Opens in a new tab

Possible property tax problems for states that reject Obamacare expansion plans

July 18, 2012

Obama signature on health care act 032310The Supreme Court ruling on the constitutionality of the health care act, known as the Patient Protection and Affordable Care Act of 2010 if you're into formal titles or Obamacare if you're a bit more casual with legislative nomenclature, continues to reverberate.

The high court's split decision — the individual mandate is OK, but states can't be forced to participate in the health care law's expanded Medicaid program — is causing problems for some states on both political and financial fronts.

The Medicaid expansion is expected to extend coverage to roughly 15 million low-income people. But that number will be lower if states opt out of the expansion.

Texas' and Florida's governors have already announced their non-participation plans. So have the leaders of Louisiana, Mississippi, South Carolina and Wisconsin.

The Ricks in the governor's mansions of the Lone Star (Perry) and Sunshine (Scott) states are adamant that although Uncle Sam initially will pick up the full Medicaid expansion tab, as the program costs transition to the states it will take billions from each state's bottom line.

Many hospitals and medical associations disagree with the governors. And in Texas and Florida, states that rely heavily on property taxes because they don't have an individual income tax, county leaders are worried.

Property tax problems to consider: In Texas, several local leaders, health policy analysts and officials at urban hospitals across the state say that Perry's rejection of federal billions in Medicaid expansion would hurt county taxpayers and the hospitals they support, forcing them to continue to pick up much of the tab for treatment of the uninsured.

Compounding the local tax collectors' fears is a recent report from the Rockefeller Institute of Government that found local governments and school districts nationwide already are facing "a serious fiscal crunch accelerated by weakness in property tax collections."

The public policy research arm of the University at Albany, N.Y., says that local property taxes declined by 0.9 percent in nominal terms in the first quarter of 2012, after two consecutive quarters of growth.

Rockefeller Institute property tax report July 2012 pull quoteBut when adjusted for inflation, local property taxes actually declined by 2.8 percent in the first quarter of 2012, marking the sixth consecutive quarterly decline in real collections, according to the report.

Lucy Dadayan, a senior policy analyst at the Rockefeller Institute and author of the report, also notes that the severity of the weakness in the property tax varies among states, but it is particularly acute in states that have experienced the largest declines in housing prices. Florida is one of those states with a hard hit housing sector.

Will the anti-Obamacare governors hold firm? Will the economy pick up enough at all levels to help counties replenish their accounts?

Since the Medicaid provision, as well as the associated health exchanges, don't kick in until 2014, states could change their minds. And some governors are waiting until after Nov. 6 to decide since a change in the White House will mean a change in the health care law.

If Obama is reelected and his signature piece of legislation goes forward, I tend to agree with Wendell Potter, a columnist and corporate watchdog, who says that when the feds start doling out billions to bring more Americans into the Medicaid program, Perry, Scott and the other opposing state leaders will be on board.

Governors, regardless of their political affiliation, are like the rest of us. We all find it awfully hard to turn down money.

You also might find these items of interest:

Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
Getting ready for the year-end tax countdown

October 17, 2026

Just 2½ months left in 2026. Time to start making tax plans and moves to…

Read More
TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
  • Obama is such a fraud. What good has he done for our country, besides breaking it up into political factions?

  • Tony, I spent almost 20 years in Washington, DC, working on the Hill and then in private industry lobbying Congress. Trust me, there have always been factions and there always will be. I concede it’s gotten worse, but that’s come from the big money that feeds the political beast. Again, I know this personally as when I left my Congressional staff job, I worked for two Fortune 100 companies that gave $$$ to legislators. But it’s gotten much worse, especially with the lack of transparency with Super PACs.

Leave your comment