Transcript Public Policy & Aging Farmers

Public Policy
& Aging Farmers
Kevin B. Rund
Sr. Director of Local Government
Illinois Farm Bureau
Policy Areas
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Access to Medical Care
Farm Program
Estate Transfer
Land Use
State & Local Tax
Technology
Background
• Not all directly affect health . . .
. . . but quality of life and the stresses
older farmers face.
• Advantage to aging . . .
Access to
Medical Care
Emergency Medical Services
• Aging farmers become more reliant
on these services
• Services are dwindling in rural
areas, farther removed
• Training standards/costs are
forcing out the volunteers
EMS & Volunteers
The EMS
providers throughout rural areas of the
state are extremely dependent on volunteers for
staffing and fundraising to support the growing need for service
providers, as well as equipment and supplies. At the same time,
many rural communities are faced with an aging population, fewer
businesses that offer local employment opportunities, and greater
competition for a limited pool of community volunteers. There is
increasing public expectation of what services should be available.
The cost of providing services continues to increase and thirdparty reimbursement has not kept pace with expenses.
Illinois Rural Health Association, 2005
Problems: Five Dominant Themes in
2005 IRHA Survey
1. Recruitment and retention of EMS providers;
2. Financial support of the EMS providers;
3. Public perception of service needs and
provider capabilities;
4. Regulatory burdens facing EMS providers;
and
5. Insufficient collaboration among EMS, public
safety and health care providers.
Illinois Rural Health Association, 2005
Recruitment & Retention
• Individual’s Costs
– Training: 120 hours for basic, 40 hours continuing
– Cost most often must be met by the individual
– Time away from their jobs
• Volunteer pool suffers—out-of-town
employment
• Older volunteers retire due to demands
• Businesses less apt to subsidize an EMS
system by allowing employees to be absent.
Financial Support
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Access to capital
Unfunded mandates
Fundraising is time consuming
Rising operating costs
Readiness costs vs. level of usership
Medicare & Medicaid inadequate
Physician Services
• Tort laws pushing doctors out of Illinois
• Physical distances increasing—
especially affecting the elderly
• Specialists scarce in rural areas
Liability for Physicians
• According to the American Medical Association, Illinois
is one of 19 states that is in a “full blown” medical
liability insurance crisis (“The Doctors Are Leaving”
2004).
• From 2001 to 2003, medical liability claims in Illinois
jumped 45 percent, with a median payout for a claim
increasing from $230,000 in 1993 to $520,000 in
2003.
• As a result, insurance providers pulled back. In 2005,
there were only four insurance companies offering
medical liability insurance to physicians practicing in
Illinois, compared to 16 companies in 2002.
Illinois Legislation 2005
• Caped non-economic damages--such
as for pain and suffering--at $500,000
for physicians & $1 million for hospitals
• Limits malpractice premium rate
increase to 6 percent w/o hearing
• Also establishes the "Sorry Works" pilot
program
Illinois Legislation 2005
• October, 2006
Nurse Practitioners
• Can be source of basic medical care
• Limits on scope of practice
Nursing Homes
• Stringent government regulations
• Older facilities too costly to update
• Scarcity of nurses, especially in rural
areas
• Low, slow state payments
• Rural communities loosing facilities
• Travel distances / costs increase for
rural families
Farm Program
2007 Farm Bill
Shift From Direct Payments?
• As retirees become more reliant on
returns from investment in farmland
• Less able to subsidize income with onfarm or off-farm income
• Operations have evolved through
decades of farm programs
2007 Farm Bill
New Focus on Rural Development?
• Would likely benefit all rural residents
• Benefits would accrue over time
• Could be too late for some of today’s
elder farmers
Estate Transfer
Estate Tax
• Economic Growth and Tax Relief
Reconciliation Act of 2001
• Current phase-in of increasing exemption
– Eliminated in 2010
– In 2011, reverts to pre-2001 level of $600,000
• Uncertainty of ceiling, planning
Step-Up in Basis
• Step-up revalues property--helps heirs when
facing capital gains tax in the future
• Unlimited step-up currently in-place
disappears with 2010 elimination of estate tax
– Could instead reset to $1.3 million
– Could add $3 million more if spouse ($4.3 total)
– After 2010, adjusted for inflation
• Still could hurt farm families
Capital Gains Tax
• Real value should be target
• Property owners are taxed on inflation
– Penalizing them for retaining investments
– Discouraging long-term investment
• Today, tax rate partially compensates
– However, treats investors non-uniformly
Capital Gains Tax
B
1997 for $1,800/a
2007 = $4,300/a, gain of $2,500
A
2007 = $3,000/a, gain of $2,500
1970 for $500/a
Capital Gains Tax
B
A
A
B
Total
Gain
Inflated
Real
Gain
$2,500
$2,500
$0
15%
Tax
$375
$2,500
$1,200
$1,300
$375
1031 Exchange
• Allows re-investment in “like kind”
property and deferral of capital gains tax
• Beneficial to older farmers
• Tends to inflate surrounding farmland
values
• Detrimental to beginning or growing
farmers
Land Use
Zoning
• Can be helpful, but
not always viewed
that way by farmers
• Despite county
prohibition from
regulating agriculture
Counties With County Zoning
Counties Without County Zoning
Rural Housing
• Multi-generational need
– “Single-family” limitations
– Single house per lot limitation
– Some make allowances for family
• Rural Subdivisions
• Non-farm residents
– Need for reverse set-backs
– Expectations
The Code of
Country
Living
Where Expectation Meets Reality
(No, the pizza place doesn’t deliver here.)
P.A.C.E.
• Purchase of Agricultural Conservation
Easements
• Realize value while maintaining ownership
• Alternatives:
– Sell land for development value
– Forego value and retain for farming
• Illinois has authority but no funding
• Local government in Illinois is not authorized
NFIP Floodplain Regulations
• Generally, prohibit new construction
within a floodplain
• Prohibit reconstruction of significantly
damaged structures—regardless of
cause
• Especially difficult for older residents
State & Local Taxes
Farmland Use-Value Assessment
• Avoids escalating taxes based on rising
development potential
• Allows landowners to retain land in
farming rather than being forced to sell
• Maintains retirement investment for
many older farmers
Gross Receipts Tax
• Governor announced in his budget
message today
• Expected to raise $6 billion
• Could dramatically impact farmers
• High-volume, low margin business
• Would apply whether or not operation is
profitable
3% Payroll Tax
• Governor announced in his budget
message today
• Could dramatically impact farmers
• Applies to businesses that do not offer
their employees health insurance
• Revenue to be used to subsidize health
insurance
Public Policy
& Aging Farmers
Kevin B. Rund
Sr. Director of Local Government
Illinois Farm Bureau®