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Lt. Governor Phil Bryant told the Hattiesburg American this week that the legislature could be called back for a special session in October. This special session would be for the purpose of considering raising the tax on cigarettes. The Lt. Governor says that he thinks Governor Barbour might now agree to allow the legislature to consider such an increase and that we might be able to use some of the revenue generated from the increase to fund our Medicaid program. It is truly unfortunate that over $600,000.00 of Mississippi Taxpayers' money was spent this summer without resolving the Medicaid shortfall. However, I am encouraged to learn that the governor and Lt. Governor now think that an increase in the tax on cigarettes as a part of a long-term solution to the yearly Medicaid shortfall is sound fiscal policy.

During the summer-long special session to solve the Medicaid "crisis", Governor Barbour and Lt. Governor Bryant told the legislature repeatedly that an increase in cigarette taxes was not an option. The Senate was presented with a bill co-authored by nearly half of its members that would have raised the tax on cigarettes by $ .50 per pack and utilized the governor's bed tax plan to raise the rest of the needed funds. The Lt. Governor ruled this compromise legislation outside of the governor’s call for the special session. That bill could have been considered, debated, voted on and passed in the first week of June. Instead, the Lt. Governor ruled that it would be unconstitutional to even consider the bill because the governor said we couldn't. The governor has apparently had a change of heart on the issue and presumably the Lt. Governor has undergone a similar transformation.

The challenge for the legislative leadership will now be to reach an agreement on how much of an increase in cigarette taxes would be appropriate and how best to spend the increase in revenue. It would be unwise and fiscally imprudent to return to Jackson without an agreement worked out. If the compromise model were used, it would involve some assessment on hospitals coupled with an increase in the cigarette tax. As Mississippi's cigarette tax ranks 49th at $ .18 per pack, it could stand an increase of $1.00 per pack. A cigarette tax of $1.18 would put Mississippi somewhere in the middle of the pack in relation to taxes imposed on cigarettes by other states. Some experts say that an increase of $1.00 per pack alone would fund the Medicaid shortfall. On the other hand, there are those who believe that it would not be a good idea to make the Medicaid program dependent upon the increase in revenue generated by an increase in the cigarette tax as it will be a declining revenue source.

However, a tax increase of $1.00 per pack together with one-half of the hospital assessment championed by Governor Barbour would raise more than enough money to cover the Medicaid shortfall. As the revenue source would be more dependable because it incorporates an annual hospital assessment, the plan would be considered more fiscally sound. This model would result in new additional revenues that could be used to reduce Mississippi's second highest tax on groceries - a tax reduction that should only be considered if it could be demonstrated that it will not cause a burden to our municipalities. Of course, the variations on the model cannot be discussed in this space as they go on ad infinitum. Regardless of the details of proposals that come out of this new paradigm, I am encouraged that the legislature may finally get to consider all options to solve the annual Medicaid problem instead of only one - the governor's bed tax - which no one seems to like.

Governor Barbour declared an end to the Medicaid crisis yesterday and announced that he has decided on a plan to bridge the $90 Million Medicaid gap. As a result, the Senate voted 30 to 19 along party lines to adjourn sine die today, and later a frustrated House of Representatives followed suit. This means that the long and expensive special session to resolve the Medicaid “crisis” has ended -- for the time being. Interestingly, the special session ends without the legislature having passed any legislation to address the problem that gave rise to it.

The Mississippi Hospital Association (“MHA”) had previously agreed to the governor’s bed tax plan as a mechanism to fund the Medicaid shortfall, but did so under duress. That plan would have imposed a tax on all hospitals of $167.00 per non-medicaid bed. The Senate passed the original plan by a 41-7 vote over a month ago, but I did not vote in favor of the bill. The governor’s original plan did not make it through the House and hospital support eroded over time. In the time since Barbour’s original plan passed the Senate, a lawsuit filed by the MHA against the governor over his attempt to impose a gross hospital assessment was decided with Judge William Singletary ruling in favor of the hospitals. Judge Singletary’s decision held that Governor Barbour did not have the authority to assess hospitals without legislative approval.

Undaunted, Governor Barbour has now proposed in his new plan to assess hospitals, but under a different statutory provision than his previous attempt. Barbour’s new plan essentially creates a shortfall in the Upper Payment Limits (“UPL”) program which he uses to justify imposing a gross assessment on hospitals in the amount of $375 Million. Put another way, the governor takes money from hospitals and gives it back to them and in doing so creates the illusion that there is a deficit in the UPL program. Under his new plan, because there is a deficit, however illusory, the governor believes he is empowered to assess hospitals to make up the difference. According to Governor Barbour, he has had the authority all along to implement his current plan without legislative approval the Judge’s ruling notwithstanding,. This is despite the fact that the federal agency charged with approving the program, Center for Medicaid Services, has not given final approval and despite the fact that the legislature has no data concerning how individual hospitals will be affected.

Ironically, two House committees passed a compromise bill today to fund Medicaid and the bill was scheduled for floor action tomorrow. The House bill reportedly raised the cigarette tax by $.44 per pack and incorporated the governor’s original bed tax plan to raise the balance of the $90 Million needed. Mississippi Hospital Association representatives testified before the House committees that they did not agree with the logic of Governor Barbour’s new plan and did not support it. In fact, the MHA officials said that they support the approach the House is taking. However, before the bill could be sent over to the Senate, we adjourned.

The hospitals and Barbour may be headed back to Court as it appears from discussions I have been privy to that MHA is of the opinion that the governor’s new plan violates Judge Singletary’s order. It looks like a court will ultimately have to decide the parameters of the governor’s authority as there has been no legislative resolution of the issue. It is likely that we will be called back in yet another special session to resolve the Medicaid problem. This is truly an unfortunate development and wasteful of important and scant resources.

As almost an aside, the Senate passed a bill creating a public health laboratory today with no dissent. In an effort to hold the Senate in town until we could receive the House Medicaid bill, I asked that the laboratory bill be held on a motion to reconsider. This is a common maneuver used to afford extra time to consider legislation and is the right of any Senator. However, because of the vote to adjourn sine die before lunch the laboratory bill died. I have already been blamed for the death of this bill despite the fact that an identical laboratory bill was passed by the House and headed to the Senate. If the Senate had only worked a little longer, we could have passed both the laboratory bill and a compromise Medicaid bill tomorrow. The Senate adjourning sine die killed the laboratory bill as well as any hope of a compromise on Medicaid.

A Congressional Delegation headed by Nancy Pelosi and Gene Taylor will be touring New Orleans and the Mississippi Gulf Coast Monday, July 21st to review progress of our rebuilding efforts in the wake of Hurricane Katrina. Once their tour is completed they will meet at 5:30 PM at Our Lady of the Gulf parish center in Bay St. Louis. Residents are welcome to attend and discuss the recovery with congressional leaders. It is important that we have as large a crowd as possible to represent the Coast. This is the third visit Pelosi has made to Bay St. Louis since Katrina.

I am happy to announce that former Senator Scotty Cuevas has decided to dismiss the appeal of his election contest. We were notified by his lawyer late last week and the dismissal is in process at this moment. I want to thank again everyone who has been so supportive through this long process. I also want to wish Mr. Cuevas well in his future endeavors.