Accelify Blog

Georgia Senate Approves Hospital Tax

April 5, 2010

After heated debate and backroom dealing, the Senate on Thursday approved a controversial hospital tax proposal expected to bring in $175 million to help fill the state’s budget gap.

The vote is expected to preserve a tentative budget deal that relies on the extra revenue.

Republicans spent much of Thursday courting Democrats, taking breaks twice to rally the votes needed to approve the measure. Senators debated for more than an hour before passing the bill 31-15. In the final tally, three Democrats voted in favor of the bill, and three Republicans voted against it. Ten senators skipped the vote completely.

Casting a vote for a tax hike in an election year could be politically risky, especially for the state’s ruling Republicans. To sweeten the pot for some wavering lawmakers, an amendment was patched in that would provide health insurance plans with a tax cut when the state’s shortfall reserve fund is above $500 million.

First proposed by Gov. Sonny Perdue last year, the tax will help the state avoid deep cuts to Medicaid. The money will be funneled back to health care providers who serve a large number of Medicaid patients. Under the plan, hospitals would pay a 1.45 percent tax on their revenues.

That money will bring in an additional federal matching dollars for Medicaid — the health insurance program for the poor — a carrot being held out to lawmakers with public hospitals in their districts.

The House approved the measure last week 141-23. Faced with 15 months of plummeting tax collections, most Republicans and hospitals came on board.

But in the Senate the proposal prompted much hand-wringing among legislators reluctant to support any tax increases. The state’s budget hung in the balance, with supporters warning that without the tax budget talks would be back to square one.

Atlanta’s Grady Memorial Hospital — the state’s largest trauma and indigent care facility — became an unlikely rallying cry among Republicans. Democrats were quick to point out that many GOP senators had in the past supported cutting funding to Grady.

”Some of the people who are promoting this solution have been the ones who have put my hospital in the ditch,” said Sen. Vincent Fort of Atlanta, who voted against the proposal and whose district includes Grady. ”It’s not right to tell me to save Grady and put it in the position that it’s in.”

Supporters of the measure tried various strategies to persuade their colleagues, from empathy to fear.

”We’re facing a serious crisis,” said Sen. Ross Tolleson, R-Perry, who voted to pass the bill. ”Politics has no place at the table. This thing is real and it’s going to get deeper. We’re going to have to make tough decisions. The revenues are not coming in to this state treasury. This is a tough vote. But this is a good bill that’s going to make a positive difference.”

Sen. Majority Leader Chip Rogers, R-Woodstock, said he does not expect any bad blood over the bill to linger as the session continues.

”I rarely see permanent things in politics,” Rogers said after the vote. ”We have another battle to fight tomorrow, and there will be many more in this session. We’ll all come back together. We always have.”

Sen. Minority Leader Robert Brown, D-Macon, who voted against the proposal, agreed.

”I can’t say the past 24 hours are going to set a lasting tone,” Brown said. ”It’s been clear from the beginning of the session that Republicans have had a plan, but they hit a road block today that they didn’t expect because they thought Democrats were just going to roll over.”

Because the bill was passed with amendments, it must return to the House for final approval. The General Assembly will be in recess for the week of Easter and return on April 12.