Giving away Louisiana

For anyone still wondering why state government seems to suffer through annual budget shortfalls and mid-year cuts, a large part of the answer arrived on Sunday when The Advocate debuted its “Giving Away Louisiana” series, a landmark eight-part examination of the way tax code giveaway programs have eroded Louisiana’s ability to fund basic services. From tax incentives that have paid Wal-Mart $700,000 to open new stores in affluent neighborhoods, to a $10 million gift to an oil refinery that resulted in 43 new jobs, these incentive programs have been growing at a rapid clip and often fail to accomplish their stated objective.

When Blanco took office, the state gave away a little over $200 million in taxpayer money through the six major programs the newspaper examined. That number is now almost $1.1 billion annually, and it’s been growing by an average of 17 percent a year over the past decade. Perhaps not coincidentally, the governor and the Legislature have found it increasingly difficult to balance Louisiana’s books. In five of the past six years, they’ve had to tap “one-time revenue” such as property sales, tax amnesties and other gimmicks to pull it off — a practice deplored by independent government watchdogs as well as many legislators on both sides of the aisle.

The whole thing is worth a thorough read – as are the new-look graphics on The Advocate’s updated website and a Sunday editorial calling on the next governor to fix the problem.

One of the unspoken truths in Baton Rouge is that everyone in politics — whether they are Democrats or Republicans, black or white, crooked or honest — knows the giveaway programs need to be trimmed back. Even Gov. Bobby Jindal, a stern foe of anything that would smell like a tax increase, tried to curtail the programs as part of his plan to eliminate state income taxes. But the plan fell apart when it appeared an 11 percent sales tax rate would be needed to offset the loss of income tax revenue.

Since then, there has been little energy for reform, and the beneficiaries of the breaks have deployed an army of lobbyists to protect the status quo. But the time to act is now.

Stopgap budget plan still leaves a massive shortfall in 2015

The latest mid-year budget shortfall came in at $180 million, and was caused largely by lower-than-expected oil prices and sluggish growth in state income and sales-tax collections. But as he’s done in years past, Gov. Bobby Jindal managed to avoid deep budget cuts by finding $130 million in one-time revenues to plug most of the shortfall. But as the AP’s Melinda Deslatte reports, that only buys policymakers a few months before the next crisis looms.

Next up for Jindal and lawmakers, a $1.4 billion shortfall is estimated for the budget year that begins July 1. Jindal has faced perpetual budget woes throughout his two terms in office. The national recession hit as a series of hefty tax breaks approved by the governor and his predecessor stripped millions from the budget. The state has struggled to recover. To keep the budget balanced and avoid anything he considers a tax hike, Jindal has turned to large amounts of piecemeal financing. He’s used dollars from tax amnesty programs, pharmaceutical settlements, insurance payments and fund balances to pay for programs and services. Trust funds have been spent down. State property has been sold.

Chemical giant benefits from film subsidy program

A lot has been written over the years about Louisiana’s generous film subsidy program. But Kate Richardson of WWNO came up with a fresh angle when she examined how the subsidies paid to the makers of “21 Jump Street” ended up giving a tax break to Dow Chemical Corp:

So here’s how you get from motion pictures to petrochemicals. When “21 Jump Street” filmed here, producers spent about $42 million. They received tax credits worth more than $12 million. Most productions don’t owe taxes to the state of Louisiana because their investors aren’t based here. So they can transfer the credits back to the state at a discount, or they can sell their credits to other people who do owe taxes to the state.

The story, which aired on Thanksgiving, featured a cameo by LBP Director Jan Moller:

If you’re going to have a film program and you’re going to subsidize films, that’s one policy decision. But a byproduct of that shouldn’t be an extra sweetheart tax break for people who have nothing to do with bringing film activity to Louisiana.

Mass incarceration and public health

High rates of imprisonment – a category where Louisiana leads the world – is a serious threat to public health, according to a new report by the Vera Institute for Justice that was the subject of a recent New York Times editorial.

The experience of being locked up — which often involves dangerous overcrowding and inconsistent or inadequate health care — exacerbates these (health) problems, or creates new ones. Worse, the criminal justice system has to absorb more of the mentally ill and the addicted. The collapse of institutional psychiatric care and the surge of punitive drug laws have sent millions of people to prison, where they rarely if ever get the care they need. Severe mental illness is two to four times as common in prison as on the outside, while more than two-thirds of inmates have a substance abuse problem, compared with about 9 percent of the general public.

Some states are investing in higher education

While Louisiana has been cutting state support for colleges and universities as it tries to fix its budget woes, two other conservative-leaning, energy-producing states are doing the opposite. As the Hechinger Report outlined recently, Alaska and North Dakota are pouring public dollars into higher education.

That’s partly because they have the resources available thanks to a boom in oil production.

But these two historically pragmatic and comparatively frugal states — the maces used at graduation ceremonies at two North Dakota campuses were originally wooden banister columns — have also determined that withdrawing support from higher education does more than force students and their parents to fork over more of the cost. They’ve decided that producing educated workers and supporting university research are essential to the continued success of their economies.

Number of the Day

2.7 million – Number of American children with at least one parent in prison. (Source: Vera Institute for Justice via New York Times)