Thursday, February 26, 2015

Thursday, February 26, 2015

Film subsidy “reform” falls short; Raising revenues won’t hurt the economy; States attempting to take power from local governments and; “Community Eligibility” in Louisiana

Film subsidy “reform” falls short

With the cost of Louisiana’s film program spiraling out of control, a pair of state legislators released draft proposals this week designed to curb the cost and curtail some of the worst abuses. As The Advocate’s Gordon Russell reports, the proposals by Rep. Julie Stokes of Kenner and Sen. J.P. Morrell of New Orleans would cap the program at $300 million a year (with unused dollars rolling over to the next year), limit what types of expenses can be claimed and require outside auditors to be selected by the Department of Economic Development instead of the film industry.


While it’s encouraging that the film industry is recognizing the need for reform,  LBP Director Jan Moller told the newspaper that a $300 million cap is “laughable” given that the program currently costs approximately $251 million annually.


“That doesn’t come close to controlling the cost, which is the real problem with this program — what it’s costing the state,” Moller said. “And it’s especially problematic the way they want to roll it over, so if you have a couple of soft years, the cap would be so high that it would be utterly meaningless. Unless you can control the costs, the rest doesn’t really matter that much.”


Raising revenues won’t hurt the economy

The steadfast refusal by Gov. Bobby Jindal to consider revenue increases is in sharp contrast to what’s happened in Minnesota during the past few years. And not coincidentally, the results are much different too. Minnesota governor Mark Dayton took a $6.2 billion budget deficit and a 7 percent unemployment rate and turned it into a $1 billion surplus and a 3.6 percent unemployment rate. And he did it, in part, by raising income taxes on the wealthy while raising the minimum wage to $9.50 by 2018. To those who say that these steps drive out business and encourage wealthy residents to flee to states with lower income taxes, the Huffington Post offers this:


By late 2013, Minnesota’s private sector job growth exceeded pre-recession levels, and the state’s economy was the 5th fastest-growing in the United States. Forbes even ranked Minnesota the 9th-best state for business (Scott Walker’s “Open For Business” Wisconsin came in at a distant #32 on the same list). Despite the fearmongering over businesses fleeing from Dayton’s tax cuts, 6,230 more Minnesotans filed in the top income tax bracket in 2013, just one year after Dayton’s tax increases went through. As of January 2015, Minnesota has a $1 billion budget surplus, and Gov. Dayton has pledged to reinvest more than one third of that money into public schools. And according to Gallup, Minnesota’s economic confidence is higher than any other state.


The reason Gov. Dayton was able to radically transform Minnesota’s economy into one of the best in the nation is simple arithmetic. Raising taxes on those who can afford to pay more will turn a deficit into a surplus. Raising the minimum wage will increase the median income. And in a state where education is a budget priority and economic growth is one of the highest in the nation, it only makes sense that more businesses would stay.


States attempting to take power from local governments
The New York Times reports that conservatives in the Texas legislature have introduced several bills to curb the power of local governments to enact their own policies when the state fails to do so. Many local governments have enacted restrictions on payday lenders,  Fort Stockton has banned plastic grocery bags and the town of Denton has banned hydraulic fracking. These “pre-emption-laws” are nothing new and are often spearheaded by business and industry trying to protect their interests at state capitols instead of fighting battles at the local level.


So-called pre-emption laws, passed in states across the country, have barred cities from regulating landlords, building municipal broadband systems and raising the minimum wage. In the last two years, eight Republican-dominated states, most recently Alabama and Oklahoma, have prevented cities from enacting paid sick leave for workers, and a new law in Arkansas forbids municipalities to protect gays and lesbians from discrimination. Already this year, bills introduced in six more states, including Michigan, Missouri and South Carolina, seek to do the same. At least five states have pre-empted local regulation of e-cigarettes. And in New Mexico, the restaurant industry supports a modest increase to the minimum wage only if the state stops cities from mandating higher minimums.


“Community Eligibility” in Louisiana

The Center on Budget and Policy Priorities has released a brief describing the “Community Eligibility” program and the level at which states are participating. Congress established Community Eligibility as part of the Healthy, Hunger-Free Kids Act of 2010. It works like this: Any school (or cluster of schools) where at least 40 percent of students automatically qualify for free meals is eligible for Community Eligibility. Schools (and school districts) that participate in the program can serve meals at no charge to all their students, regardless of income, freeing them from the administrative hassle of having to determine which students qualify for free or reduced-price meals and which ones are required to pay. This, in turn, means schools may have more time and money to focus on tasks that improve students test scores, such as teacher workshops and after-school tutoring.


“Community eligibility not only reduces redundant paperwork at high-poverty schools but also makes possible huge gains in meeting vulnerable children’s nutritional needs by providing them with a healthy breakfast and lunch at school each day.  Reliable access to healthy meals, in turn, better prepares students to learn.  The popularity of community eligibility in its first year of nationwide implementation speaks to schools’ desire to improve access to healthy meals while reducing red tape, as well as to the option’s sound design.  And the fact that take-up rates have risen each year in states that piloted the option shows that many school districts that took a “wait and see” approach liked what they saw and signed up the next year.


In Louisiana, 44 percent of eligible school districts have adopted the program, 37 percent of eligible schools have opted in and 49 percent of the highest poverty schools participate in the program. Visit LBP’s website for a listing of all school districts eligible to enroll in Community Eligibility.

Number of the Day
$104.6 million – Decrease in the reserve fund held by the state Office of Group Benefits in the first seven months of the 2014-15 fiscal year, a “burn rate” of $14.9 million per month (Source: Legislative Fiscal Office)