Saturday, November 21, 2015

Interim Session November 2015: Power, Perverts, Ethics, Taxes, and Refugees

We just completed a last round of interim committee meetings before the General Session begins in January 2016.  In this last round of meetings we discussed several potent subjects that are in the headlines and on the minds of the public.  We also discussed several potential bills to be heard during the General Session.  Here is a summary of items I thought were worth mentioning.

Power to the People

One bill that we heard in morning committee dealt with the public's ability to overturn legislation.  The vehicle the public has to do this is called a public referendum. Currently, if the Legislature enacts a wildly unpopular law, the people can follow steps to initiate a public referendum which places the law on a ballot to be voted up or down directly by the people.  If I recall correctly, the last law that this happened to was the Legislature's creation of school vouchers in 2007.  The education community rallied and successfully overturned that law.

In the bill we heard, Representative Brian Greene wants to expand the referendum power so that it applies to cities, school boards, special service districts, and any other legislative body at the local level.  I support his effort.  The referendum power acts as a check against laws that may simply be too difficult to tolerate until the next election cycle where the elected officials can be replaced the law reversed through the normal course.

Unfortunately, it appears the bill sponsor did not speak with the cities, school boards, specials service districts and others that would be affected by enactment of this law.  They showed up to testify at our committee that hey had just been made aware of the bill.  With that in mind, I voted against the bill so that these entities were given a fair amount of time to review the policy and share their informed perspective.  Had the bill received a unanimous vote at our committee, it would have been heard on the first day of the session with little debate. The few dissenting votes from our committee insure that the bill is heard at committee again and that all sides of the issues can be assessed before a vote.  I look forward to supporting the bill (even if it is refined) when it gets to the Floor for a vote.

SB 54 - Scrambled Eggs Election Law and Ethics

Last month the Republican Caucus moved to support an option of making changes to SB54 to provide clarity to the signature gathering process and also clarify dates for filing for office.  However, one of the provisions of the changes would permit "in-kind" campaign contributions to be made during the General Session.  The law prohibits any type of contribution during the General Session currently.

I felt that this was a major setback (even if only in perception) to the public's confidence in our political system to run as ethically as possible.  So, I had some constructive criticism while the bill was being presented.  You can hear the dialogue at committee here where I voice my opinion.  My more salient comments are around the 4:00 mark although the whole snippet is worth hearing:

Ultimately, a motion was made and the words allowing in-kind contributions were stricken from the bill by a slim margin.  Yet, the bill passed the committee and will be heard early during the General Session.  My complaint is not about "in-kind" contributions (typically services, like signature gathering, that are performed in lieu of cash donations) being performed during the General Session. My main concern is that the negotiation of those contributions during the Session creates clouds of doubt.  It can create the situation where contributors are tempted to make promises to donate based the performance of the Legislator.  We should never be having those kinds of conversations in such close proximity to voting. 

Ultimately, I expect the language to be clarified so that the contributions are solicited, negotiated, and reported before and after the General Session but the services the contribution represents may be performed during the General Session.   

Syrian Refugees

Another topic we discussed in our Republican Caucus was the Syrian Refugee issue.  In light of the Paris Massacre, doubt is being cast on the ability of our Federal Government to properly vet individuals coming from Syria to seek refuge in the United States.  I have my own doubts.  Many of us felt that Governor Herbert should publicly express concern over Syrian refugees coming to Utah to resettle until proper safe guards were put in place.  

My view has always been that the Middle East needs to deal with problems in the Middle East.  Many countries bordering Syria, including Turkey and Jordan, have refugee camps that provide housing and food for these people while the war is on going.  I suggested that instead of spending our state tax dollars on resettling Syrians here, we should contribute those funds to the organizations managing the camps abroad.  This would provide the humanitarian aid they need, while also providing for our immediate safety.  It is not the responsibility of The West to guarantee a First World standard of living to the rest of the world.  Yet, we can and should keep them from starving.
I believe we can be compassionate and common sensed about this issue.  

Taxes, Taxes, Taxes

As Vice-Chair of the Revenue and Taxation Committee, I get to hear a lot of interesting discussion on topics related to tax policy.

One bill we discussed would prevent taxpayers from being overcharged when "centrally assessed" properties decrease in value and then increase again.  Under current statute, the counties get to include any upper movement in value of these properties to the formula dictating taxes that you pay.  The concept is difficult to detail here but the proposal is liked by stakeholders on both sides of the issue.  Look for this bill to pass this next session.  

Another significant bill we heard dealt with the way corporations elect to be taxed by the State.  Depending on their business structure, they can chose between three different types of taxation.  The bill proposal we heard offers the "Single Sales Factor" method to more companies.  The effect is a tax decrease of up to $50 Million per year.  This decrease would be a giant incentive to bring more companies here to Utah with their capital and jobs.  It's a big proposal from Senator Howard Stephenson and we will see what happens with it in the General Session.  

Shoot'em Up and Taken'em Down

After our meetings concluded at the Capitol, we were invited by the Attorney General's Office to visit their facility and view some of their training and tactical equipment.  We heard from Sean Reyes how the AG's office is working with law enforcement agencies to help moderate the tone of police interactions with the public.  A lot of this effort is due to the ongoing disgruntlement of minority communities in how they view their treatment by law enforcement.

We were also introduced to some fantastic tools that the AG's office hopes to use with local agencies to help train officers in de-escalating volatile situations while also honing their marksman skills in difficult circumstances.  The tool they have for this an interactive video studio.

The scenario I faced involved active shooters at the local Megaplex Theater.  The guns they gave us had real recoil and limited ammo.  We had to shoot the shooters before they shot us or shot other civilians.  It was stressful to say the least.

We were also shown the Internet Crimes Against Children mobile forensics lab.   This elite team is tasked with catching perverts and abusers of children.  We discussed the inroads that child pornography is making into society and the impact that it is having on the community.  It is sad commentary to know that this is a real problem in our society.  It is even worse to know that this problem is growing ever larger.  Kudos to this elite team for their work in taking our most devious and dangerous predators out of circulation.

In summary, it was a busy but informative day.  The Republican Caucus meets again in December to discuss issues coming up for the General Session.


Thursday, October 22, 2015

Medicaid Expansion Propaganda and Mythology

We held an open caucus meeting during Interim Session this month to discuss some new information regarding Utah's experience with the Affordable Care Act.  One of the  most revealing topics of conversation had to do with criticism the House has received for its stubbornness in not moving forward with the Governor's Medicaid Expansion plan as proposed.

One of the first arguments that is made by supporters of the plan and the media is that Utah is being penny wise and pound foolish by not expanding Medicaid.  Their argument for the past two years has been that with the Federal Government "committing" to pay 90% of the costs of the program, we are losing out on tax money we are already paying to the Feds.  They say we have been paying taxes and not getting anything back to show for it.  Here are a few snippets from emails I received from supporters of Medicaid Expansion:

"By not expanding medicaid Utah can't access the healthcare the Utah taxpayers have already paid for during the last 2 years." 
- Ms. Summers

MR PETERSON, I'm not at all happy how you and the others voted on the Medicaid Expansion!! We elected you for the views of the people you represent, NOT on your views!!  I do not need Medicaid but so many others do! You should all be ashamed of yourselves! Then you leave ALL that tax payer's money on the table!!" 
- Ms. Phelps (emphasis added)

Surely, the public believes that there is a steep price to be paid to avoid entangling ourselves in an uncertain deal with the Federal Government.  Supposedly, to reject expansion is to forfeit hundreds of millions of our tax dollars and consign us to watching our poor and disadvantaged die en mass. At least that is what advocates want you to believe. This inaccurate narrative has been pushed by the big-hearted but grossly misguided folks at the Utah Health Policy Project and Alliance for a Better Utah among others.  

Alliance for a Better Utah rallys among 361 Christian crosses that represent people who have died this year while waiting for Medicaid health coverage.  (NOT SHOWN:  The 4,000+ crosses that represent unborn Utahns who have died this year at the hands of an abortionist.)  - Photo Courtesy Salt Lake Tribune
This tax dollar narrative has been particularly effective in provoking public sentiment.  Yet, it is an outright lie.  How so?  Here are the facts;

As you can see, Utahns are paying $710 Million a year in taxes collected by the Federal Government related to the Affordable Care Act.  That is a lot of money.  However, contrary to the convenient narrative pushed by advocates for Medicaid Expansion, Utah is receiving $730 Million a year from the Federal Government to pay for subsidies, cost-sharing, CHIP and other coverage programs.

The truth is we actually receive MORE than we pay in tax dolloars!  Whoa!

So, the next logical question is about how would Medicaid Expansion affect these dollars.  Would we get more?  Of course!  But where would they come from?  They would come from other states who had the ignominious distinction of having to pay more than they receive.  Ironically, expanding Medicaid in Utah would put other states in the same situation that advocates are falsely claiming we are in today.  Regrettably, beggar-thy-neighbor appears to be in vogue.

Bad data makes for bad policy.  Lets stop the charade of telling taxpayers they are wasting their money if they don't submit to a massive entitlement expansion.  It simply isn't true.

Meanwhile, we will be seeking other more sustainable solutions to help the truly disadvantaged in our state.

Tuesday, October 13, 2015

PENROSE POLICY: The Illusion of Sustainable Medicaid Expansion

We met as a Republican Caucus recently to discuss the new Utah Access Plus plan to expand Medicaid in the state.  With a gap existing in current Medicaid coverage, the Legislature has been toiling for years now to find an affordable and sustainable path to provide medical coverage for those living in the gap.

The gap mainly consists of single adults without children who live under 138% of the Federal Poverty Level.  There are approximately 130,000 living in Utah without any form of insurance coverage in this gap currently.

In the 2015 General Session, a plan was proposed to use state tax revenue to pay for expanding Medicaid to cover these folks.  It was called Healthy Utah and was estimated to cost $78 Million to fund.  The House was very uncomfortable with aspects of this plan and proposed its own $40 Million version called Utah Cares.  Healthy Utah failed in the House and Utah Cares failed in the Senate.  The stalemate left the Governor, House Leadership, and Senate Leadership staring at each other and scratching their head.  They went to work on a compromise and thus Utah Access Plus was born.

The main disagreement between parties on the other plans had largely to do with funding.  The questions arose about how much, for how long and from whom?  The unified message the legsslature heard from the medical industry who supported Healthy Utah was that the math was simple:  Utah would get $9 in Federal tax money to pay for medical services for every $1 in Utah tax money we contributed.  In their eyes, we were being foolish to turn down such a sweet deal.  Obviously, they were biased because they would be the ones directly profiting from the infusion of Federal tax money.

So, House leadership begged the question:  Why should Utah taxpayers be on the hook for funds that allow medical providers to profit substantially from federal tax dollars?  Why don't medical providers contribute $1 and get $9. If the math is really as simple as it was being claimed, certainly the medical industry would clamor at the opportunity to reap that windfall profit at such little expense.

Speaker Greg Hughes listens to a wheelchair-bound professional protester from Texas who interrupted a closed Republican Caucus meeting September 29, 2015

Well, Utah Access Plus proposed to fund Medicaid Expansion under those terms.  The medical industry would contribute $1 and get $9 back...or so it seemed.  Interestingly, as soon as this proposal manifested itself, the medical industry immediately changed its tune.  Suddenly, the $1 burden was simply too onerous to countenance and the Legislature was flooded with complaints from doctors and hospital administrators claiming the proposal was to risky and expensive.

Thus, we see a remarkable example of how moral hazard is created by the promise of getting other people's money with no personal risk or responsibility.  In this case, the medical industry wanted all the profits for themselves and all the responsibility with the taxpayer.  Who can blame them?  It makes for great business.  But, such policy is ultimately unfair and reckless.

So, this backstory brings us to today's vote on Utah Access Plus.    I hope to articulate some of the details faced by the Legislature in dealing with this problem.

"Mother, May I" Politics

Medicaid expansion has happened in many other states.  Utah has looked around and recognized that there are things we could do that would work in our state.  There are best practices out there that make expansion feasible.  However, the Federal government has seen to it that our ability to implement those are restricted.  Utah has had to negotiate long and hard to get the Federal government to verbally agree to waivers of existing law in order to accommodate some sort of expansion.  Unfortunately, all the best ideas are prohibited.  Why?  According to the National Director of Health and Human Services, "It's not the President's policy."  At the Federal level, Medicaid expansion is seen as more of a political policy than it is a pragmatic and workable one.  Let's also keep in mind that the folks we have been negotiating with in Washington D.C. will only be there for another 18 months or so.  They don't have much skin in the game.  They will be gone but we will still be here 10 years from now wondering what happened.    

Cost Shift/Crowd Out

Medicaid brings with it a whole host of economic distortions.  If a doctor bills your insurance $100, under his agreement with your insurance he will be paid $100.  However, under Medicaid, your doctor is only paid $80 for the same bill.  Your doctor has to live with the $20 loss.  Since we live in a free country (for now) many doctors simply opt not to serve folks who are on Medicaid.  It simply doesn't pay to serve them when there are other full paying customers out there.  So, while it sounds great to offer Medicaid and tell a bunch of people they now have health coverage, the reality is that there won't be enough doctors out there to serve their needs.  Also, the expansion population may also get put in front of existing Medicaid enrollees when it comes to service.  This may unfairly bump those in need to the back of the line due to bureaucratic whim.  Combined, these conditions make the Medicaid coverage promise a promise of false hope for many.

The other issue is that the doctors who do end up servicing Medicaid patients may make up for the short fall by charging their full paying customers for the difference.  We call this process cost shifting.  Under Medicaid expansion, regular customers will pay higher fees for service to make up for the losses that doctors incur by choosing to service an expanding pool of Medicaid patients.  There really is no free lunch.

How Much? How Long? And From Whom?

The giant wild card in the Medicaid expansion debate is related to who pays what.  The Federal government has "promised" Utah that it will cover 90% of the costs if we will just contribube 10%.  In this case, our 10% contribution would mean supposedly $78 Million.  If the state didn't raise taxes or charge the medical industry for this, where does the money come from?  Well, it would come from cuts in higher education and pre-existing health and human service programs at the state level.  Services would have to be cut somewhere to pay for Medicaid expansion.

Of course, this is assuming that the $78 Million projected figure is correct.  In most other states, the estimates for costs have been woefully inadequate and the figures have been much higher than anticipated.  Medicaid expansion is in effect writing a blank check.  Once implemented, the state has no control over the costs.  It is obligated to pay for whatever happens, whether its affordable or not.

The other assumption is that the Federal government will honor its "promise" to pay for 90% of the costs of the program.  Of course, when our state leaders went to Washington D.C. to discuss this issue, they discovered that members of Congress are talking about reducing the Federal portion to just 70%.  That would mean that Utah's obligation would triple to $240 Million overnight if that change were to occur.  Uh oh!  It is pretty difficult to commit to massive once-in-a-lifetime social entitlement programs when the funds are not guaranteed to be there the next year.  With as precarious as our levels of national debt are right now, it would seem short sighted to believe that the payment obligations promised today would be maintained in the event of national fiscal hardship.  Some may say that the payments would be made, which indeed they might, but they would be payments manufactured at the Treasury's printing press.  Contributions may stay the same as costs rise due to inflation.  Everyone would feel the deprivation this causes even if the money flowed as "promised".

In the end, the proposal was voted on by the Republican Caucus and received only 7 votes in favor and 56 against.  I voted against the proposal. It is my view that the solutions to the Medicaid coverage gap are elusive at best and Medicaid expansion in general is a flawed idea.  The market mechanisms that promote innovation, technological progress, and price discovery are missing in the medical market.  Government insurance mandates now cloud the freedom of choice that allows for competition and price reductions that benefit consumers.  The Affordable Care Act has done nothing to decrease the cost of healthcare.  In fact, it has done the opposite by injecting billions of dollars arbitrarily into the insurance markets.  This money infusion has distorted even further the true cost of healthcare.

One man's waste is another man's profit.  In light of our vote on Utah Access Plus, I look forward to discussing solutions that limit taxpayer exposure, contribute to a real reduction in cost of healthcare services,  and  promote free choice and price discovery in the medical services market.  Meanwhile, it behooves us to cease chasing the illusion of sustainable Medicaid expansion in Utah.      

Monday, September 21, 2015

Interim Update: Legislative Bus Tour to Southern Utah

The legislature recently returned from a bus tour to southern Utah as part of its interim legislative session.  The experience was a 2-day affair and something new for many legislators.  The last off-campus tour during interim was in 2008.

Our journey began at the Capitol building at 7am Wednesday morning.  Fortunately, spouses were able to attend and I invited my wife to accompany me on our trip.  I paid for her travel expenses.

Of course, no bus trip would be complete without a few persuasive video presentations along the way.  We were subjected to many.

Our first stop was in Price where we heard from Lt. Governor Cox and staff at USU-Eastern.  We also heard from the owner of Bowie Resource Partners who recently purchased some failing coal mines in Carbon County.  They have turned their operations around from being major money losers to now being profitable ventures.

We then got back on the bus and headed to Green River, Utah.  Along the way, the mayor spoke to us about the state of the city and how things were fairing in his town of 950 people.  When we arrived at Green River, we stopped at the local high school.  We discovered that they have 105 students between grades 7 and 12.  The staff often teach multiple subjects and the school has just a principle and a secretary for administration.  The principle also plays the role of teacher.

With high teacher turnover and low student counts, the school can only provide the most basic needs and curriculum to its students.  Students have to seek additional opportunities elsewhere.  Unfortunately, the nearest elsewhere is about 90 minutes away.  My hat goes off to these scrappy teachers as they make due in a difficult situation.  They truly are working a labor of love.

After leaving Green River we visited Dead Horse Point.

En route to Dead Horse Point we had a member of the Grand County government on board to present to us.  One of our colleagues didn't like some things this person had to say in a written statement earlier in the year. He called him out on it and suddenly there was a major disagreement between the two.  The Q and A portion of our discussion came to an abrupt end.

After disembarking and walking around for a bit, the confrontation flared up again as members of the Grand County council had to contend with allegations they were opposed to mineral development in the area.  It was certainly an interesting meeting.

Later we headed east along the Colorado River for a dinner event at the Red Cliffs Lodge.

The following morning we were given the option to walk around Arches National Park or float down the Colorado River for several hours.  We opted to float the river.  We witnessed all kinds of pent up legislative frustration spring forth into a series of boat drenchings as everyone took the opportunity to splash their colleagues.  Years of grudges were settled (and perhaps some new ones created) on the river.

Later, we boarded the bus again and were on our way to our next stop.  We entered Emery County and the fascinating San Rafael Swell region.

County officials were on hand to explain some of the unique problems they are experiencing.  Emery county only has 11,000 people.  The county is 1.8 million acres big and only 8% is privately owned.  The rest is owned by the Federal government.  With that, their communities live and die by regulations imposed by Washington D.C.  For instance, many coal mines have shut down due to tighter regulations.  There are many power plants in Southern Utah due to the easy availability of coal.  Yet, many of these plants have shut down due to ever increasing environmental standards.  In many cases, these power plants employed significant portions of the communities.  They have suffered under the burden of ever-increasing Federal regulations.

After stopping for a break in Castledale, we embarked up Huntington Canyon and over into Sanpete County.  We discovered that there is a heated and ongoing water feud between Carbon and Sanpete county going back to the 1940's.  One county feels they have been jilted by the other and is seeking legislative intervention to settle the matter.

After having a fantastic turkey dinner at the Fairview dance hall, we drove back to the Capitol and arrived in SLC around 9:30pm.

It was a whirlwind tour.  Yet, I appreciated seeing the side of Utah that is often in the background of public debates.  With such a small population, it is often difficult for our rural friends to be heard at the Capitol.  I believe this trip really opened the eyes of the legislature to the issues of rural Utah and how our decisions at the Capitol are affecting them.  The trip was definitely a great experience and worth the time invested in learning about these complicated yet important issues.    

Wednesday, August 19, 2015

My Vote to Move the Draper Prison to SLC

Today I voted to move the ailing Draper prison to a new site in Salt Lake City.  Critics of the move have cited costs and implied cronyism in liquidating state owned property.  Lets clear the air on the facts of the situation.

The effort to understand the best interest of the taxpayer in moving the prison has been ongoing for the past four years.  When the original proposal to sell the prison site came up in 2011, the process dictated by the laws only allowed for a 90-day request-for-proposal from contractors.  With such a large site and important impacts for Utah moving forward, the Legislature decided to create a Commission to study the issue and make sure the State was making the wisest choice possible.  This commission was called the Prison Relocation and Development Authority (PRADA).

Rep. Brad Wilson presents the resolution to move the Draper prison to Salt Lake City

PRADA was tasked with contracting with architects, geologists, and other specialists in analyzing all the impacts associated with rebuilding or moving the Draper prison.  The study was exhaustive.  Two years ago, after preliminary reports came to the Legislature, we voted to move the prison to a future site which was to be determined.  At that time there were about 50 sites being considered.

Ultimately, that long list was winnowed down to 5 sites.  After final deliberation and analysis, the Salt Lake City site was chosen as the best long term value to the taxpayer when considering construction costs and operation costs over the 50 year life of the site.

Here is the information that helped inform my vote:

Passage of the bill was not without drama.  Rep. Fred Cox attemped to substitute the bill with his own version that keeps the prison at the Draper site.

There was little support for that on the floor.  Another substitute was offered to override Rep. Cox's substitute.  The vote to override Rep. Cox's substitute passed with his being the only dissenting vote.

Debate on the bill was emotional and passionate.  Ultimately the bill passed with a vote of 62-12.

Friday, August 14, 2015

Spending Your Tax Dollars on Education

The Utah Taxpayer Association recently published data on Utah's 41 school districts and how they spent tax dollars for the last fiscal year.

Here is their report:

There is some really interesting information in this report.  I wanted to take a look at Ogden and Weber School Districts specifically to see how they compared to the state average.  Here are some charts I created from the data:

Lets take a look at spending per student in various categories.  Instruction costs are less in Ogden School District compared to Weber School District and the State Average.  Yet, media costs are significantly more.  Ogden SD has higher student support costs while Weber has higher student transport costs.  Facility construction is extremely low for Ogden SD and high for Weber SD.  Ogden SD also has much higher nutrition expenses.

These data sets aren't very surprising given that Ogden School District serves a very old urban center while Weber School District serves an area that is still growing in population and suburban sprawl.  I believe the spike in media spending in Ogden SD may be representative of the technology focus on ESL and improved learning.  Ogden SD has been involved in a very rigorous program focused on enhancing student achievement. You can read more about the results of that program.

Both Weber SD and Ogden SD pay higher than the average wage for teachers in Utah.  Kudos to them for doing so.

Finally, here is the total spent per pupil.  Weber School District mirrors the state average closely while Ogden School District spends significantly more.  

A special thanks to the Taxpayer Association for gathering and publishing this data in a format that is comprehensible.  For policymakers like myself, this is very helpful information.  

Wednesday, June 17, 2015

The Plurality Problem: Finding a Majority Winner in the Wake of SB54

With the passage of SB54, Utah's caucus/convention method of determining how candidates get placed on ballot was paired with a parallel method where candidates can be placed on the ballot through a petition effort.  The changes are scheduled to take affect in 2016.

The old caucus/convention system provided one candidate per party by the time the general election came around.  In the event there was a contest at convention, a primary election would typically be held to select between the top two candidates vetted at convention.  However, with the new petition process coming on line, it may be possible for many candidates, even more than two from the same party, to be on a primary ballot.

The question then is what happens when you have more than two candidates on a ballot and the winning candidate receives less than a majority of the vote  (aka a plurality)?  Interestingly, 36 of the states in the U.S. have a plurality system in place and have no other process or mechanism for making sure the winning candidate receives a majority of the vote.  Yet, 14 other states do require a majority vote to win an election.

The question facing the Legislature this year is multi-faceted:

1.  Do we want to require a majority vote for a candidate to win an election?  Or are we fine with a candidate receiving less than a majority?

2.  If we want a majority winner, what method would be best to make that happen?

Our interim committee looked at several prospective methods used by other states to determine a winner in a case of plurality winners. One option includes a run-off election held between the top two candidates in the primary election.  Another option includes a 'ranked' voting system where voters prioritize multiple candidates.  A third, less appealing, option includes kicking a plurality result from the primary race back to the parties to determine a winner.

'Ranked' voting, often called Preferential Voting was one of the for fascinating options.  Here is a video that explains how it works in Australia:

Our committee has been tasked with making a recommendation to the Legislature on how we feel we should best handle the plurality question.  We will be discussing this issue for several months.  Regardless of our committee's final recommendation, elections are about to become a lot more interesting in Utah.  Campaigns starting in 2016 will look a lot different than they have in the past.