Hospital Tax Likely to Be Extended

As Gov. Bill Haslam wrestles with cutting the state budget, he is no doubt relieved to hear that the Tennessee Hospital Association has agreed to extend a tax and prevent a $700 million hole in the TennCare budget.

It is not a done deal, it still requires legislation, but hospitals are expected to support the idea of extending a temporary tax on hospitals that raises $210 million that can be used to draw down $507 million in federal funds for TennCare. It was done this past year to avoid cuts, though two things might threaten a routine extension for another year. There may be a need to increase the state tax to get even more of a federal match or there might be an effort by some legislators to redirect the money to someone other than the health-care providers.

Meanwhile, popular state spending programs are expected to face an ax, since a tax increase by the newly elected conservative Republican majority in the state House is an impossibility.