LITTLE ROCK — If Republicans win control of the state House in this year’s election, they will push for cutting taxes and spending, curbing regulations and finding alternatives to Gov. Mike Beebe’s Medicaid overhaul plan in the 2013 regular session, the income House GOP leader says.
The House Republican agenda will not include repealing a $4 million sales tax break for the trucking industry that Beebe tried but failed to have removed in the recent fiscal session, said Rep. Bruce Westerman of Hot Springs.
Westerman, an engineer and first-term lawmaker, was elected March 9 to lead the House Republican Caucus in the 89th General Assembly, which will convene for it next regular session in January. He said the caucus’ policy committee, which he chairs, has been working since last summer on an agenda for the 2013 session.
“(We’ve been) thinking about the possibility that we could be in the majority next year, and we knew we had to have a solid plan going into that,” Westerman said in an interview with the Arkansas News Bureau.
Some details of the plan will be released on April 4, with more details to be released later, he said.
One of the key points in the plan will be cutting the state income tax. Westerman said Arkansas “has a disadvantage in our tax rates compared to our neighboring states in the income tax.”
“Income tax is something that helps everyone who’s working, and it gives employees and people on fixed income an immediate raise,” he said. “I’m not saying that lowering income taxes is going to fix the economy, but I think it’s part of the equation to make Arkansas more competitive.”
The idea is likely to meet some resistance. Rep. Hank Wilkins, D-Pine Bluff, a legislator since 1999, said he does not buy the argument that Arkansas is at a disadvantage because of its income tax rate, noting that the state has fared better than most during the economic downturn.
“If you lift the income tax in and of itself out of the context of the entire revenue stream, then that could create problems for Arkansas,” Wilkins said. “We don’t need to make rash … cuts here and there in order to (curry) favor with voters without telling the voters the whole story, and that is that we put them at a disadvantage in some other way if we lift that one thing out of the total tax context.”
Westerman also said Republicans will push to slow the growth of government spending. During this year’s fiscal session, the current House GOP leader, Rep. John Burris, R-Harrison, proposed cutting $21 million from the governor’s proposed budget for the 2012-13 fiscal year, but the proposal gained no traction in the face of opposition from Beebe and legislative leaders.
“It’s pretty obvious to me that there wasn’t a will in the Legislature to implement any spending cuts,” Westerman said, but he said the will may be there next year.
“Part of our plan is based on us having a majority in the Republican Party to be able to implement the plan that we’re putting forward,” he said.
The budget for the next fiscal year keeps funding flat for most agencies, but Westerman said that “if you look at the historical data on spending, we’ve spent at a rate quite a bit higher than what the economy has grown.”
Matt DeCample, a spokesman for Gov. Mike Beebe, said the budget is growing only in education, in order to maintain court-mandated adequacy in public schools, and Medicaid, which is headed for a budget shortfall despite new funding.
“I don’t know what he’s looking to curb, because if you curb in those areas, in one of them you’re going to potentially run afoul of the courts and in the other you’re going to have a significant gap in needed Medicaid revenue,” DeCample said.
The Medicaid shortfall could reach $400 million in fiscal 2014, according to state human services officials. Beebe has said he thinks that estimate may be high, but he does expect a shortfall of more than $200 million.
The state is working on a plan to overhaul the payment system for health care providers by moving from a fee-for-services system to a system in which providers are paid for bundled episodes of care. Westerman said House Republicans have problems with that approach and are looking for alternatives to address the Medicaid crisis.
“The research I’ve done has shown that the episodic care reimbursement hasn’t been a success where it’s been implemented in other places,” he said.
Westerman said Republicans are studying Medicaid reforms in other states such as Florida, which has implemented reforms emphasizing consumer choice, and Kansas, which has sought to save money by integrating health care services.
John Selig, director of the state Department of Human Services, said very limited versions of episodic care have been tried in other states, but Arkansas is including the state’s biggest private insurers as well as Medicaid in its overhaul. He said that has never been done anywhere before and said it should have a greater chance of success than limited reforms.
“Medicaid is obviously a huge program, but we’re still, for a lot of docs, maybe 10 percent of their practice, and it’s tough … to expect a practice to change the way they do business based on 10 percent,” Selig said. “We’re trying to bring all the payers in.”
Westerman said House Republicans also will push for loosening government regulations and offering more alternatives to traditional public schools. Not on the agenda, he said, is repeal of the $4 million sales tax exemption for large trucks and trailers that the Legislature approved in 2011.
Lawmakers approved the tax break in order to win the Arkansas Trucking Association’s support for a diesel tax hike to fund a highway bond program, but the association later withdrew its support. During this year’s fiscal session a resolution that would have allowed legislators to consider repealing the tax break passed in the House — with Burris’ support — but stalled in the Senate.
Westerman disagrees with the outgoing GOP caucus leader on repealing the tax exemption, which does not go into effect until July 1 but will have been on the books for months when the Legislature convenes next year.
“At that point I don’t see how you would call (repealing) it anything but a tax increase,” he said, using a phrase that is anathema to many GOP lawmakers.
Westerman also said that despite the election March 9 of Darrin Williams, D-Little Rock, as House speaker-designate, if Republicans win a majority in November they likely will not seat him. Williams defeated Republican Terry Rice of Waldron in the speaker’s race.
“I think the majority party should have the speaker. If the people of the state put the Democrats in the majority or if they put the Republicans in the majority, I think it’s only fair to the people of the state that the majority have the speaker,” Westerman said.