Last Modified: Sunday, April 12, 2015 7:21 AM
You know the budget situation for the state’s new fiscal year is bad when legislators and others start talking about taxes, limiting the TOPS scholarship program and ending some tax credits, rebates and exemptions. All of those have been forbidden topics since Gov. Bobby Jindal took office in 2008.
Legislators have filed bills for the session beginning Monday that would raise the cigarette and gasoline taxes, make TOPS changes and take a long and serious look at the money state government is giving away every year with tax breaks of one kind or another.
The $24.6 billion budget for fiscal 2015-16 proposed by Jindal is short by $1.6 billion. The Public Affairs Research Council of Louisiana in a Guide to the State Budget Crisis said the shortfall represents 18 percent of the $8.7 billion general fund, which is all lawmakers have to work with.
The Advocate in a recent report said, “Louisiana simply isn’t collecting as much money as it was when Jindal took office, and the spending cuts he has made, though substantial, haven’t kept pace with the declining revenue.”
Tim Barfield, secretary of the state Department of Revenue, last week offered another explanation for shortfalls after his auditors studied corporate tax filings. He said only one-fourth of the state’s largest companies are paying corporate taxes to the state.
“You start realizing that, wow, of the biggest companies doing business in Louisiana, very few are paying income taxes,” Barfield told The Associated Press.
“… You combine that with our generous tax exemptions and other things, companies are paying very low taxes in Louisiana.”
Legislation has been proposed to improve corporate reporting procedures. However, no one should get the idea that Jindal has suddenly had a conversion and will accept higher taxes. He still adheres to the no tax pledge he signed with Americans for Tax Reform. And he doesn’t deviate from that pledge without permission from Grover Norquist, the president of ATR.
The organization has given Jindal the OK to eliminate payments the state has been making to companies that aren’t able to fully recoup local inventory taxes they pay on their state income tax forms. They include companies dealing with the wind and solar industry, offshore vessels, telephone service, natural gas, alternative fuels, sugarcane transport and milk production.
The governor’s goal is to save $526 million in extra state payments and use the revenues for higher education and other budget needs.
ATR may approve, but those businesses are rebelling in force and the plan faces tough sledding. Jindal and legislators can expect major opposition from lobbyists for those industries.
The Norquist organization also said it would be OK to raise student fees at colleges and universities if parents and students could recoup their money. Jindal wants them to be able to do that on their state income tax forms by raising the cigarette tax by 47 cents per pack. The increase would raise $100 million annually.
Jindal is still opposed to anything more than those two exceptions. It will be interesting to see what happens when legislators debate bills trying to raise the cigarette tax even higher and the state gasoline tax by 4 cents per gallon. The current state tax is 20 cents per gallon, which promoters of the tax say represents only 7 cents in buying power since the tax was last increased in 1984.
The TOPS scholarship program is a major cost to state government, and it keeps climbing higher. It started at $40 million in the 1990s and has been forecast to cost $284 million for the fiscal year beginning July 1, which is $34 million higher than last year.
Previous attempts to make any changes in the program have been fiercely resisted by Jindal and the Patrick F. Taylor Foundation that conceived the scholarship program. That, too, appears to be changing.
A Senate bill supported by the widow of Taylor would set a fiscal 2015-16 ceiling on the award unless a higher appropriation is approved by the Legislature. Jindal hasn’t taken a stand on the legislation.
State Treasurer John Kennedy, a perennial foe of state funds going to unaccountable non-government organizations (NGOs), is supporting a measure designed to help higher education. He said the bill will direct more federal funds to higher education.
“… Second, it will take control away from NGOs and consultants that are wasting taxpayer money on salaries, luxury cars, vacations and find dining,” Kennedy said.
Legislators appear determined to look at other tax breaks to see if they are productive and worth retaining. The success of that legislation will depend on how far lawmakers will go to oppose Jindal. He still insists than any revenues produced by removing exemptions would have to be offset by a decrease in spending. That doesn’t help plug the $1.6 billion hole.
Political observers agree that Senate President John Alario, R-Westwego, will have a strong voice in what happens at the legislative session. Like Jindal, he signed the no tax pledge and still thinks it’s a good idea.
These issues only scratch the surface when it comes to legislation proposed for the session. Some of the other more heated topics will deal with the controversial Common Core curriculum, religious freedom and more autonomy for colleges and universities.
Since many legislators face re-election this fall, it will be interesting to see whether they put their own political futures ahead of the many needs of the people they serve.