The Governor and the Democratic Leadership of the Legislature Insist on Taxing Retirement Savings

The Department of Health Care Services (DHCS) called a second stakeholders meeting last Thursday (6/17) to present their latest iteration of the Governor’s package of proposals that includes eliminating the MLRCs’ exemption from paying the Quality Assurance Fee (QAF). Despite the thousands of letters the legislature has received against this proposal, the Governor and the Democratic leadership of the legislature continue to insist that private pay residents of MLRCs be taxed on their retirement savings.

While the California Association of Health Facilities (CAHF), representing the for-profit nursing homes, supported the MLRCs’ against losing the exemption going into the meeting. CAHF got the changes to the pay-for-performance plan it sought, so now the for-profit association supports eliminating the MLRC exemption.  In essence, government intends to tax not-for-profit, high quality nursing homes’ residents, in favor of for-profit facilities.

The consumer advocates were unsympathetic to middle-class residents who might get taxed out of their homes. Their singular goal appears to be a more punitive enforcement system.

At this point in the process the MLRCs are in serious jeopardy of losing the exemption. While the Budget Conference Committee has yet to make a final decision about taxing retirement savings, the Committee Chair, Senator Denise Ducheny (D-San Diego) would not object to taxing private pay residents of MLRCs.  The Budget Conference Committee’s Chief Consultant attended the stakeholders meeting and clearly and forcefully stated her support for taxing retirement savings.

The best chance for stopping this proposal is BEFORE it is wrapped into the budget by the conference committee.  Our vote on this issue will be in the Conference Committee and we must convince them to kill it now. Once it is “in” the budget, we will not get an opportunity for an up or down vote on the tax on the Senate or Assembly floors. So our work is not done.  We must convince the Democratic leaders of the Assembly and Senate that taxing retirement savings is unacceptable and that they must find another way.

To make that argument convincing to the legislature requires the help of all people that understand that taxing retirement savings is unfair to people who have followed society’s expectation to live frugally, save money, and pay-off the mortgage to ensure a decent retirement.

It is time for the middle-class to tell California Legislators “no.” So far, they have ignored our pleas not to tax retirement savings.  We must speak louder and with more force.  We must make it clear to Senate Pro Tem Darrell Steinberg and Assembly Speaker John Perez and the Budget Conferees that middle-class people will not support any Democrat that votes to tax retirement savings. Middle-Class Californians will not support such ill-advised priorities and poor political representation.

The boomer generation has an interest in this issue beyond concern for their parents’ retirement savings.  If taxing nursing home residents’ retirement savings becomes law, it will be the taxing scheme in-place as retired boomers reach the need for nursing home care. Private pay residents in nursing homes will still be taxed, the main difference is that the indigent population to be covered by the tax will be much, much larger and so will the tax!

The immediate task is to increase the pressure on the legislative leaders. Residents, family members (including grandchildren) and friends must tell the Legislative Leaders in Sacramento that the public is watching how they handle this issue and that the public expects them to kill this poor idea in the Budget Conference Committee as quickly as possible.  The longer it lingers on the Conference Committee’s agenda the stronger the chance it becomes law. It must be killed now and the legislative leadership can do that.

Write and telephone Senator Steinberg, Assemblyman Perez, and Senator Ducheny and demand that the elimination of the MLRC exemption from paying the QAF be struck from the Budget Conference Committee’s agenda. Telephone your Assemblyman and State Senator and remind them all retirees are watching their actions on this matter and will vote accordingly.  If we are going to win this battle, we have to win it now. We must stop the retirement tax from being wrapped into the Budget Conference Committee’s report.

We can win this fight if we all write the letters, make the calls, and stand-up for what’s right.

Visit Aging Services’ website to download the appropriate sample letter (resident, management, family, etc.). Then, call and/or send your letters to the Pro Tem, Speaker and Conference Committee Members:

Senate Pro Tem Darrell Steinberg
California State Senate
State Capitol, Room 205
Sacramento, CA 95814

PHONE: (916) 651-4006
FAX: (916) 323-2263

Speaker John A. Perez
California State Assembly
State Capitol, 219
Sacramento, CA 95814

PHONE: (916) 319-2046
FAX: (916) 319-2146

Budget Conference Committee Members (Click here for roster)

For more information, contact Jack Christy, Director of Public Policy at (916) 469-3366.

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