No Need for Provider Tax on Developmental Disability Programs
March 21, 2012—People who provide services to the developmentally disabled were willing to pay a provider tax out of their own pockets in order to receive federal matching dollars, but such a tax ended up being unnecessary.
They made the attempt after learning about a 4 percent reduction that would have been imposed in April, and had already seen a 6 percent cut in programs last October.
To mitigate some of those cuts, the service providers were willing to impose a 1 percent tax on themselves, said Brian DeLashmutt, who lobbies on behalf of the Community Providers Association of Oregon, which called the proposed tax a “voluntary assessment.”
House Bill 4036 would have extended the state’s 1 percent transient lodging tax, which taxes temporary living places such as hotels, motels and cabins to tax residential services for the developmentally disabled. Those residential services are considered temporary, which is why they could be included in the tax.
About 133 providers would have been impacted by the tax. It would have generated about $9 million, which would have been matched with federal dollars. That pot of money could only have been used for programs for people with developmental disabilities.
“We’re putting this forward to get the federal match,” DeLashmutt said. “We have a lot of people interested in this.”
The tax would only have covered about 2.5 percent of the projected 4 percent cut, said Tim Kral, the executive director of the Oregon Rehabilitation Association. But he told legislators the tax would enable “us to preserve the most critical of the protection, health and safety services our members provide.”
“It would keep us from going over a tipping point and prevent people [from] spiraling off to more expensive services,” agreed Bob Joondeph, the executive director of Disability Rights Oregon.
But to the relief of advocates and service providers, the tax ended up being unnecessary. The Legislature’s rebalanced budget, which filled a $300 million hole created by declining revenues, made no reductions in programs that serve people with developmental disabilities, including the program’s reimbursement rates.
The Legislature also added $7.5 million back for 24-hour residential service providers, providers that provide residential services and support services, and children’s residential and foster home services. The money makes the funding level for services equivalent to funding levels during the 2009-2011 biennium.
Had legislators been unwilling to appropriate funding, House Bill 4036 would have faced a rocky road. All revenue-generating bills have to originate in the House, which is split 30-30 between Democrats and Republicans. Since tax measures require a three-fifths vote, that meant 36 House members would have had to vote in favor. Since many Republicans are vocal opponents of raising taxes, that was probably an unlikely scenario.
“We were glad we didn’t have to find out,” Kral said. “As it turned out, the wisest course of action appeared to be focusing on our need for more funds without telling [the Legislature] how to get them.”