Friday, January 16, 2015

Friday, January 16, 2015

Budget crisis: Legislature might suspend sales-tax exemptions; More on Taxing the Poor; Scott Angelle proposes toll roads; and Troopers get raise through flawed process

Budget crisis: Legislature might suspend sales-tax exemptions

With the state budget gap expected to swell beyond $1.5 billion when the official revenue forecast is revised later this month, legislators are considering taking the rare step of suspending some sales-tax exemptions as a way to generate up to $250 million in revenue. As Jeremy Alford reports in LaPolitics Weekly:


At this hour lawmakers are considering putting into play rarely used substantive resolutions, rather than a traditional bill, to temporarily suspend exemptions. The veto-proof maneuver would allow for a suspension that would stretch from the resolution’s effective date to 60 days following the conclusion of the 2016 regular session. The big question is whether it’ll take a two-thirds vote or a majority. Precedence in the House calls for a two-thirds vote, although House Speaker Chuck Kleckley, R-Lake Charles, may be called on for a ruling.


The news comes on a day when the dean of the Legislature, Sen. John Alario, R-Westwego, warned in the Business Report that the cuts to higher education – pegged as high as $384 million –  could lead to the closure of the Pennington Biomedical Research Institute and Secretary of State Tom Schedler said he may soon start furloughing employees as a way to save money. Another contender for the chopping block, according to The $40 million “WISE” Fund, which was the centerpiece of Gov. Bobby Jindal’s higher education agenda in 2014.


In the meantime, all three GOP candidates are now calling for a 2016 special session to address the state budget.


More on Taxing the Poor

The Washington Post’s invaluable E.J. Dionne looks at ITEP’s “Who Pays?” report and laments the fact that most state and local governments rely on regressive tax policies. But it doesn’t have to be that way:


Poor and middle-class people pay more simply because they have to spend the bulk of their incomes just to cover their costs. This gets to something else we don’t discuss much: Public policies in most other well-to-do countries push much harder against inequality than ours do. According to the Luxembourg Income Study (LIS), the United States ranks 10th in income inequality before taxes and government transfers. By this measure, Ireland and Britain, and even Sweden and Norway, are more unequal than we are. But after government transfers are taken into account, the good old USA soars to first in inequality. Norway drops to sixth place and Sweden to 13th.

The Advocate’s Mark Ballard also picks up on the ITEP study, and is the first to get a reaction from Gov. Bobby Jindal’s administration. Revenue Secretary Tim Barfield didn’t address the substance of the report, but instead takes issue with the messenger.

“We have had a long-standing philosophical difference with this group,” Barfield said in a prepared statement. “We believe in minimizing the reliance on government subsidies and programs, while lowering taxes and supporting reforms that are conducive to sustainable job creation, the improvement of education and training programs, and overall economic development that will combat poverty and provide a combination of choices and opportunities for the poor and low-income.”


Scott Angelle proposes toll roads

The 2015 governor’s race unofficially kicks off Friday morning with the first of many candidate forums. With a spotlight on transportation issues, Public Service Commissioner Scott Angelle previewed his remarks for The Advocate, telling the newspaper that he favors toll roads as one of the answers to Louisiana’s $12 billion backlog of transportation needs.


“I will not wait on this. I want the potential projects to be started and finished as soon as possible. We need to build toll roads and maintain the old roads to ensure that motorists have choices, while relieving traffic congestion,” Angelle said in a statement provided to The Advocate.


Troopers get raise through flawed process

A legislative budget committee this morning is expected to approve a 30 percent pay raise for state troopers. The money is coming from a new tax on uninsured drivers passed in the waning hours of last year’s legislative session – a method that draws fire in an Advocate editorial.


The money to pay for the raises was pushed through the Legislature at the last minute in 2014. It’s basically a new tax. Gov. Bobby Jindal and lawmakers who say they are against raising taxes have several times found ways to raise revenues without taking direct responsibility for them. “This is a $53 million tax that will fall mainly on the poor, and it was conceived in the worst possible way, behind closed doors without public debate in the last few hours of a legislative session,” Jan Moller, director of the Louisiana Budget Project, said at the time about the last-minute passage of the bill by Rep. Barry Ivey, R-Central.


Number of the Day

19 – Louisiana’s ranking on the Tax Inequality Index. (Source:  Institute on Taxation and Economic Policy)