Senators advance bills on child care subsidies, rural hospitals and pharmacies

A debate about child care subsidies turned into a larger discussion about the state’s budget problems in the Nebraska Legislature Wednesday. And lawmakers advanced a measure intended to protect rural hospitals and pharmacies.

The child care debate took place on a proposal, LB13, by Sen. Machaela Cavanaugh to have the state comply with federal rules regarding child care subsidies. Those rules require child care providers be reimbursed on whether a child enrolled, rather than whether the child shows up every day.

Sen. Wendy DeBoer supported the proposal. She said child care subsidies are already low, at only 75% of market rates, and docking providers pay if a child does not show up would discourage them from accepting subsidized clients.

“We need to support our childcare businesses," she said. "These are small businesses. These are folks who are making a living, and helping others to make a living."

About 9,000 Nebraska families receive childcare assistance. Cavanaugh said the proposal would not cost any money this year, but could cost about $17 million a year in the future.

Sen. Myron Dorn, a member of the Appropriations Committee, acknowledged that last month’s improved revenue forecast had reduced the state’s projected budget shortfall. But he said the state is not out of the fiscal woods just yet.

“We're at a $98 million deficit, as we sit here today, yet, but when you look two years out, that's still a $670 million deficit,” he said.

Cavanaugh sought to reframe the issue.

“We actually don't have a deficit. We have a choice of what we're funding in the budget, and we are choosing to put hundreds of millions in dollars towards a tax we don't levy, to reimburse. And so if that is the choice that we want to continue with, then we have to make cuts other places,” she said.

Cavanaugh was referring to Gov. Jim Pillen’s proposal to spend $250 million to offset local property taxes in order to keep them from rising.

Sen. Brian Hardin, chair of the Health and Human Services Committee, said federal budget cuts will worsen the state’s budget picture. Hardin pointed to a decline in the federal share of Medicaid expenses, known as FMAP, and predicted other cuts as well.

“The FMAP is not the only area where we can, and probably will, see money go down from the federal government provision and be handed off to the states, and for us as a state to pick up the slack," he said. "The slack could turn into hundreds of millions of dollars per year, just related to Health and Human Services."

Sen. Kathleen Kauth also expressed concern about the cost. She suggested parents receiving child care subsidies were the ones who should pay providers for days when their kids don’t use the services.

“The $17 million is a lot of money. We're stewards of our citizens’ money," she said. "This is not something the state makes. This is something the state takes. I do think that people who are benefiting from the subsidy, the parents of those kids, should be able to plan ahead and say, ‘Okay, if, if my child is going to be out, I'm going to need to make that payment for that day,’ and take some ownership of that."

In her closing argument, Cavanaugh said her proposal is necessary.

“We need this program. We need this for tax revenue. We need this for our economy. We need this for our workforce. We need this for our business industries. We need this program. And, the kids that are in this program need this program,” she said.

Senators then voted 25-14 to give the bill first round approval. That’s the minimum number of votes needed to advance a bill, suggesting an uncertain future as the measure still faces two more rounds of voting.

Also Wednesday, lawmakers gave first-round approval to a bill, LB168, that advocates say will help rural hospitals and pharmacies. Hardin is lead sponsor of the bill, which would prohibit drug companies from imposing additional restrictions on hospitals or pharmacies that get drugs at a discount under a federal program known as 340B. Hardin said the program is essential for rural areas.

“The program's purpose is to invest those savings into expanding services for underserved communities," he said. "Savings from the 340B program help our Nebraska hospitals provide more comprehensive care for underserved patients. They invest these savings back into the communities in many different ways, but most importantly, the savings can literally keep the doors open for some struggling rural hospitals."

Sen. John Arch supported the bill, but said the underlying federal program needs work.

“The 340B program is a mess. I'm going to vote for this bill, but this does not fix the 340B program,” he said.

Drug companies have criticized the program as a way to force them to subsidize hospitals without any guarantee those hospitals will use the savings to benefit patients. And Arch said the program is an example of the federal government shifting costs onto the private sector because it is unwilling to raise taxes to pay the full costs of services under Medicare and Medicaid.

Nevertheless, senators voted 41-0 to give the bill first-round approval.

More from the Unicameral:

Housing aid for survivors of domestic violence advances, Lincoln East Beltway discussed

School cellphone restrictions advance, E-verify mandate heard

California-style prop tax limits proposed, revenue estimates up

Senators consider superintendents' pay, term limits

Proposal for 'missing year' of property tax relief heard

All Nebraska students would receive free school lunch under Unicameral proposal

University of Nebraska pushes back against proposed budget cuts

Bill to protect children from compulsive use of social media met with concerns from senators