Louisiana Budget Project

Protecting health care from state budget cuts by…cutting hospital budgets?

Written by webmaster on January 4th, 2012

By: Steve Spires

When Gov. Bobby Jindal’s administration presented its mid-year budget cuts to the Joint Legislative Committee on the Budget last month, Commissioner of Administration Paul Rainwater assured lawmakers that neither Medicaid providers nor LSU hospitals were being affected.

Not so fast. Now it appears the LSU public hospitals , which provide critical safety-net care for the state’s poorest residents, will in fact have to cut $29 million over the next six months, according to a story in the Baton Rouge Advocate.

How did this happen?

In a nutshell: To help close the $251 million December shortfall, the administration replaced $50 million in state dollars it was planning to spend at the Department of Health & Hospitals with federal dollars through a change in what is called “means of financing.” Legislators were assured that this was simply the result of a smarter use of federal dollars and would protect state health-care services from cuts.

But when something sounds too good to be true, it often is. And in this case, it turns out the LSU public hospitals were counting on using the same federal dollars to pay for their own operations – something legislators weren’t told at the time.

Now the LSU hospitals – including small, rural hospitals that provide critical outpatient care to communities with few health-care options – are starting 2012 by deciding which employees to fire and which services to cut.

More than anything, this latest episode shows the need for new revenues to fund vital safety-net services. Instead of robbing Peter to pay Paul year after year, the state needs a long-term strategy for paying its health-care bills while ensuring that its neediest residents get the care they need. For years, we have been told that state agencies are doing “more with less.”

But the state’s public hospitals will be doing less with less after this latest round of cuts.

Unfortunately, there is little that can be done in the short term. The Legislature is constitutionally barred from considering any revenue measures when it meets this spring, when the Legislature is expected to face another billion-dollar shortfall.

And that means more of a cuts-only approach that harms education and health care.

Posted in Budget, Health Care, Uncategorized | No Responses »

Corporate subsidies in Louisiana: few strings attached

Written by webmaster on December 15th, 2011

Posted by: Tim Mathis

While Gov. Bobby Jindal has sought to make government transparency a hallmark of his administration, a new report finds that Louisiana asks for little in return when it comes to corporations receiving multi-million dollar subsidies.

The report by the non-partisan research center Good Jobs First gave Louisiana a D+, finding that the costliest tax credits, exemptions, and cash rebates don’t include the kind of strict performance standards needed to ensure that quality jobs are being created for the money that taxpayers spend. Louisiana Economic Development is the state agency responsible for overseeing and administering economic development subsidies.

The study evaluated five programs that cost Louisiana taxpayers more than $1.1 billion annually in a state report card:

Three of five programs do not prohibit job-shifting. States receive zero economic benefit from subsidizing companies that create jobs by simply moving from one part of the state to another.
Four of five programs lack wage requirements. Simply creating jobs will not lead to a stronger economy. Those jobs must pay enough to support a decent standard of living, and create economic ripple effects. Without wage requirements, the subsidies can result in jobs that pay workers so little that they must rely on social safety net programs such as Medicaid, food stamps, or the Earned Income Tax Credit.
Four of five programs have no health-care requirement. Although most people get health insurance from their employer, that percentage is declining. Subsidized workers unable to afford their own health insurance may fall onto the rolls of Medicaid, thus negating any positive economic benefits.

The programs with the fewest strings attached include Motion Picture Investor Tax Credits and Purchases of Manufacturing Machinery and Equipment Exemptions. Neither program has wage or health care requirements. Neither program requires a minimum duration for the jobs they create. This is especially problematic for film tax credits, which subsidize employment episodes with productions that average 4 to 6 months in length.

Fortunately, Louisiana policy makers already have a good model on which they can base future reforms. The Quality Jobs Program lives up to its name (receiving a 93 a maximum possible score of 125), providing cash rebates and investment tax credits to industries such as bioscience, manufacturing, information technology, environmental technology, exporters, or businesses located in low-income areas. Qualifying companies must create at least five new full-time jobs, provide health insurance and pay their employees living wages. However, even programs that require job creation and other quality standards can set the bar too low. Louisiana needs to hold every dollar accountable, to ensure subsidies promote good jobs that lead to a stronger economy over the long term.

Fewer than half of the programs required job creation and other standards for workers at subsidized companies such as competitive wages or health care coverage.

“If a company can simply move an existing job and call it ‘new,’ that’s not job creation,” the report said. “If the workers at a subsidized company get such low pay and benefits that they must rely on Medicaid and food stamps, few would consider that ‘economic development.’”

Posted in Budget, News/Updates, Workforce Development | No Responses »

Medicaid in Louisiana: Improving Health, Protecting Children

Written by webmaster on December 15th, 2011

It is hardly a secret that Louisianans, on average, are poorer and less healthy than other Americans. But Louisianans would be even worse off without assistance from Medicaid, the federal-state program established to expand access to medical care.

As Louisiana’s Medicaid program prepares for an era of rapid change, a new report by the Louisiana Budget Project highlights the importance of the state’s health-care safety-net for children and families, as well as the state’s economy. It is the first in a series of two papers highlighting the key role Medicaid plays in protecting the state’s most vulnerable citizens.

Medicaid provides vital health care services to nearly 30 percent of Louisianans. In 2010, three out of five children in Louisiana received Medicaid. This means nearly 775,000 kids relied on Medicaid for everything from routine checkups to specialty care for serious health conditions.

Read the full report and press release.

Posted in Budget, Health Care, News/Updates, Press Release, Report | No Responses »

Louisiana losing ground on the gas tax

Written by webmaster on December 14th, 2011

With Louisiana facing a $12.7 billion backlog of unmet construction needs on its roads, bridges and ports, a new report finds that the purchasing power of the state’s gasoline tax is at a 20-year low.

The report by the Institute on Taxation and Economic Policy found that Louisiana would generate an extra $327 million per year for road and bridge construction if the state’s 20-cent per gallon gas tax had kept pace with growth in the cost of road construction since 1990. Returning the tax on diesel to its 1990 purchasing power would bring in an additional $106 million for road repairs.

The erosion of the gas tax has made it harder for the state to invest in construction and repair projects that would help drive economic growth by reducing traffic congestion and vehicle wear and tear—saving consumers and businesses millions in repairs and time lost stuck in traffic.

The report says Louisiana isn’t the only state where gas taxes have failed to keep up:

Most state gas taxes are built to fail, and cannot generate sufficient
transportation revenue today or in the long-term. Overall, this report
estimates that the states are losing $10 billion in annual gas tax revenue
that could have been collected if they had planned for inevitable
increases in the price of construction materials the last time they
raised their gas taxes. This $10 billion shortfall is a major contributor
to the $130 billion that the American Society of Civil Engineers
(ASCE) estimates is lost each year due to vehicle repairs and travel
time delays caused by deficiencies in America’s transportation systems.

Louisiana hasn’t raised its gas and diesel tax since 1989, when voters approved a constitutional amendment that raised the tax by 4 cents per gallon and tied the revenue to specific projects.

Restoring the gas tax to its 1990 purchasing power would require an increase of 14.4 cents a gallon, which would cost the average driver an extra $6.20 a month, according to the report. Restoring the tax to the purchasing power it had in 2000 would add 7.5 cents a gallon and cost the average driver $3.22 a month.

Read the full report here.

Posted in Budget, News/Updates, Revenue and Taxes | No Responses »

Study: Half of corporate profits escape state income tax

Written by webmaster on December 8th, 2011

Dozens of America’s largest and most profitable corporations paid little or no state income taxes during a recent three-year period, according to a new report by the Institute on Taxation and Economic Policy.

The report found that some of America’s largest corporations paid state taxes on 3 percent of their total profits. But state income tax rates average 6.2 percent, meaning these companies escaped paying taxes on more than half their profits from 2008 through 2010.

Some large companies, including DuPont, Intel and International Paper, paid no state income taxes at all during the three-year period.

“The data in this report show in stark terms just how successful large, multistate corporations have become at shirking their responsibilities to state and local governments,” the authors conclude. “They have been abetted in this effort by America’s major accounting firms, used heavy lobbying and even threats, and often persuaded state elected officials to be their facilitators.”

Two Louisiana-headquartered multistate firms were included in the report: New Orleans-based Entergy, which paid state income taxes equal to 1 percent of its $5.6 billion in reported profits during the three-year period; and Monroe-based CenturyLink, which paid taxes on 1.8 percent of its $2.9 billion in total profits over the same time frame.

Louisiana’s corporate tax rate ranges from 4 percent to 8 percent, depending on profits.

The report also highlights policies that Louisiana and other states could enact to make sure that corporations pay their fair share in state taxes. One policy is combined reporting, which would close tax loopholes and help level the playing field between large, multistate corporations and in-state businesses, as the Louisiana Budget Project explained in a paper last year.

The report looked at 265 Fortune 500 companies that reported profits each of the last three years, and whose public filings provided enough information to calculate their domestic profit and the amount paid in state income taxes.

It’s impossible to determine how much companies paid in specific states, as companies don’t disclose profits and taxes paid on a state-by-state basis.

Posted in Budget, News/Updates, Revenue and Taxes | No Responses »