Tuesday, December 16, 2014

Tuesday, December 16, 2014

Tax breaks are “open ended” government spending; Should TOPS be means-tested?; More governors jump on Medicaid expansion bandwagon; and Busted flat in Baton Rouge

 

Tax breaks are “open ended” government spending

The Legislature’s chief economist says the tax breaks that Louisiana doles out to film producers, energy producers, big box retailers and other favored industries function the same way as other state spending programs, with a very important difference. Per the AP:

 

Greg Albrecht said the difference with Louisiana’s $7 billion in various tax credits, rebates and exemptions is that the spending comes off the top, with no annual oversight from state lawmakers before the money goes out the door. “It’s open-ended and unappropriated. It’s on auto-pilot. The programs, the parameters, the statutes that set them up, participation, payout. It’s got no controls, no review, nothing,” Albrecht told the Press Club of Baton Rouge.

 

The Business Report notes that “Albrecht’s view of state tax exemptions – as expenditures, not as uncollected revenues – differs from that of Gov. Bobby Jindal’s administration. Jindal has opposed limiting the exemptions, calling any action reining them in akin to a tax increase.”

 

Should TOPS be means-tested?

Dillard University President Walter Kimbrough isn’t happy about the latest data on Louisiana’s TOPS college scholarship program, which shows that most of the scholarships have gone to white students with family incomes above $70,000 per year. In a provocative guest column in The Advocate, he suggests that the scholarships should be limited to students from families earning less than $60,000 as a way to combat inequality.

 

The state has spent almost $2 billion on a program that exacerbates income inequality and limits financial assistance to those who need it the most. I know lawmakers say they don’t want high numbers of students to lose the grant, so they’ve rigged the system to give the money to those most likely to succeed. But if we are trying to improve opportunity, it means helping students who cannot go to college without additional financial support.

 

In a similar vein, The Washington Post takes a searing look at the factors that conspire to keep students from low-income backgrounds from attending or completing college.

 

When you live on the margins, economists are discovering, even the smallest disruption can knock you off course and out of school. Things like your car breaking down, or your neighbor saying she can’t watch your child anymore, or your boss threatening to fire you if you don’t work more hours in your low-wage job. Emerging research suggests there’s a broader social pull at work, too, linked to the nation’s faltering middle class and the widening gap between the very rich and everyone else. Dwindling economic opportunity, University of Maryland economist Melissa Kearney has found, compounds across generations to keep children poor.

 

More governors jump on Medicaid expansion bandwagon

Gov. Bill Haslam of Tennessee on Monday became the latest governor from a deep red state to announce that his state would extend Medicaid coverage to low-income adults as part of the Affordable Care Act. As The Washington Post reports, the Volunteer State joins Wyoming and Utah among the states whose governors have said they would accept the federal dollars that come with expanding coverage.

 

Like most other Republican governors who want to take the health-care law’s generous federal funding, Haslam is now offering a plan that deviates from the Medicaid expansion envisioned under the Affordable Care Act. Haslam, who made the announcement almost a month after his re-election, said the Obama administration has verbally approved the approach.

 

Louisiana, which is America’s third-most unhealthy state, remains one of the states that refuses to look for ways to expand coverage.

 

Busted flat in Baton Rouge

Jeremy Alford of LaPolitics, writing on Nola.com, says the administration is running out of tricks when it comes to balancing the budget, which means the governor’s budget blueprint for 2015-16 may include some painful cuts.

 

The real question is whether lawmakers are willing to take the heat for tough decisions during the same year they’re facing re-election. Moreover, will Gov. Bobby Jindal allow his budget to produce a political tempest at the same time he’s expected to announce his presidential campaign? If there’s a way to hold off on the pain, you better believe the administration and Legislature will find it.

 

Number of the Day:

$28,000 – Inflation-adjusted growth in the gap between the annual earnings of college-educated families vs. those with just a high school education, over 35 years (Source: Washington Post)