NV hospitals spurn Medicaid cuts, support tax plan

Some Nevada hospitals are backing a Democratic plan for a new business tax as an alternative to Medicaid cuts they say have left their profession "in critical condition."

Sunrise Health System President Sylvia Young on Tuesday told the Senate Revenue Committee the Sunrise hospitals in Las Vegas absorb tens of millions of dollars in losses providing care for uninsured people or Medicaid recipients. Such deep losses could prompt more providers to turn away Medicaid patients.

"A Medicaid rate cut," Young said, "is essentially a tax on hospitals."

Gov. Brian Sandoval has proposed lowering the rate at which hospitals are reimbursed for serving Medicaid patients, although a legislative committee on Saturday reversed some of those cuts. The budget differences need to be reconciled.

The hearing comes as Democrats challenge Sandoval's no-new-taxes promise with a $1.2 billion tax plan. It includes a margin tax based on a business' gross revenues to replace an existing payroll tax Democrats say is unpredictable and discourages businesses from hiring.

Skeptics of the plan say the margin tax could distort the economy and hamper growth. Geoff Lawrence of the Nevada Policy Research Institute said it is a disincentive for businesses to cross the $1 million threshold for gross revenues - the point where the tax kicks in.

Several students who camped outside the Legislature Monday night as part of a protest to support the Democratic tax package urged the committee's endorsement as a way to mitigate education cuts for the state's poorest residents.

"I don't know what I'll tell these kids whose moms are addicted to drugs and whose dads are dead," said Michael Flores, a student activist with Progress Now Nevada. "I tell them education is the way out, but our education system is garbage."

While Senate Revenue focused on the margin tax, members of the Assembly Taxation Committee on Tuesday continued discussing AB569, a companion tax bill that would impose a transaction fee on services.

Some questioned the complexity of administering the tax, citing examples of fees collected by homeowners associations for landscaping upkeep or property management.

Michael Randolph, testifying from Las Vegas, also asked the committee to limit the tax rate.

"If I'm going to get taxed from cradle to grave," he said, "I would appreciate a cap of no more than 1 percent."

But Janine Hansen, with the Nevada Families Eagle Forum, said the measure would be an added burden on struggling families.

She said those she represents are "the ones paying the bills."

"They're paying the taxes. They're the ones that don't have a voice here, because they're home doing what they have to do," she said.

"When the level of taxation goes up, the level of prosperity goes down," Hansen said.

Paul Enos, representing the Nevada Motor Transport Association, said applying the tax to the shipping industry would lead to "pyramiding," where items that are transported, stored and then shipped again would be taxed at every stage.

Enos also said the proposal is regressive, because "sometimes your things of less value will cost you more to ship."

He cited an example of shipping two watches, a Rolex and a Timex. The costs and assessed tax for the shipping service would be the same, but the amount would consume a greater percentage of the overall cost of the less expensive Timex.

"These are difficult questions," he said.