Some Alaskans: Tax, don't cut

Speakers suggest raising revenue to avoid more hits to programs

Posted: Friday, November 07, 2003

A physician who has spent 20 years serving in emergency wards in Homer and Soldotna told a joint hearing of the Alaska Senate and House Health, Education and Social Services committees Wednesday morning that it is time to stop cutting social programs, initiate an income tax to fund them better and wake up to the needs of Alaska citizens.

"I am not here to help you find places to cut the funding," Dr. Hal Smith of Homer said toward the close of the four-hour, statewide teleconference. "I am totally opposed to the $250 million in cuts proposed by the governor (for the overall fiscal year 2005 state budget). The budget is already very austere."

Smith told lawmakers he was "shocked and ashamed" that the governor was even considering cuts to the Department of Health and Social Services.

"Who, among you, after listening to all this testimony, could in good conscience vote to cut a dime from any of these programs?" Dr. Smith continued. "All of the services are necessary. The time for cutting is over. In fact, these programs deserve increased funding. The governor and the Legislature need to be working to increase revenue to pay for services needed by the citizens of Alaska."

Smith said new revenues should include an income tax.

"We need the leadership of the state to stop chanting the no-tax mantra," he said.

Smith wasn't alone. Several others from various parts of the state included a call for an income tax to ensure that social programs on which so many depend remain functioning, and functioning well.

The joint committees, chaired by Sen. Fred Dyson, R-Eagle River, and Rep. Peggy Wilson, R-Wrangell, called the hearing to give Alaskans a chance to speak about the social programs run by the department a department that represents one-third of the state government and spends one-quarter of the general fund each year.

Commissioner Joel Gilbertson and Deputy Commissioner Marcia Kennai updated the committee and the public on the ongoing restructuring of the department initiated July 1 with the FY 2004 state budget.

"We are experiencing the fiscal pressures, the challenges that the state carries with it across the board," Gilbertson said.

He noted a $72 million growth in programs between the FY 2003 and 2004 budgets. The largest component, Medicaid, grew by $60 million. That came as federal funding help declined.

"We are going to see a similar growth going from FY 2004 to FY 2005," Gilbertson said. "We will be moving forward again with aggressive cost containment and other efforts to make sure the state can afford these programs."

The largest restructuring in the history of the department has meant the creation of new offices and divisions, including the Office of Children's Services and the divisions of Behavioral Health and Healthcare Services. Gone are the divisions of Alcohol and Drug Abuse, Mental Health, Developmental Disabilities, Medical Assistance and the Division of Family and Youth Services.

"The programs did not go away. The employees did not go away," Gilbertson said. "We found more efficient manners to deliver those services."

He said Kennai would be working to improve the new children's services office.

Gilbertson said the department is moving forward with the integration of its behavioral health system, acknowledging for the first time that the majority of clients have "co-occurring disorders."

"If we fail to acknowledge that up front, if we fail to assess up front all of the service needs of that individual, the system will fail," he said. "We will not be able to provide comprehensive integrated services."

The integration project is to be completed by the end of the current fiscal year. After which, he said, there will be no "wrong door," and clients will get the care they need with a minimum of bureaucratic red tape.

Gilbertson also discussed changes to other department services, including those to seniors, the disabled and juveniles.

The Division of Juvenile Justice is going through a system reform, he said.

"We have taken a cottage offline at the McLaughlin Youth Center, not because we didn't have the money, but because we believe that we have not been adequately using all out-patient services first. We've been rushing to put kids in detention beds. We must find ways that we can deliver services in the least restrictive setting."

He noted overcrowding in the Bethel and Nome youth detention facilities.

"The system reform will lead to better outcomes," he said.

He pointed to fiscal pressure in the Medicaid program that is expected to grow by another $60 million in general funds.

"Five years ago the Medicaid program was barely $500 million," he said. "By next year it will be pushing close to $1 billion."

It risks taking over all the other activities of the department, he added.

"We have to find ways to control the growth of the Medicaid program in a responsible manner," he said.

The department has had to make some difficult cost-containment decisions, he said.

"Things you would not want to do if you had all the money in the world, but we don't," he said.

One step is to move forward on a preferred drug list, he said.

"It is a way we can improve the prescribing habits for our Medicaid clients," he said, adding that it would mirror what is happening in hospitals and insurance providers across the nation.

Kennai said the state of Alaska did not rate well in a recent review of how the state delivers children's services. She is working to improve the safety of children in the system.

"Safety must be addressed as a first priority," she said. "We need effective, systemic change, but there are no quick fixes."

Gilbertson acknowledged that there is a high caseload in child-protective services.

"It is a problem, one we inherited," he said. "The governor's FY 2005 budget will include additional resources to hire more social workers."

But lack of workers is only part of the problem, he said.

"We have social workers doing things that such workers should not be doing," he said. "We don't have enough administrative support. We don't have an IT (information technology) system in place that has the proper case-tracking and real-time access."

Following Gilbertson's update, lawmakers went to the phones asking for comments from around the state.

Sue Drathman, with the Homer Community Mental Health Center, asked that as they work to balance the state budget, lawmakers don't dismantle the safety nets that serve the most vulnerable citizens.

"We serve over 90 people in Homer and I am very concerned that as funding is reduced that folks are going to have to move to Anchorage to receive services, perhaps even congregate care there," she said. "Without the services we currently have in place, people are going to have to be institutionalized."

She said services had been cut to the bone. She urged the committee members to increase revenues, even through taxes, rather than cut further.

Homer resident Mako Haggerty said his son, now grown, suffers with cystic fibrosis and has utilized state services and is now on Medicaid.

He echoed Drathman in calling for more revenue, not more cuts.

"I am more than willing to pay a state income tax," he said.

Margaret Parsons-Williams of Soldotna is the fetal alcohol syndrome coordinator with Frontier Community Services. She suggested using the alcohol tax to pay for alcohol prevention and intervention services.

Linda Flowers with Central Peninsula Counseling Services' Forget-Me-Not Care Center in Kenai said she was speaking on behalf of adult daycare programs across the state. She said it was an Alzheimer's victim who, in a moment of lucidity, reminded her just how important such programs are.

"She told me, 'I had forgotten what happy was.' That right there told me how important it was to the seniors," Flowers said.

She also said it was time to look at increasing revenues, not cuts. She said she backs either a sales tax or an income tax.

Steve Horn, of Soldotna, is with Alaska Community Mental Health Services. He said agencies are lean and have been cost-containing for years, to the point where it is affecting morale. He urged legislators to make site visits to see first-hand the difficulties under which they operate.

Committee members are working with the department to find ways to improve the efficiency and effectiveness of its operations and to make its services easier to access, Rep. Wilson said in a press release announcing the hearing.

Rep. Paul Seaton, R-Homer, a member of the House committee, said he was pleased to hear testimony that the reorganization was going well.

"Normally, when changes are happening, you hear about all the problems," he said. "But, I heard a number of good comments about things that are getting better."

He said he was struck by the number of people who were willing to pay a state income tax to protect the social service programs.

"I heard it not only from Homer, but from Seward and Fairbanks as well," he said.

On Nov. 20, the House Ways and Means Committee will hold a public hearing in Kenai on revenue. It will be held at the Kenai Legislative Information Office, but will be teleconferenced elsewhere.

Seaton said he hoped people would come to testify.

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