 2019-2021 Change in rent cost 2019-2021 Current vacancy rate
New Haven, CT 400.0% 3.8% 9.0%
Boston, MA 305.9% -7.6% 6.9%
Cape Coral, FL 266.7% 3.3% 8.8%
Buffalo, NY 169.2% N/A 14.0%
San Jose, CA 160.0% -13.4% 6.5%
Bridgeport, CT 108.6% 3.6% 7.3%
San Francisco, CA 102.6% -14.0% 7.9%
Denver, CO 93.8% -0.2% 6.2%
Indianapolis, IN 91.2% 6.8% 10.9%
Detroit, MI 85.1% 5.4% 8.7%
New York, NY 62.5% -5.6% 6.5%

CITIES WITH THE LARGEST DECREASE IN AVAILABLE APARTMENTS
City/metro Increase in available apartments 2019-2021 Change in rent 2019-2021 Current vacancy rate
Richmond, VA -73.7% 7.6% 2.0%
Raleigh, NC -69.2% 3.5% 2.0%
Grand Rapids, MI -65.3% 5.7% 1.7%
Fresno, CA -63.4% 15.7% 3.4%
Memphis, TN -61.5% 10.7% 5.0%
Las Vegas, NV -56.3% 9.6% 2.8%
Syracuse, NY -54.2% 9.8% 8.2%
Milwaukee, WI -53.4% 3.1% 3.4%
Riverside, CA -52.7% 15.7% 2.6%
Oklahoma City, OK -51.3% 5.0% 5.7%
Columbia, SC -46.8% 9.2% 5.8%

Americans are moving out of highly populated, heavily congested urban centers and into more suburban ones. Much of this change happened during the pandemic, but the signs go back to the first quarter of 2019. The difficulty is that while rental habits and housing prices have changed, income has largely remained stagnant. Our worry is that these trends could create a situation where long-time residents can no longer afford to live in the place they’ve called home for so long.

Methodology

To calculate the change in rental vacancy rates, we looked at housing data from the United States Census Bureau and compared the first quarters of 2019, 2020 and 2021. Current vacancy rate data was also compiled using this data.

 

Delaware sees drop in unemployment as job sectors numbers rise

From:(The Center Square) – While the number of new unemployment claims is on the rise across the country, Delaware is bucking that trend.

The Department of Labor released its Unemployment Insurance Weekly Claims report, and The First State saw a decline in first-time filers.

Nationally, according to the report, there was an increase of 23,000 initial claims filed for the week ending Feb. 12, which put the total at 248,000. The previous week there were 225,000 claims filed, putting the four-week average at 243,250 claims filed, a decrease of 10,500 from the previous week’s average.

For the week ending Feb. 12, according to the report, Delaware saw a drop of 296 initial claims being filed. There were 354 advance claims filed for the week, and 650 the previous week.

The state’s Department of Labor, in its December 2021 Monthly Labor Review, reports the state’s unemployment rate decreased by one-tenth of a point to 5.0%. March 2020 was the last time the state’s unemployment rate sunk below 5%, when it was 4.8% that month. The state currently ranks 37th in the nation.

According to the report, the state ended the year with 11,900 more jobs than it did when the year began. Over the course of the year, the Leisure & Hospitality industry saw an increase of 5,800 jobs, while Wholesale & Retail Trade, and the Construction industry, saw an increase of 2,300 jobs over the year. However, Professional & Business Services saw a decrease of 1,300 jobs and Manufacturing saw a decrease of 300 jobs.

INELIGIBLE MEDICAID ENROLLEES ARE COSTING TAXPAYERS BILLIONS

From: The Foundation for Government Accountability

KEY FINDINGS

Overview

While initially meant as a program for the truly needy, Medicaid has bloated into a massive welfare program for millions of able-bodied adults dependent upon the government.12 Medicaid has rapidly become the largest line item in state budgets, reaching more than $700 billion per year.34 More than 89 million people are now dependent on the program, nearly two and a half times as many as in 2000.567 Unfortunately, as Medicaid has grown, so has its mismanagement.

Today, more than one in five dollars spent on Medicaid is improper.8 Virtually all improper payments are due to eligibility errors, administrative oversights, or outright fraud.9 And because eligibility errors make up more than 80 percent of improper payments, countless individuals are receiving Medicaid benefits for which they are not eligible.10

However, never-before-released data shows the improper payment crisis is even worse in several states. Improper payment rates have reached staggering proportions that threaten the sustainability of the Medicaid program.

While the national improper payment rate for Medicaid is nearly 22 percent, in some states the situation is far more dire.11 Never-before-released data from state Medicaid agencies reveals that improper payment rates have reached as high as nearly 50 cents for every Medicaid dollar spent in some states.

Equally concerning is that an overwhelming number of improper payments are due to eligibility errors, signaling that these are not simply administrative blunders—but rather serious situations of countless enrollees receiving resources for which they are not eligible.

Ohio

Ohio’s Medicaid program is nearing insolvency. The program now costs taxpayers nearly $32 billion per year—almost double what it cost a decade ago and more than four times what it cost in 2000.12131415 These skyrocketing costs have crowded out funds for all other state priorities, as Medicaid now consumes more than half of Ohio’s entire general revenue budget.16

The pandemic has only made these problems worse, with enrollment spiking by more than half a million people since February 2020.17 As a result, Ohio’s Medicaid program has been plagued by major budget shortfalls, leading to further cuts.1819

Coupled with Ohio’s Medicaid enrollment and spending crisis is an equally pernicious improper payment crisis. Ohio’s Medicaid improper payment rate is an astonishing 44 percent, more than twice the national average.20 Virtually all of that improper spending—98 percent of it—was caused by eligibility errors.21 At this pace, Ohio’s Medicaid program is on a clear trajectory towards calamity.

Illinois

Illinois has also struggled with a rapidly growing Medicaid program. The program now costs taxpayers nearly $29 billion per year—more than double what it cost a decade ago and nearly four times what it cost in 2000.22232425 Enrollment has swelled to nearly 3.9 million people—growing by more than 750,000 new enrollees in just one year.26 As a result, Illinois’s Medicaid program now consumes nearly one in every three dollars in the state budget.27

But much of this spending is improper. The state’s official improper payment rate sits at more than 37 percent—far above the national average.28 A whopping 95 percent of these improper payments are due to eligibility errors.29

Missouri

As the Show-Me State gears up to implement ObamaCare’s Medicaid expansion, the state’s Medicaid program is already on fragile footing. Before expansion, Missouri’s Medicaid program cost taxpayers nearly $11 billion—nearly three times what it cost in 2000.30313233 The program already consumed nearly 40 percent of total expenditures—the highest level of any non-expansion state in the country.34 With Missouri implementing ObamaCare expansion effective October 1, 2021, these budget issues are only going to worsen, as expansion could add nearly 600,000 more enrollees to the program.35

Much of this spending growth has been driven by waste, fraud, and abuse. Nearly one in three dollars Missouri spends on Medicaid is improper, with roughly 70 percent of those improper payments driven by eligibility errors.36 As Missouri implements ObamaCare expansion over the coming months and years, it can only look forward to even greater improper payments in the future.

Kansas

By rejecting ObamaCare’s Medicaid expansion, Kansas has seen lower enrollment and spending growth than many states, helping it better weather the COVID-19 pandemic. But even without expansion, the cost of Kansas’s Medicaid program has more than tripled since 2000, reaching nearly $4.4 billion in 2021.373839 Medicaid now consumes nearly one-fifth of the state’s total expenditures.40

But nearly 28 percent of Kansas’s Medicaid spending is improper—with an eye-popping 99 percent of these payments attributable to eligibility errors.41 Democrat Governor Laura Kelly has repeatedly lobbied to expand Medicaid under ObamaCare, which would add at least 262,000 more able- bodied adults to the program and undoubtedly drive this improper payment rate even higher.42

It is no coincidence that the two states with the highest publicly available improper payment rates have expanded Medicaid under ObamaCare. In fact, the national improper payment rate in Medicaid has nearly quadrupled since ObamaCare expansion was first implemented.43

Federal Medicaid spending has grown by more than $200 billion since 2013—an increase of 80 percent.444546 Improper payments make up more than 40 percent of that growth.4748495051 Medicaid expansion not only coincided with the spike in improper payments, but were a key cause of it. The Obama administration paused annual reports auditing Medicaid spending during the rollout years of Medicaid expansion, both delaying and concealing critical information regarding improper payment rates.52

In California, auditors found nearly 450,000 Medicaid expansion enrollees who were ineligible or potentially ineligible.53 In Ohio, federal auditors found that nearly 300,000 of the state’s then-481,000 expansion enrollees were potentially ineligible, undoubtedly explaining why Ohio has one of the highest improper payment rates in the nation.54 Similar audits and reports in other expansion states—such as Colorado, Kentucky, Louisiana, Minnesota, New Jersey, and New York—have reached equally alarming conclusions.55565758596061

But as bad as Medicaid expansion’s effect on improper payment rates is, we still do not know the full scope of this out-of-control crisis.

The True Extent of Improper Payments is Still Hidden.

In 2021, improper Medicaid spending hit a record high.62 But official reports may only scratch at the surface of waste, fraud, and abuse in the Medicaid program, as the true extent of improper payments remains hidden.

In 2020, the U.S. Department of Health and Human Services suspended the annual reports auditing Medicaid spending for 17 states, including large expansion states like California, Massachusetts, and New Jersey.63

Worse yet, Congress imposed federal Medicaid handcuffs on states in 2020 that provided a temporary boost in federal Medicaid funding in exchange for states agreeing not to remove ineligible enrollees from their Medicaid programs.646566 As a result, millions of individuals are now locked into coverage for which they are no longer eligible.6768

Medicaid enrollment has grown by an estimated 18 million people since February 2020.69 State data reveals that more than 90 percent of that growth has been caused by states’ inability to remove ineligible enrollees. This disastrous arrangement has further muddied the waters of determining accurate improper payment estimates.

BOTTOM LINE: Policymakers should work to reduce improper payment rates and improve transparency.

States do not need to wait for the Biden administration to act in order to get improper Medicaid spending under control. State policymakers have a wide variety of tools at their disposal to reduce improper payments and improve transparency.

FIRST, states should remove the Medicaid handcuffs imposed by Congress. By rejecting the temporary extra funding, states can regain control over their Medicaid programs, conduct redeterminations and renewals, and remove ineligible individuals from their programs.

SECOND, states can implement Medicaid program integrity measures, such as cross-checking Medicaid enrollees against death, employment, wage, and residency records. States can also verify Medicaid applications received through the ObamaCare exchange and prohibit individuals from self-attesting to eligibility without verification. In 2021, Arkansas and Texas enacted several of these commonsense program integrity reforms to reduce Medicaid improper payments and preserve Medicaid resources for the most vulnerable.7071

FINALLY, states can require their Medicaid agencies to submit annual reports on improper payment amounts and causes in order to better monitor and address the issue.

It is long past time for policymakers to ensure that Medicaid is preserved for truly needy Americans—not for waste, fraud, and abuse.

APPENDIX: STATES’ MOST RECENT IMPROPER PAYMENT RATES (2019) 

 

Defunct literacy council money goes to Kent, Sussex programs

From: Town Square Live!

Money allotted to a defunct literacy council has been going to to family literacy programs at three Delaware high schools, via the Delaware Department of Education.

The issue of where $278,000 listed in state budgets was going came up in Tuesday’s meeting of the Joint Legislative Oversight and Sunset Committee.

The committee’s staff said that the cash continued to be allotted to the Interagency Council on Adult Literacy, which hasn’t met since June 2015.

The committee asked the staff to pursue what was happening to the money designated for the council, also known as ICAL.

The Sunset Committee reviews state board, councils and commissions to make sure they are needed. If they are, the committee considers how to improve or support them.

“The purpose of the ICAL monies was to fund the two-family literacy programs in the state – Polytech Family Literacy and Sussex Tech Family Literacy,” said Alison May, spokeswoman for the Delaware Department of Education. “Each year these programs have used this money to support these family literacy services.”

The Polytech and Sussex Tech programs are valuable resources for English Language Learner families in Kent and Sussex counties she said.

The results are documented in the Adult Education Annual Reports, which she provided.

The reports say ICAL, and some federal funding is being used for programs that are designed to improve literacy levels of young children by providing instruction to parents. The programs combine adult basic education, parenting education, early childhood development activities for children and interactive literacy programs.

Classes are taught in schools, libraries and public housing authorities.

In 2017, 2018 and 2019, the reports say, Polytech High School and Sussex Tech High School used the literacy money.

In 2020, Polytech, Sussex Tech and Christina High School are listed under the literacy funding, with Polytech and Sussex Tech receiving the ICAL money and Christina receiving federal Dual Generation funding.

In 2021, three family literacy programs are listed. Again, Polytech and Sussex Tech received ICAL money and Christina got federal funding.

Delaware Restaurant Association issues dire plea for help

From: Delaware Live!

The organization that represents restaurants in Delaware said the industry is far from being out of the woods after two years of the COVID pandemic.

The Delaware Restaurant Association’s 2022 ‘State of the Restaurant Industry’ report found that restaurants continue to struggle to keep their doors open amid a surge in coronavirus cases, inflation, a labor shortage, and supply chain delays.

“Alarmingly, Delaware’s restaurant industry remains down 4,300 jobs from pre-pandemic employment levels,” the report says. “Data from BLS.gov shows DE leisure and hospitality jobs at 49,100 in December 2021, down from a high of 53,400 in December 2019.”

According to the National Restaurant Association, the United States lost more than 650,000 restaurant and hospitality industry jobs early in the pandemic and still hasn’t recovered. The group found that to be a loss of 45% more than the next closest industry.

The national association is now asking Congress to replenish the Restaurant Revitalization Fund, a now-depleted $28.6 billion program created by the American Rescue Plan Act that provides emergency assistance for eligible restaurants, bars, and other qualifying businesses impacted by COVID-19.

“It’s dangerous to see restaurants open and think that everything is ok and profits have returned,” said Carrie Leishman, president & CEO of the Delaware Restaurant Association. “Industry subsidies and relief programs in 2020 helped, but the reality for restaurants is that business conditions are more difficult now than a year ago during the height of the pandemic.”

The Delaware association notes in its report that new data collected from Delaware restauranteurs highlights the devastating impact of the omicron variant and the rapid deterioration in business conditions for Delaware restaurants.

According to the survey, 90% of restaurants experienced a decline in customer demand for indoor on-premises dining in recent weeks, as a result of the increase in coronavirus cases due to the omicron variant. 86% of operators report that business conditions are worse now than three months ago and 80% say their restaurant is less profitable now than it was before the pandemic.

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The survey also found that Delaware restaurants took a number of actions in recent weeks as a result of the increase in coronavirus cases due to the omicron variant.

Among those actions, 70% of those surveyed reduced hours of operation, 50% closed on some days when they would normally be open, 30% reduced seating capacity while 7 in 10 employers say their restaurant currently does not have enough employees to support customer demand. Most operators expect their labor challenges to continue throughout 2022.

Data collected from the National Restaurant Association did find that consumer spending in restaurants trended steadily higher during the first half of 2021.

That trend was driven by rising vaccination numbers, the easing of capacity restrictions and healthy household balance sheets.

“However, that positive trajectory stalled during the second half of 2021, with sales dropping back below pre-pandemic levels by December 2021 – the lowest monthly reading since August,” the report says, noting a Morning Consult report that found the percentage of U.S. adults who say they feel comfortable dining out has fallen by 9 points since Oct. 30, 2021.

“To make matters worse, restaurant operators are dealing with a material increase in costs across the board as U.S. inflation hit 7% in December.”

This marks the fastest pace since 1982 — “an increase that is tough to swallow for an industry that typically generates, under good conditions, 3-to-5% profit margins. Coupled with the labor inflation necessary to retain enough workers to keep the doors open, we’re finding ourselves in the middle of a malevolent storm,” the association says.

Restaurant survey data also reveals:

  • 68% of Delaware restaurant operators report lower sales volume in 2021 than in 2019
  • 83% of Delaware restaurant operators say their restaurant costs were higher in December 2021 than December 2020
  • 74% of Delaware restaurant operators report slower customer traffic in 2021 than 2019
  • 96% of national restaurant operators experienced supply delays or shortages of key food or beverage items in 2021
  • More than half of nationwide restaurant operators say it would be a year or more before business conditions return to normal

“More support is vital to meet the current challenges our industry is facing,” Leishman concluded. “Labor and inflationary pressures, as well as a mask mandate that our neighboring states do not require, have added increasing pressure and tensions to our workforce.”

Currently, nine states, including California, Delaware, Hawaii, Illinois, Nevada, New Mexico, New York, Oregon and Washington have mask mandates for indoor public places, regardless of vaccination status.

Nearby Maryland, Pennsylvania and New Jersey do not have such mandates. For most Delawareans, one of those destinations is likely to be within a thirty-minute drive.

The association reiterated in its report that sustained support for restaurants is needed immediately.

“While the bipartisan passage of House Bill 290,” a bill to permanently allow the sale of to-go liquors, “was a small victory for restaurants in Delaware, more support dedicated to sustaining the industry during this critical climb towards recovery is vital.”

The group said that the following list of items are steps the Delaware government can take to alleviate the pressure on the restaurant industry:

  • Immediate reinstatement of targeted relief funds to Delaware restaurants
  • Support an immediate moratorium on restaurant industry gross receipts tax
  • Support regulatory/licensing fees moratorium for two years
  • Introduce flexible labor laws for entry-level teen workers
  • Limit regulatory barriers for re-entry individuals
  • Subsidize mental health and health benefits for front line workers
  • Oppose legislation that negatively impacts restaurants and/or threatens the rebuilding of its workforce
  • Provide a clear timeline on removal of the current Delaware mask mandate
  • Support pro-entrepreneurial/small business and pro-restaurant legislation

“The Delaware restaurant industry recovery is paralyzed and nowhere near complete,” the group said. “As Congress works to provide a further financial lifeline for restaurant operators, the [aforementioned] are actionable items we believe are within the purview of our Delaware state leadership and government officials to help rebuild our industry and workforce.”

Lack of Focus Not Funding: Delaware’s FY23 Budget

From: Kathleen Rutherford, Executive Director, A Better Delaware

WILMINGTON, Delaware – In Governor John Carney’s budget presentation, he proposes a whopping $4.9B operating budget – 4.6% higher than the unprecedently enormous FY22 budget. Top spending priorities include education and workforce development –– two areas that have had marginal results despite increased funding year over year. Absent were any plans to reduce Delaware’s unfunded pension debt, reduce healthcare costs, or significant tax relief. More focus on delivering effective outcomes rather than increased spending would be more beneficial to Delawareans.

EDUCATION: Increased spending on education is not producing better results for our students. Spending per student in Delaware has increased by $5,000 ($13,000-$18,000) over the past eight years, while test scores have stagnated or declined. This year 26% of students tested from grades 3 to 8 were proficient in math, and 41% of students tested were proficient in English. The current proposed education budget focuses on spending – 10% of the allocation on infrastructure and approximately 70% for staffing following Delaware’s 80-year-old funding method.

Added to that pile of cash is Delaware’s supplemental federal funding that amounts to nearly $411M through the Elementary and Secondary School Emergency Relief Fund (ESSER). The DOE (Delaware Department of Education) can spend funds on programs to address learning loss due to remote learning during the pandemic. Our neighbors in Virginia spent $12,216 per pupil in the 2020-2021 school year, with 69% of their students proficient in reading and 54% proficient in math. Delaware’s educational focus is missing the mark.

WORKFORCE DEVELOPMENT: Delaware is not getting enough people back to work. Our state ended 2021 with 5.1 % unemployment, landing us in the bottom third of all states with 6,500 fewer people employed than in 2019, pre-pandemic. The Governor’s announcement of $50M in workforce development will not work if the plan does not focus on training for jobs that need to be filled now. Georgia shows us how to fill worker shortages without extra funding. This state had the fifth lowest unemployment rate in 2021 (2.8%) in the nation. Its Quick Start workforce training program is credited with getting people back to work by offering skills-based training to qualifying businesses at no cost, passing savings along to business owners who can reduce and, in some cases, eliminate training costs.

Helping the 75% of Delawareans who lost jobs in the early months of the pandemic who had a 12th grade or below education with only 49% of 12th graders proficient in reading and 28% proficient in math in the 2020-2021 school year would be a good place to start.

HEALTHCARE: Delawareans have suffered from high health care costs and limited access for years, something that the FY23 budget does not properly address. Medicaid is approximately 25% of our state’s budget and is expected to grow larger. Over half of Delaware’s Medicaid funding comes from the federal government, but that money is expected to shrink in the future, placing the burden on Delaware taxpayers. Delaware’s health care costs are already one of the highest per capita in the nation. The best path forward that Delaware could take would be to abolish the Health Resources Board. The Governor’s office and the Delaware Prosperity Partnership could work together with strategic funds to incentivize and entice new hospital systems to come to Delaware. This would improve access to health care at reduced costs, with quality outcomes.

PENSION DEBT: How long is our Governor going to ignore the elephant in the room? Year after year, Delaware’s ballooning pension debt is not addressed in the budget. Delaware’s overall financial condition worsened by 21% during the onset of the pandemic, mostly because of post-employment liabilities. A Truth in Accounting report from 2021 revealed that Delaware still has $1,819,158,000 of unpaid pension debt. With more than an $800M surplus, it is time to pay down this massive debt.

TAXES: While Governor Carney’s budget did include a 2021 unemployment insurance benefits tax exemption, this does nothing to help the workers who never took a day off during the pandemic or struggling small businesses. A 2022 study by the Tax Foundation shows that Delaware ranks dead last in corporate tax burdens and 44th in individual income taxes. With a burden of $31,300 per taxpayer. Several tax relief bills have been proposed this year which would make a 10% across-the-board cut to the state’s personal income tax rates; would reduce the corporate income tax by 30% and slash the gross receipts tax – sometimes referred to as Delaware’s hidden sales tax – by 50%. These proposals will collectively allow the taxpayer to retain more than $282M this year and more than $321M next year.

In the coming weeks, the Joint Finance Committee will conduct hearings where the Executive Branch will present their spending priorities which will eventually culminate as the General Fund Budget to be approved by the end of session on June 30th. Please contact your legislators in Dover and let them know why it is important for them to use these unprecedented resources more efficiently, enabling tax relief for you and your family.