For the fourth time in the past week, a bill to grant spending authority for Arkansas' Division of Medical Services in the next fiscal year fell short of obtaining the required three-fourths vote for approval in the Arkansas House of Representatives.
According to legislative leaders, the difficulty in passage last week was connected to conflicting proposals to reduce the tax on the sale of used cars. Furthermore, if the Medical Services appropriation fails to pass, then lawmakers will have to rework a different bill that sets spending priorities for general revenue. That bill must pass if the Legislature is to recess by April 30.
The House's 72-19 vote Monday on Senate Bill 55, the Medical Services appropriation, fell three votes short of the 75 required for approval in the 100-member House as legislative leaders continued to work behind the scenes to shore up support for the $9 billion appropriation. Seven representatives didn't vote on the bill, and two others voted present.
But Monday's vote was the closest the measure has gotten to a three-fourths majority in four attempts.
Fifty-four representatives voted for the bill last Tuesday; 66 voted for it Wednesday; and 64 voted for it Thursday.
"We are close" to getting 75 votes for the Medicaid appropriation, state Rep. Lane Jean, R-Magnolia, co-chairman of the Joint Budget Committee, said Monday night.
"We'll get it in a day or two," he added.
STATE BUDGET
The state Division of Medical Services' appropriation since 2013 typically has had difficulty obtaining the required three-fourths vote because it includes spending authority for the Medicaid expansion program that provides private insurance for poor people.
Senate President Pro Tempore Jimmy Hickey, R-Texarkana, told the Legislative Black Caucus earlier Monday that he doesn't know how he can lay the state's proposed Revenue Stabilization Act for fiscal 2022 on lawmakers' desks without the House approving the Medicaid appropriation.
If SB55 doesn't pass, then lawmakers and state officials will have to rework the state's proposed general revenue budget based on that reduction in funds, he said.
A draft Revenue Stabilization Act, distributed to the Legislative Black Caucus members, would disburse up to $5.84 billion in general revenue to state-supported programs in fiscal 2022, which begins July 1, up from the state's current funded general revenue budget of $5.68 billion in fiscal 2021.
The draft budget would distribute up to $1.37 billion in general revenue to the state's Medicaid program, an increase from the current funded budget of $1.31 billion; up to $764.2 million to the state's colleges and universities, an increase from the current funded budget of $717.4 million; and up to $2.25 billion to the state's public school fund, an increase from the current funded budget of $2.23 billion.
SB55 includes spending authority for both traditional Medicaid and the Medicaid expansion, which together provide health care services to more than 1 million low-income Arkansans, according to the state Department of Human Services.
The Medicaid expansion program was overhauled by lawmakers earlier this session to allow the Human Services Department to seek a new waiver from the federal government to promote work through access to government-subsidized private insurance plans. Enrollees who fail to meet the incentives would be moved to traditional Medicaid under the new plan, called Arkansas Health and Opportunity for Me (ARHOME).
Opponents of the Medicaid expansion attempted to scrap the plan and move all of the enrollees to traditional Medicaid's fee-for-service plan, but that attempt failed.
USED CARS
Jean said Monday morning that he believed that disagreements with the Senate about which of two bills to enact to provide a tax break on sales of used vehicles had cut into the votes in the House last week for the Division of Medical Services' appropriation.
The House Revenue and Taxation Committee on Thursday advanced a bill that would implement Gov. Asa Hutchinson's plan to reduce the sales tax on used vehicles, trailers and semitrailers priced between $4,000 and $10,000 from 6.5% to 3.5%. House Bill 1912 was sponsored then by the committee chairman, Rep. Joe Jett, R-Success.
However, the House on April 12 voted 97-0 to send the Senate a competing measure, House Bill 1160 by Rep. John Payton, R-Wilburn, that would gradually increase the price of used motor vehicles exempt from the sale tax from $4,000 to $10,000.
On Thursday, Jett had described his bill as a backup plan in case the Senate didn't approve HB1160.
The House on Monday afternoon amended HB1912 so that Payton, rather than Jett, is the House sponsor of the bill.
And earlier Monday, the Senate Revenue and Taxation Committee amended Payton's HB1160 so that the price of used motor vehicles exempt from sales tax would increase from $4,000 to $7,500.
Jean said Monday night that the move calmed "a lot of people down" and that lawmakers are heading in the right direction to provide a sales tax break on used vehicles this year. Attempts in previous years failed to change the exemption.
Because the Senate would be "locked up" on Payton's HB1160, Jett told representatives that Payton had agreed to carry HB1912 instead of Jett.
Jett said he had met with senators earlier Monday afternoon to try to work out a compromise.
"This is going to be, I think, the best we're going to do," he said.
Payton said he couldn't persuade senators to pass his bill and that a couple of them were "creating a roadblock."
"They would be happy to go home without any car-tax relief," Payton said.
He said he felt like it was unfair to keep his House colleagues in the "hot seat" and noted the lateness in the session, which is expected to recess April 30.
"I think this is the best we can get right now," Payton said. "The bottom line is, this moves us closer to what we've shown in the past two sessions that we want to do, and that is to exempt the lower-priced used cars from sales tax altogether."
Payton said he would work toward that goal in a future session and that HB1912 would make that "an easier bite to take."
HB1912 is projected by the state Department of Finance and Administration to reduce state sales tax revenue by $6.5 million in fiscal 2022 and $13.1 million in fiscal 2023. The bill would become effective Jan. 1.
During the Senate Revenue and Taxation Committee meeting on Monday morning, Hickey said he believes that Payton's HB1160 would create an incentive for car dealers to boost the price of used vehicles to right below the $7,500 price threshold and that it would hurt consumers.
But Payton countered that the problem is the supply of used vehicles priced below $7,500.
"By the time you get down to maybe the $7,500 range, there is just no supply, so there is not an opportunity for dealers to gouge the market when a customer is in a favorable financing position," he said. "Where the dealer gets to gouge the market is when you have a customer that can't get financed, don't have enough down payment and you have to turn to the subprime lending situation.
"I appreciate your argument on this and your position, and I hope that you and I can be friends and get along and do a lot of things," Payton said. "We just disagree on this point."
Hickey, who has said he supports the governor's plan to cut the sales tax on used vehicles, said: "This isn't about our friendship. This is about good policy for the state."