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EDITORIAL: Agenda 2006: Lighten Counties' Medicaid Burden, Expand Their Authority

Posted on: Sunday, 1 January 2006, 12:00 CST

By The Charlotte Observer, N.C., The Charlotte Observer, N.C.

Jan. 1--Medicaid is a health insurance program for low-income children, pregnant women, the disabled and the elderly. It's an invaluable contributor to the well-being of many North Carolinians. But it's killing some N.C. counties.

Why? North Carolina and New York are the only states that require counties to pay a significant portion of the Medicaid budget. The federal government pays less than two-thirds of the cost, and states are responsible for the remainder. Our state requires counties to pay 15 percent plus some administrative costs.

The steadily rising tab strains counties' ability to provide other vital services. Do the math. Medicaid costs are rising an average of 10 percent a year. Across the state, the local property tax base is growing about 7 percent a year. To meet this ever-increasing cost, counties must either raise taxes or slash other services.

Counties cannot control this expense. They do not set Medicaid policy, eligibility criteria, service options or provider rates. The burden is particularly heavy in counties with a low tax base and a high concentration of low-income residents. In Mecklenburg, 15 percent of residents qualify for Medicaid, but in 20 of the state's 100 counties, more than 25 percent of the population is eligible for Medicaid. In six counties, one resident in three is eligible. The result? Fifteen counties spend more than 10 percent of their budget on Medicaid (compared to Mecklenburg's 2.9 percent). Five counties spend more on Medicaid than on education.

The legislature proposed phasing out the county share over six years, but House and Senate budget negotiators removed $15 million needed to start the phaseout. Now the House and Senate are studying ways to begin relieving counties of the burden. Good. Counties understand the state can't assume all the Medicaid cost right away, but they're entitled to some relief in 2006 and more as the state's finances improve.

That leads to a second change affecting local governments: more revenue options.

The legislature determines how local governments may raise money. To create additional revenue sources, towns, cities and counties must win state approval. Often they have done so. It's time to make those revenue options the legislature has authorized for some local governments available to all of them.

Rep. Mickey Michaux, D-Durham, introduced legislation to do that in the 2005 session. Titled Local Tax Menu With Voter Approval, it would give cities and counties a menu of optional revenue sources, including an additional 1-cent local sales tax, a local impact tax, meals tax, occupancy tax, land transfer tax and income tax. Local governments could impose the taxes only if voters approved them in a referendum. Local governments are the closest to the voters. They know their needs better than Raleigh does. It's time to give local people broader authority to tax themselves in different ways if they see fit.

Agenda 2006

TODAY: Lighten counties' burden, expand their authority

TUESDAY: Reform public schools

WEDNESDAY: Build a bridge to connect Charlotte and Raleigh

THURSDAY: Link approvals for development with funding for public services

FRIDAY: Modernize N.C. tax structure

SATURDAY: Adequately fund N.C. court system

SUNDAY: Crack down on drunk driving

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Copyright (c) 2006, The Charlotte Observer, N.C.

Distributed by Knight Ridder/Tribune Business News.

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Source: The Charlotte Observer (Charlotte, N.C.)

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