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Action Alert Archive
2005
ACTION ALERT UPDATE Date: June 29, 2005
Subject: TANF Extension
The House of Representatives passed another 3-month TANF extension on Wednesday morning (June 29). A controversy about paying for some of the costs of the bill slowed down the extension to within a day of TANF's expiration. However, the House Committee on Ways and Means secured the agreement of the Energy and Commerce Committee to bear the costs of extending Transitional Medical Assistance (TMA) for families leaving welfare for work and for abstinence-only programs, since both of those programs are under the jurisdiction of Energy and Commerce. Additional costs for TMA and abstinence-only programs that go beyond the funds allocated to Energy and Commerce in the budget resolution will be offset by savings they find, either in the reconciliation bill or in other legislation. According to CQ Today, TMA costs $850 million annually, while abstinence-only programs cost $50 million a year. We do not yet know where the Energy and Commerce Committee will seek savings. They have jurisdiction over Medicaid and other programs, with a net savings target of $14.7 billion over 5 years that they are required to incorporate in a reconciliation bill by September 16.
The Senate must also act on extending TANF. If enacted, this will be TANF's 10th short-term extension.
ACTION ALERT UPDATE Date: June 29, 2005
Subject: 2005 Legislative Wrap-up
The Campaign for Hoosier Families’ major legislative initiative for this session of the state legislature was the extension of the state Earned Income Tax Credit. The Earned Income Tax Credit is a federal tax break that provides targeted relief to low & moderate income Hoosiers and encourages self-sufficiency for these working men and women. It is a “Hand Up” (not a hand-out) that helps working families escape poverty. EITC supplements wages – it is a refundable tax credit, meaning workers can get back more than they actually paid in taxes.Tax restructuring in 2002 made the Indiana state EITC a refundable credit that is 6% of the federal credit, with a sunset of December 31, 2005. We worked on legislation to make this credit permanent – to repeal the sunset. Our bill to do this was HB 1083, authored by Representatives Mike Murphy, John Day, Cindy Noe & Sheila Klinker. Representative Joe Micon spoke on this legislation from the floor of the House and it passed 47-0. Senate sponsors were Sen. Ronnie Alting, Vi Simpson & Luke Kenley. It was heard in Senate Tax and Fiscal Policy Committee. Working closely with Senator Luke Kenley, we were able to get language included in the final budget bill to extend the state EITC to 2011. This was indeed a victory that will mean approximately $10 million to low-income working Hoosiers. This credit is vital to low-income families trying to make ends meet and it is needed to maintain the improvement in the state’s taxation of low-income working Hoosier families. In 2002, Indiana’s income tax threshold (the income at which state income tax must be paid) for a single parent family of three was the 3 rd lowest in the country. But in 2003, the threshold improved to 13 th in the nation. This improvement was largely due to the change in Indiana’s state EITC. We will continue to work to make the state EITC permanent and a higher percentage of the federal credit. Budget The two-year, $24.3 billion state budget (House Enrolled Act 1001 ) was passed along party lines. Republicans claim it will eliminate the state’s $645 million deficit and provide new dollars for schools and Medicaid without raising state taxes. Democrats are critical of the spending plan, claiming that it relies on hundreds of millions of dollars in property tax increases that will result in spending cuts for more than 129 school districts over the next two years. The funding formula for K-12 education is based in part on a philosophy that money should follow the child. Support by a Republican majority for the expansion of charter schools, coupled with the elimination of minimum funding level guarantees for schools experiencing decreasing enrollment, may leave economically disadvantaged and disabled students further behind. It is possible that the funding formula change, which will benefit growing suburban areas to the detriment of urban and rural areas, could force local school boards to raise property taxes by $469 million to cover costs for transportation, textbooks, and operating expenses. Republicans assert that the budget will eliminate the structural deficit, rebuild the state’s reserves, and increase funding to public schools by 2.5% and Medicaid by 5%, without any new taxes or gambling expansion. Democrats argue that local governments will have no choice but to raise property taxes significantly – by as much as 4.1% each year; while funding levels for K-12 and higher education are only increased by barely 1%, and the increase in Medicaid spending is only half of what projections estimate will be needed to meet entitlement requirements. Accompanied by a freeze in state reimbursement for property tax replacement credits, which will cost counties about $276 million, and a requirement that counties pay the state back for unreimbursed juvenile offender payments, the total property tax increase required of counties could be about $847 million. (Thanks to Lindsay Mintz of the Indianapolis Jewish Relations Council for Budget analysis.) Other important issues that passed this legislative session include:
- SB523: Permits certain drug offenders participating in a reentry court program to receive food stamps or temporary assistance for needy families (TANF).
- SB481: Requires FSSA and OMPP to implement a program to provide transitional services, including access to Medicaid, to individuals aged 18 to 22 who have become emancipated while receiving foster care.
- SB529: Establishment of Department of Child Services; language establishing maximum caseload ratios for child protection caseworkers and funds the hiring of 400 new child services caseworkers is in budget bill (HEA 1001).
Another major issue for the Campaign for Hoosier Families was energy assistance for low income families. Indiana does not invest any state money in helping low income with the cost of heating their homes. Federal funds from the Low Income Home Energy Assistance Program (LIHEAP) are crucial to help low income consumers pay their utility bills. Indiana distributes the LIHEAP money through Community Action Agencies to help keep low income families warm & safe . When Community Action Agencies pay utility bills with this federal money, Indiana takes a portion in sales tax. We believe all those federal funds should be used as intended – for low income energy assistance. Companion bills filed by Representatives David Yount, Sheila Klinker, John Day, Michael Murphy, and Joe Micon proposed a state sales tax exemption for sales of home energy and bulk fuel purchased with LIHEAP funds. These bills would have provided millions of additional dollars for low-income energy assistance. While these bills did not receive a hearing this session due to their fiscal impact, much interest was generated in the issue and we hope to be successful next year. The state sales tax exemption for bulk fuel would have only cost $200,000 and bulk fuel customers are some of the most vulnerable consumers. A tragic fire this past winter, which cost the lives of three young children, was due to the family running out of their LIHEAP-provided bulk fuel. Other important issues that did NOT pass this session include:
- Full day kindergarten – these bills were never heard: SB291, HJR15, HB1515.
- Free textbooks to public school students – these bills were never heard: HJR12, HJR13, HB1181, HB1637.
- A number of bills helping low-income Hoosiers through an income tax deduction for eligible medical expenses, by eliminating the waiting period for unemployment benefits, and by raising the minimum wage.
An important issue DID pass the legislature which could be particularly harmful to the voting rights of low income individuals. SB483requires state-issued identification to vote in all elections. According to Mary Anderson, Executive Director of Lafayette Urban Ministry, “Obtaining picture identification in Indiana is a very difficult and often impossible process for our low income clients.” In a letter urging the legislature not to pass SB 483, she stated “This is dangerously similar to the poll taxes and literacy tests of the 1950’s that denied whole classes of people the right to vote. Low income populations are already faced with many impediments to exercising their right to vote. Please do not add another barrier to their ability to access this most fundamental American right.” Unfortunately, this bill did become law and we will have to deal with its ramsifications.
ACTION ALERT UPDATE Date: January 5, 2005
Subject: Extension of State Earned Income Tax Credit (EITC)
Ways and Means (the financial committee of the Indiana House of Representatives) is holding a hearing TODAY (Wed. Jan 5th) about the extension of Indiana's State Earned Income Tax Credit (EITC). Below is a copy of some of the testimony I will present. Please contact your state representative and members of the Ways and Means Committee and ask that they SUPPORT HB 1083. Use any of the information below to make your point, or merely ask them to support the bill! Thanks so much for your help - Patti
Patti's Testimony:
Many working families continue to struggle to feed, clothe, and house their families. The Earned Income Tax Credit is a federal tax break that provides targeted relief to low & moderate income Hoosiers and encourages self-sufficiency for these working men and women. It is a “Hand Up” (not a hand-out) that helps working families escape poverty. Last year, Lafayette Urban Ministry helped EITC-eligible workers file their taxes free of charge and filed for nearly $100,000 in earned income tax credits. This is real money that is making a difference for Tippecanoe County workers. One person receiving EITC put a down payment on a home and was able to get their family out of a difficult rental situation, another single mother of three essentially increased her salary by 33%!
And EITC is making a difference in Indiana. Most poor children live in families with a working parent. Yet these families in poverty are still required to pay Indiana state income tax. Hoosier families of four with incomes at the poverty line paid $387 in income taxes in 2002. However, Indiana’s tax burden on low-income families has improved. In 2002, Indiana’s income tax threshold for a single parent family of three was the 3rd highest in the country, but in 2003 the threshold had improved to 13th in the nation. This improvement was due largely to the change in Indiana’s state Earned Income Tax Credit (EITC). When the new state EITC became effective in 2003 becoming refundable and based on six percent of the federal EITC, it reduced taxes on a family of four at the poverty line by nearly $200. A single-parent family of three with poverty level income in 2002 paid $284 in state income taxes, and in 2003 this family paid only $55 in state income taxes due to the EITC.
Earned Income Tax Credit is a reward for work as it goes only to those households with earnings and the size of the credit rises as earnings increase up to a cap and then gradually decrease as it is needed less. Indiana’s state EITC is set to expire December 31, 2005. If the credit is not renewed the threshold for a two-parent family of four will fall from its current level of 77 percent of the poverty line to less than 37 percent of the poverty line. This credit is vital to low-income families trying to make ends meet and is needed to maintain the improvement in the state’s taxation of low-income working Hoosier families.
To help working families move out of poverty, Lafayette Urban Ministry is supporting an extension of the state Earned Income Tax Credit.
State Representative Contacts
E-mail or to determine who your elected officials are: www.in.gov/legislative/legislators
Phone: (317) 232-9600 or (800) 382-9842
Mail: Indiana House of Representatives, 200 West Washington Street, Indianapolis IN 46204
Tippecanoe County state representatives:
* Rep. Tim Brown - H41@in.gov 1-317-232-9762
* Rep. Sheila Klinker H27@in.gov 1-317-232-9644
* Rep. Joe Micon - H26@in.gov 1-317-232-9606
Here are the committee members:
WAYS AND MEANS
- Representative Jeff Espich, Chair
- Representative Ralph Ayres, Vice Chair
- Representative Larry Buell, Budget Chair
- Representative Phyllis Pond, Higher Education Chair
- Representative Jeff Thompson, School Funding Chair
Members:
- Representative Billy Bright
- Rep. Bill Crawford, RMM
- Representative Bob Cherry
- Rep. Tiny Adams
- Representative Bill Davis
- Rep. John Aguiler
- Representative Dan Leonard
- Rep. Dennis Avery
- Representative Rich McClain
- Rep. Bill Cochran
- Representative Luke Messer
- Rep. John Day
- Representative Cindy Noe
- Rep. Ben GiaQuinta
- Representative John Smith
- Rep. Clyde Kerse
- Representative P. Eric Turner
- Rep. Sheila Klinker
- Representative Troy Woodruff
- Rep. Peggy Welch
2004-2005 Public Policy Plan
The Campaign for Hoosier Families’ major legislative initiative for this session of the state legislature will be the extension of the state Earned Income Tax Credit (EITC).
Many working families continue to struggle to feed, clothe, and house their families. The Earned Income Tax Credit is a federal tax break that provides targeted relief to low & moderate income Hoosiers and encourages self-sufficiency for these working men and women. It is a “Hand Up” (not a hand-out) that helps working families escape poverty. EITC supplements wages – it is a refundable tax credit, meaning workers can get back more than they actually paid in taxes.
EITC is an anti-poverty initiative that lifts approximately 5 million people a year out of poverty. (US Census Bureau)
Tax restructuring in 2002 made the Indiana state EITC a refundable credit that is 6% of the federal credit, with a sunset of December 31, 2005. This credit is vital to low-income families trying to make ends meet and it is needed to maintain the improvement in the state’s taxation of low-income working Hoosier families. In 2002, Indiana’s income tax threshold (the income at which state income tax must be paid) for a single parent family of three was the 3 rd lowest in the country. But in 2003, the threshold improved to 13 th in the nation. This improvement was largely due to the change in Indiana’s state EITC. The state EITC results in approximately $10 million to low-income working Hoosiers.
There would be no new fiscal impact making the state EITC permanent. We have been paying this since it became effective in 2003. Just as we have made many business tax credits permanent, we need to make this credit permanent for our low income workers.
Also, state funds expended on the Indiana EITC are applied to the state’s required Maintenance of Effort (matching funds for federal TANF- Temporary Assistance to Needy Families). Thus the state EITC provides a means of meeting part of the state’s match.
EITC is an Economic Development issue because these funds are received by people who need them and who will spend this money in their community to feed, clothe, and house their families.
We will propose legislation to make the state EITC permanent - to repeal the sunset. We will also work to make the state EITC a higher percentage of the federal credit.
A related Public Policy project will be increased outreach to help families know they are eligible for EITC and increase the number we are able to provide free income tax preparation. Many families don’t claim the Earned Income Tax Credit (EITC) because they don’t realize they’re eligible for it, they file the easy form (or not at all), or they just need help filing their taxes. In tax year 2002, $1.7 million in federal EITC went unclaimed in Tippecanoe County. We will work to bring more of that money back to Tippecanoe County.
Another important issue to address is energy assistance for low-income families. The past few winters have been extremely cold and at the same time energy costs soared. Citizens Gas estimates that if this winter is as cold and wholesale gas prices rise as expected, the average heating bill will be well over $600. It will be difficult for many families to pay this amount. We will propose several bills to address this issue:
- Eliminate state sales tax on LIHEAP (Low Income Home Energy Assistance Program) funds from the federal government. That would generate approximately $2 million additional dollars for energy assistance.
- Create an energy assistance contingency fund that captures heating fuel sales tax revenue above a baseline to use for energy assistance. The amount generated would depend on the baseline set and the increase in heating costs.
- Extend the moratorium on gas and electric disconnects from March 15 to March 31 st and expand it to include more low-income families, including those who receive Food Stamps, Medicaid, Supplemental Security Income, federal public housing assistance as well as those who receive LIHEAP.
- Require utility companies to provide uniform information about the number of clients facing disconnect, those actually disconnected, the number of those who are low-income and the amount of money the utility provides to low-income consumers.
It may also be time for the state of Indiana step up and provide some funding for emergency homeless shelters. Currently, Indiana merely administers the federal Emergency Shelter Grant funds without contributing any state dollars. Many states have a Housing Trust Fund, funded by various mechanisms including a line item in the budget and/or a fee on real estate transactions. We will try and get this into the budget.
Those advocating for vulnerable populations in Indiana must remain active on issues of township poor relief and public assistance as well as energy assistance. Considering the fiscal crisis in Indiana, along with the tax restructuring passed in 2002, this may be the time to look at the township form of government and if there may be a more cost-effective, as well as more just, way of administering poor relief. We will follow these discussions with groups interested in addressing this from the fiscal standpoint and look for the opportunity to address the poor relief aspects as well.
As this will be a budget session, we will watch carefully to ensure that the budget deficit is not made up on the backs of low-income people. Thus, we support the budget position of the Indiana Coalition for Human Services:
“The Indiana Coalition for Human Services supports action by the State legislature that will adequately fund health and social services in the state budget and improve the delivery of health and social services throughout the state of Indiana.” The entire ICHS Budget statement can be viewed at: www.ichsonline.org
Patti O’Callaghan, Director of Social Justice Ministries, Lafayette Urban Ministry
November 19, 2003
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