Powerful House Committees Get New Leaders

US Supreme Court Filings

Information submitted by:  SPADD member

Click here to view a crucial filing by the US Solicitor General requesting the US Supreme Court not hear California's appeal on rate litigation.  The filing by the US Solicitor General possibly means that the US Supreme Court will not take up California's appeal of the 9^th Circuit's decision which would have given providers standing to sue on rates under the Supremacy Clause as well as the injunctions against California's rate reductions.  This effectively means that states in the 9^th Circuit, the largest curcuit in the nation, will not be able to reduce provider rates without a study showing that the reduction does not affect quality and access.  I would assume providers in other Circuits will also sue.  From my read of the paper, it appears that the recommendation was based on technical issues-that CMS had denied the SPA to do the rate reduction and that the 10% reduction had expired (note the 5 and 1% reductions that replaced the 10% reduction have not expired).  20+ states filed papers supporting California's appeal.  From a state perspective this could take away the ability to control their budget through rate reductions.  From a provider perspective, this opens the door to litigation to stop rate reductions and to force rate increases.

It has the US government coming out and explicitly saying that it disagrees with the 9^th Circuit that states have to take into consideration cost studies before reducing rates.

For additonal information submitted: click here

DOUBLE DIGIT INCREASE BEST IN 24 MONTHS

State revenues took a jump in one of the two months normally associated with the Christmas buying season gaining 10.9% over December of 2009 for a total for the month of $1.55 billion or up $152.8 million.  Don't remember a month anywhere near this increase for at least the past two years when virtually every month was under the same month a year before.  Later in the column, we will try to put this six month trend in perspective, but December certainly topped any expectations.  Individual income taxes (includes small businesses) came in at a 7.7% increase or up $60.2 million for a total of $856.7 million.  That amount might just be the best December Income Tax collection month in five years.

Overall state sales tax collections were up by the same amount, 7.7% with collections of $26.6 million for a total of $374.1 million.  December in sales tax collections tracked last year similar to other months this fiscal year... up over last year but under more normal years.  Since sales tax collections trail a month behind, these numbers are really November's sales taxes and December's will come in the January report.

Motor Fuel Tax collections were up a total of 13.9% or $8.9 million.  Both categories were up in December.

Corporate Income Taxes were up $48.2 million.  A better gauge will be the six month figure we will review later. 

In other categories, tobacco collections were up 0.2% and alcoholic beverages were up 11.6%.

YEAR TO DATE NUMBERS LOOKING STRONGER

With six months of the FY2011 in the books, the trend is certainly positive.  Total revenues are $7.8 billion or an increase of $587.7 million over the FY2010 year; however, we must keep in mind the affects of the refunds paid out early a year ago.  So the 8.1% gain is probably on the high side, but even if we deducted the $160 million in refunds from a year ago, the difference is still a growth rate of over 5%.

Individual Income Tax collections are up 7.9% or up $300.8 million for a total of $4.1 billion.  Sales Tax collections are up 6.5% or $151 million for a total of $2.4 billion.  Motor Fuel Taxes are up 17.2% YTD.  Total collections have increased $69.1 million and are on track to reach $940 million for the year.  Corporate Income Taxes are flat for the six months at minus 0.9%.  Tobacco Tax collections are off by -2.7% YTD and alcoholic beverages are up slightly at 0.7%.

Looking back at FY10 months January through June, it appears that it will be difficult to maintain the level of increase the rest of FY11.  The last six months a year ago started the trend that resulted in the positive revenue numbers this past June.

LAST QUARTER - SOLID GROWTH, PROBABLY NOT SUSTAINABLE

The last three months provide a "clean" quarter unaffected by any issues from one year ago.  The good news is that the second quarter of the FY11 Fiscal Year shows an increase of a little over 8%.  The two largest categories, Individual Income Taxes and Sales Taxes show slightly under 6% for the quarter.  Looking at the last six months of the FY010, we realize that numbers started to creep up a year ago before turning positive in June.  These increases, 5.7% to 5.9%, look realistic even if a good January starts off the second half of the fiscal year.  Don't count chickens before the integrator picks them up, but irregardless, a 5.7% increase would certainly be a good kick-off for the FY12 budget year.