In California, when the going gets tough, the tough come up with a complicated, arcane funding solution.
To put it in the simplest terms possible, the state doesn’t have enough dollars in its budget, so it wants more federal dollars. And to get more federal matching dollars for the In-Home Supportive Services program, the state is planning to levy a 6% sales tax.
On itself. Which it will pay — to itself.
In January, the entire $1.5 billion IHSS program was targeted for elimination by the governor. The program was revived in the May budget revision, but the governor’s new proposal calls for cutting about half the IHSS general fund allocation — a cut of about $750 million.
That is anathema to many state lawmakers, so they are scrambling to make other cuts and impose fees and budget changes to keep IHSS and other social service programs in California relatively intact.
The state is considering levying a 6% sales tax on all in-home support services. That means that whoever orders and buys those in-home services would owe about $190 million to the state. The federal government would then match that money, bringing in an extra $190 million into state coffers.
Since the buyer of all of those in-home services is the state, California would basically be charging — and paying — itself the 6% sales tax.The providers of those in-home services would get one extra check a year — and be charged the exact same amount at exactly the same time.
“The net impact to providers is zero,” Karen Keeslar of the In-Home Supportive Services Coalition said. “They’re called provider fees. It’s mirroring something that has been done successfully in three other states — Kentucky, Maine and West Virginia.”
Keeslar said the idea is analogous in some ways to the Avon Lady.
“The closest I can come to a comparison is that it’s like Amway or Mary Kay or Avon, where hundreds of thousands of people are selling the stuff, but it all goes through the mother ship, which pays the sales tax. In this case, the in-home providers around the state are sort of the middle body between the consumer receiving services and the state providing those services.”
“At first it does sound kind of bizarre. But it makes a lot of sense,” said Gary Passmore, director of the Congress of California Seniors.
More than 30 states have used provider fees to help fuel some of their Medicaid programs, he said. It’s relatively new to impose provider fees for in-home services.
“The state dipped its toe in this water back in 2004,” Passmore said. “Commonly, states do it with hospitals, skilled nursing facilities, emergency medical care.”
There are about 430,000 in-home workers statewide, and almost all of them get paychecks from the state. About 20,000 of those workers are paid directly by the counties, and that detail still has to be worked out, Passmore said.
“The idea is just that we get a record of what services the state is receiving [in the form of sales tax figures], so the feds can pay us back for Medicaid services,” he said. “It’s a record-keeping thing.”
One caveat, Passmore said: The $190 million of federal money currently estimated to come to the state may soon change a little.
“How much money this generates will be determined by the FMAP allocation,” he said. That’s the Federal Medical Assistance Percentages, the rates used to determine matching fund rates, and those are being recalculated now, he said.