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June 16, 2009

Re: Insurance Premium Tax Advanced to Balance Uncompensated Care Fund

Dear Mayor:

Yesterday, in concert with their consideration of the FY 2010 Appropriations Act, the Senate Budget and Appropriations Committee and the Assembly Budget Committee released companion bills that would increase the tax on insurance premiums. S-2016 ( ) and A-4108 ( ) would more than double the premium tax on health insurers.  The proceeds from these increases will be directed toward hospital uncompensated care.

Municipalities that participate in the State Health Benefits Program (SHBP) are already facing a considerable increase in benefits. (See our May 28 letter at for details.) The proposed taxes that passed yesterday would directly impact municipalities that purchase insurance in the private markets.  Public entities and small employers make up the bulk of business in these markets.  These increased premiums, coupled with an expected double digit increase in the SHBP, will make it harder than ever for all to find affordable coverage.

We are concerned that these new taxes will have an added adverse impact on local budgets Again, coupled with the expected increases in SHBP that the League commented on last week, these increases will significantly burden local officials as they seek affordable coverage. 

In light of these concerns, we urge you to contact the Legislature and ask them to hold these bills, until their impact on municipalities, as well as on the SHBP is further reviewed.  Health care costs for all public entities continue to represent a major component of local budgets.  Taxing these policies in the private markets will inevitably increase the cost of health care and reduce affordable options for all. 

Please contact Assembly Speaker Joe Roberts at 609-292-7065 and Senate President Richard Codey at 609-292-5217 and urge them to hold A-4108 and S-2016, until the State can determine their impact on local budgets.

For more information, contact Jon Moran at 609-695-3481, ext. 121.

Very truly yours,

William G. Dressel, Jr.
Executive Director




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