Wednesday, February 18, 2015

Wednesday, February 18, 2015

Jindal rhetoric limits budget options; Mid-City ER closure could be a done deal; Taxing the poor and sparing the rich; and Inequality hasn’t increased since the Great Recession


Jindal rhetoric limits budget options

As Louisiana legislators look for potential ways to fill the $1.6 billion hole in next year’s state budget, they are finding themselves hemmed in by an anti-tax pledge Gov. Bobby Jindal signed more than a decade ago at the behest of a Washington lobbyist. As The AP’s Melinda Deslatte reports, the governor’s broad interpretation of that pledge could make it difficult to scale back some of the tax-code giveaways that have mushroomed in recent years.


Even if a tax break program is performing poorly, not producing the jobs expected or spending millions with little to show for it, Jindal won’t support reining in the giveaway without an offset somewhere else. And he’s maintained that position as the cost of tax break programs has ballooned by more than $600 million in the last five years. That strict adherence to “revenue neutral” is a problem for lawmakers and an administration grappling with a $1.6 billion shortfall in the budget year that begins July 1 and trying to find money to keep health care services and colleges from deep slashing.


The effort to hew to Jindal’s demand that any tax-break change be “revenue neutral” has led to some strange proposals.


For example, the Jindal administration is talking about the possibility of creating tax breaks for businesses that donate directly to public colleges or for parents who will then be asked to spend more on college student fees. The proposals would generate outside financing for campuses, and the state could pay for them by scaling back other tax breaks. The tax break swaps would meet the governor’s “revenue neutral” requirement, so he wouldn’t have to explain to national political watchers that he was willing to raise taxes or eliminate tax breaks to preserve education programs. But problems have quickly cropped up, including how to ensure the dollars help campuses equally and arrive in time to avoid cash flow problems.


Meanwhile, The Advocate’s James Gill notes that the current budget crisis could likely have been avoided had legislators (and Govs. Jindal and Kathleen Blanco) had the fortitude to maintain the Stelly Plan, rather than repeal the income-tax hikes that voters approved in a 2002 constitutional amendment.


Stelly was not only enlightened, in that sales taxes place a disproportionate burden on the poor, but it was sound fiscal policy. Economists say sales tax revenues tend to fluctuate whereas income taxes always will reflect economic growth. Because the private sector is booming, as Jindal never tires of assuring us that it is, the state coffers would have been overflowing by now had Stelly been left in place.


Mid-City ER closure could be a done deal

Louisiana’s top health official announced Monday that the CEOs of four major Baton Rouge hospitals will meet today to discuss the impending closure of Baton Rouge General’s Mid-City emergency room. The Business Report’s Stephanie Riegel reports that the meeting was organized by state Health and Hospitals Secretary Kathy Kliebert, and includes no formal agenda.


But any hopes of keeping the emergency room open beyond the 60-day timeframe announced earlier this month have likely already vanished. The Advocate’s Marsha Shuler reports that the General remains committed to shutting down the only emergency room serving the heart of the state’s capital city.


Baton General Hospital executives say plans to close an emergency room in Mid City will proceed regardless of any alternatives legislative leaders, community activists and the Jindal administration develop. “We respect the community’s constructive discussion and their desire to have emergency services in Mid City,” said Mark Slyter, president and chief executive officer at Baton Rouge General/General Health System. “Sadly, the time has passed … But we are moving forward thoughtfully and sensitively, remaining focused on taking care of our patients and staff for an effective transition.”


Taxing the poor and sparing the rich

Louisiana isn’t the only state having a big debate about taxes and budgets. The New York Times reports that a number of states are considering proposals to shift the responsibility for paying taxes from the richest to those in the middle and bottom of the income ladder.


Conservatives are known for hating taxes but particularly hate income taxes, which they say have a greater dampening effect on growth. Of the 10 or so Republican governors who have proposed tax increases, nearly all have called for increases in consumption taxes, which hit the poor and middle class harder than the rich. Favorite targets for the new taxes include gas, e-cigarettes, and goods and services in general. Gov. Paul R. LePage of Maine, who wants to start taxing movie tickets and haircuts, is also proposing a tax break for the lowest-income families to relieve some of the pressure.


Inequality hasn’t increased since the Great Recession
Also from The Times, an interesting read from David Leonhardt refuting the commonly held notion that economic inequality has increased since the start of the Great Recession. Not true.


How could that be? Because the crisis, which ran roughly from 2007 to 2010, reduced the pretax incomes of the wealthiest Americans more than the incomes of any group. The wealthy have indeed received the bulk of the gains since the recovery began, but they still haven’t recovered their losses. Meanwhile, the steps that the federal government took in response to the crisis, including tax cuts and benefit increases, have mostly helped the nonwealthy.


Number of the Day

$200.5 billion – Revenue that would accrue to state and local governments if the top one-fifth of income earners were taxed at the same rate as the middle class. (Source: Keystone Research Center and Good Jobs First via The New York Times)