Property Tax Reduction Act of 2023

To amend title XIX of the Social Security Act to reduce Federal financial participation for certain States that require political subdivisions to contribute towards the non-Federal share of Medicaid. 1. Short title This Act may be cited as the Property Tax Reduction Act of 2023 2. Reduction of Federal financial participation (FFP) for certain States that require political subdivisions to contribute toward non-Federal share of Medicaid Section 1903 of the Social Security Act ( 42 U.S.C. 1396b (cc) Reduction in FFP for contributions required by political subdivisions (1) In general Notwithstanding the previous provisions of this section, in the case of a State that had a DSH allotment under section 1923(f) for fiscal year 2023 that was more than 6 times the national average of such allotments for all the States for such fiscal year and that requires political subdivisions within the State to contribute funds towards medical assistance or other expenditures under the State plan under this title (or under a waiver of such plan) for a quarter in a fiscal year (beginning with fiscal year 2025), in determining the amount that is payable to the State for expenditures in such quarter under subsection (a)(1), other than contributions described in paragraph (2), the amount of such expenditures shall be reduced by the applicable percentage described in paragraph (3), with respect to such fiscal year, of the amount that political subdivisions in the State are required to contribute under the plan. (2) Excepted contributions The contributions described in this paragraph for a fiscal year are the following: (A) Contributions required by a State from a political subdivision that, as of the first day of the calendar year in which the fiscal year involved begins— (i) has a population of more than 5,000,000, as estimated by the Bureau of the Census; and (ii) imposes a local income tax upon its residents. (B) Contributions required by a State from a political subdivision for administrative expenses if the State required such contributions from such subdivision without reimbursement from the State as of January 1, 2023. (3) Applicable percentage For purposes of paragraph (1), the applicable percentage described in this paragraph is— (A) with respect to fiscal year 2025, 25 percent; (B) with respect to fiscal year 2026, 50 percent; (C) with respect to fiscal year 2027, 75 percent; and (D) with respect to fiscal year 2028 and each subsequent fiscal year, 100 percent. .

Summary: Property Tax Reduction Act of 2023 This bill reduces federal Medicaid funding beginning in FY2025 for certain states that require political subdivisions to contribute funds towards medical assistance. Specifically, the bill applies to states that received, for FY2023, disproportionate share hospital (DSH) allotments greater than six times the national average. (DSHs are hospitals that receive additional payment under Medicaid for treating a large share of low-income patients.) Excepted from the bill are contributions that: (1) are required from a political subdivision that has a population greater than 5 million and imposes a local income tax upon its residents, or (2) were required for administrative expenses as of January 1, 2023.