State settles $103 million lawsuit with Clark County
December 6, 2012
The state has made a deal with Clark County to settle a lawsuit demanding the return of $103 million in property taxes taken from the county to help balance Nevada’s budget.The deal, praised by Gov. Brian Sandoval as good for both sides, gives Clark County about half of what it initially sought and involves both highway funds and the hospital funding the state collects from the county to make up the gap between Medicaid and Medicare payments.According to Department of Transportation Director Rudy Malfabon, the state will contribute $35 million in federal funding to help build the McCarran Airport Connector project. Clark will put up the remaining $20 million for that work.The other part of the puzzle reduces the percentage of the so-called Upper Payment Limit cash that locals provide the state to leverage more federal funding in the Medicaid program. The UPL is designed to make up the difference between what Medicaid pays for medical services to the poor and what Medicare pays since Medicare pays more. It is designed to ensure that hospitals can continue taking Medicaid patients.Health and Human Services Director Mike Willden said the reduction from 60 percent to 56 percent of Medicaid program costs is fair because the federal contribution to Nevada Medicaid has risen from just about 50 percent to 60 percent due to the state’s weak economy.Willden said that as a result of that increase the state was actually getting more from Clark County than it needed for the Medicaid budget — in effect a windfall.That settlement resolves this year’s funding — an estimated reduction of $12.5 million — and also eliminates the $16.4 million Clark County would otherwise owe the state for fiscal years 2010 and 2011.The state can afford to do the deal because it doesn’t involve cash drawn from its General Fund that Nevada doesn’t have to give. To make the $16.4 million payment to Clark, the state simply reduces what the county contributes to the Medicaid program.The state collects the money from county governments that have hospitals to leverage more federal funding to the Medicaid program. The money plus a share of the leveraged federal cash is then returned to the counties. Willden said in Clark’s case, some $41 million in contributions to the state would generate about $68 million back to Clark County plus about $10 million to the state that can be used for other Medicaid costs the state couldn’t otherwise afford.The plan was approved by the Clark County Commission on Monday and the state Board of Examiners on Tuesday.It is similar but somewhat more complicated than the deal the state reached with Washoe County’s demand for the return of its property tax revenue seized by the state in 2010 and 2011. Washoe originally demanded $21.5 million. The final deal was to pay Washoe $1.25 million in cash and another $6 million in highway projects.At that September meeting, Reno City Manager Andrew Clinger asked the state to pay its share of property taxes taken to balance the state budget — just over $2 million. No action has been taken on that request yet.