The latest newsletter of the LFT:
Fiscal insanity grips legislature
In a breathtaking display of fiscal irresponsibility, lawmakers have advanced three separate bills that would abolish the state’s corporate and personal income taxes, leaving multi-billion dollar gaps in future budgets.
The House Ways and means Committee approved:
HB 634 by Rep. Hunter Greene, (R-Baton Rouge), which would eliminate personal income taxes next January 1, costing the state $3 billion in the first year alone.
HB 633 by Rep. Hunter Greene (R-Baton Rouge), which would repeal the state’s corporate income tax, also beginning on January 1, at a cost of $81 million the first year.
HSB 259 by Sen. Rob Marionneaux (D-Livonia), which would phase out both the personal and corporate income taxes over five years. That bill would reduce state revenues by $605 million next year.
Adoption of any of these bills would blow a disastrous hole in the budget.
Some lawmakers who support the bills point to states such as Texas and Florida, which have no income taxes, as models. However, as residents of those states can attest, property taxes are astronomical, and are collected by the state as well as by local governments. In Louisiana, there is no state property tax.
Estimating conference: Revenue down $77 million
On top of other fiscal woes facing lawmakers, the state’s Revenue Estimating Conference announced this week that income for the current fiscal year will be some $77 million lower than expected. The lowered expectation, economists said, is caused by weak collections of personal income and severance taxes.
That leaves legislators in an unenviable position. In order to avoid an unconstitutional budget deficit at the end of the fiscal year on June 30, they must either identify new revenue or further reduce expenditures on state services.
Lawmakers are aware that some $118 million in unexpected revenue has appeared this year. That money could be used to plug the deficit; however, the legislature plans to roll it into next year’s budget.
Plan will cut education department budget
The budget cuts made by the House Appropriations Committee this week included some $32 million from the Department of Education, a move that acting Superintendent of Education Ollie Tyler said would have a “crippling impact” on the department’s operations.
Almost $12 million of the reduction would gut voucher programs that have been keystones of Governor Bobby Jindal’s education agenda.
That would include a $10 million cut to eliminate Jindal’s kindergarten through sixth grade voucher program in New Orleans. The money primarily props up Catholic schools which had experienced declines in enrolment since Hurricane Katrina in 2005.
The budget cut would also eliminate a $1.9 million pilot program in six large school systems that provides vouchers for students with exceptional needs.
Other cuts include:
* $8.4 million from the Department of Education’s operating budget
* $11 million from the Recovery School District’s operating budget
* $1.2 million from the Special School District and Special Schools operating budget.Better Choices: A victory for transparency
The Better Choices for a Better Louisiana coalition logged a victory when the House Ways and Means Committee approved HB 491 by Rep. Michael Jackson (No party-Baton Rouge). By 17-0, the committee agreed that the legislature should review all of the state’s tax exemptions every two years.
The bill is a hallmark of the Better Choices coalition and a major priority of the LFT. Currently, the state has 441 separate tax exemptions on the books, which add up to $7.1 billion in lost revenues for the state.
Once adopted, most exemptions remain in effect and are never examined to determine whether they help or hurt the state economy.
The ups and downs of tobacco taxes
A House committee approved the continuation of one cigarette tax, but turned down another that would have raised Louisiana’s tobacco tax in line with neighboring states.
HB 591 by Rep. Harold Ritchie (D-Bogalusa) was reported out of committee. This bill renews a portion of cigarette taxes set to expire next fiscal year. The four-cent portion of the state’s 36-cent brings in about $12 million per year.
The renewal, which was passed on a 10-5 vote, was opposed by the Jindal administration. The governor has vowed to veto the renewal if it is ultimately passed by the legislature.
Rep. Ritchie was not as successful with a bill that would have increased the cigarette tax by 70 cents per pack and generated $100 million in new state revenues dedicated to health care. Faced with overwhelming opposition from the governor, the tobacco lobby and the retailers’ association, he voluntarily pulled the bill from consideration. It could be brought back in the future if conditions change.
SUNO-UNO merger dead; UNO may leave LSU system
In a major defeat for Governor Bobby Jindal and Speaker of the House Jim Tucker (R-Terrytown), lawmakers signaled a lack of support for a bill that would have merged Southern University in New Orleans with the University of New Orleans.
Bowing to reality, Speaker Tucker on Wednesday admitted that he does not have enough votes to pass his HB 537. The merger was strongly opposed by the legislative black caucus, which saw the bill as an attack on the state’s system of historically black colleges and universities.
Supporters said the bill was written because SUNO has a very low graduation rate, and that it is geographically close to UNO. Opponents claimed the bill was aimed solely and unfairly at SUNO. A more serious bill, they said, would investigate graduation rates and other issues at all Louisiana institutions of higher education, and come up with a comprehensive approach.
What did emerge from the debate is the possibility that UNO will finally realize its long-time dream of disaffiliation from the LSU system. A Senate bill, SB 183 by Sen. Conrad Appel (R-Metairie), is being rewritten to move UNO into the University of Louisiana system. Originally, Sen. Appel’s bill was a Senate version of Speaker Tucker’s HB 537.
School takeover bill fails in committee
Despite support from a broad coalition of education organizations, the House Education Committee turned down a bill that would have suspended the state program that seizes control of struggling schools from local school boards.
Supporters of HB 499 by Rep. Pat Smith (D-Baton Rouge) said that the state Recovery School District has drastically exceeded its original mandate, and urged a moratorium on further takeovers. Instead, sub-par schools would be required to enter into memoranda of understanding with the state and undertake significant reforms.
Testifying in favor of the bill, LFT President Steve Monaghan told the committee that taking over schools “is a hostile process that does not engender peach or solve problems.”
Saying that memoranda of understanding would create better relations between the state and local school boards, Monaghan said, “You don’t have to conquer a people to educate them.”
In general, schools taken by the RSD are supposed to be turned back over to local control after five years. In reality, however, the State Department of Education has balked at that.
Researchers supporting the bill say that there is very little evidence that schools in the RSD have improved as much as supporters claim. In New Orleans, they said, schools under jurisdiction of the parish school board have increased student performance by 17%, while those in the RSD have languished.
Governor will keep influence over BESE
A plan to strip the governor’s office of its influence on the Board of Elementary and Secondary Education was defeated be the House Education Committee.
HB 84 by Rep. Pat Smith (D-Baton Rouge) was a proposed constitutional amendment. It would have given shared responsibility for the three appointed members of the 11-member board to the Speaker of the House, President of the Senate and governor. Currently, the governor appoints three members to the state education board, and eight are elected from districts.
LFT President Steve Monaghan said that, ever since the state’s constitution was rewritten in 1974, most governors have appointed their three BESE members from candidates suggested by business interests, education organizations and parochial schools. Gov. Jindal has upended that tradition, Monaghan said, appointing members who adhere to his ideological leanings.
Why do you think Jindal is so vehement about the tobacco tax?
Axé.
coldhearted scientist وداد 