By Bobby Harrison
Daily Journal Jackson Bureau
JACKSON – The Mississippi Legislature, working late Sunday night, voted to remove money from the quickly dwindling Tobacco Trust Fund to solve a record-setting $268 million Medicaid deficit and repay it over seven years, including 5 percent interest.
The bill now goes to the governor. His staff indicated late Sunday that he would sign it.
The Legislature was acting in the first-in-recent memory special session within a regular session to deal with the fact that Medicaid either has run out of money or will run out of money soon to pay the health care providers who treat the 780,000 Medicaid recipients. Gov. Haley Barbour called the special session Friday.
The Senate leaders and Barbour had supported taking money from the Tobacco Trust Fund but did not advocate a method of repaying the money. The House previously had supported taking the money from the trust fund to solve the deficit but replenishing the trust fund with a cigarette tax. The Senate leaders and Barbour were adamantly opposed to the cigarette tax hike.
The House passed the legislation about 10 p.m. Sunday by a 92-12 margin with primarily black members voting no. Many felt the tax should be part of the solution to the deficit – especially with the state facing a $950 million shortfall in its total budget.
But, House Public Health Committee Chairman Steve Holland, D-Plantersville, said Medicaid was in a crisis and had to be fixed. He said repaying the trust fund during seven years with general fund money was a good compromise.
“It is heinous to talk about taking the trust fund and not paying it back,” Holland said. “That's the height of fiscal irresponsibility.”
The Tobacco Trust Fund was created from money the state received from the settlement of former Attorney General Mike Moore's lawsuit against the tobacco companies in the 1990s. The plan was to place the annual payments from the tobacco companies in the trust fund and use the investment earnings for health care needs.
In recent years because of budget woes, the governor and the Legislature have dipped into the trust fund. If the $240 million is removed to address the Medicaid deficit, the trust fund will be left with less than $200 million. It was supposed to be more than $1 billion by now.
Barbour said to support concept
There was no debate on the legislation when it passed on the House floor. After the vote, Rep. David Gibbs, D-West Point, said he voted against the proposal because he supports the House's original position of demanding a cigarette tax hike be part of the solution to the Medicaid deficit.
“We are going to have to have some more revenue or we are going to have second and third rate universities, colleges and high schools,” Gibbs said.
The Senate passed the House plan about 11:15 p.m. Sunday with no one voting no.
“This is a concept they (House leaders) have come up with and we agree,” said Senate Appropriations Committee Chairman Jack Gordon, D-Okolona. “This will ease the minds of 780,000 Mississippians (on Medicaid) and address what we came down here to do.”
Earlier in an eventful Sunday, the House put the brakes on a Senate proposal to issue bonds to solve the state's $268 million Medicaid deficit.
Saturday night the Senate leadership successfully amended a bill on the floor of the Senate to sell to investors the first $20 million of the annual payments the state receives from the tobacco companies for 20 years. For the $400 million, it was estimated the state would receive between $200 million and $240 million.
Barbour urged the House to pass on Sunday the plan to borrow against future tobacco company payments to the state to solve the immediate Medicaid woes.
For most of Sunday, it looked as though the House was moving toward selling $400 million of the state's tobacco lawsuit settlement money over 20 years at today's value.
At one point, Speaker Billy McCoy, D-Rienzi, made the unusual move from his podium of saying, “We have to come forward with something. It seems this is not a bad plan.”
It would have taken a three-fifths vote to pass the plan, and as the day wore into night it became apparent there were not enough votes in the House to pass the plan.
At about 7 p.m. Sunday, Rep. Cecil Brown, D-Jackson, who previously served as the state's fiscal officer and one of the members McCoy appointed to study the complex scheme, said a majority of the House had indicated they wanted more time to study the plan. Brown said House leaders simply had not been able to talk to enough experts on a Sunday.
He said he was not ruling out that the borrowing scheme might be the best alternative but said it needed to be taken up during the week when the financial markets were open and more information could be obtained. Brown said he could not even ascertain Sunday whether selling $20 million annually for 20 years would generate enough money to solve Medicaid's woes.
“We are being asked to borrow $240 millions with a gun at our heads on a Sunday night,” Brown said. “I don't think that is being good stewards of taxpayer money.”
Not all pleased
Obviously, everyone was not happy with the House leadership's decision not to take up the plan.
Rep. Jerry Turner, R-Baldwyn, said he was disappointed the House did not take up the plan to borrow up to $240 million right now that would be paid back over 20 years at a cost of $400 million.
“I feel comfortable with it,” Turner said of the borrowing plan.
But Sen. Hob Bryan, D-Amory, said the House offered a solution to the current Medicaid crisis and that the borrowing plan was bad policy.
If the plan passes “20 years from now our children – or someone's children – will be paying for Medicaid services provided in calendar year 2005,” Bryan said.
At the end of a long day, the House voted instead to essentially borrow from itself, taking money from the trust fund, but repaying it over seven years. And the Senate concurred.
Rep. Billy Denny, R-Jackson, questioned whether the money would ever be repaid.