Monday, March 2, 2015

Monday, March 2, 2015

Budget plan focuses on tax breaks; Film and enterprise credits are spared; DOE eyes early childhood upgrade; and Louisiana ranks worst for business


Budget plan focuses on tax breaks

Gov. Bobby Jindal’s executive budget – presented to legislators on Friday – proposes to patch a $1.6 billion deficit in three ways: About one-third is actual cuts to the budget; another one-third comes from “efficiencies,” “continuation expenses” and “revenue opportunities”; and fully 34 percent comes from what the administration is optimistically calling “tax reform.” It is the tax reform that is likely to be the focus of the most intense debate as legislators begin their deliberations on March 17, as much of the “reform” involves doing away with a rebate the state pays to companies who pay local property taxes on their inventory.


The Advocate’s Gordon Russell has a preview of the tax debate, including the strong pushback from the business community that began almost immediately after the budget presentation.


“If you just repeal the (inventory) credit, it is a tax increase of $462 million on employers,” said Stephen Waguespack, president of the Louisiana Association for Business and Industry, the state’s largest business lobby. “If we repeal the credits, we’re going to move down in all the rankings (of states) when it comes to competitive markets, and we’re going to incentivize employers to move their inventory. It’s about the worst signal you can send to small and midsized manufacturers in Louisiana right now.


The proposed tax changes, totaling $526 million, would be used to offset cuts to higher education, healthcare and other programs that already are taking a big hit. Colleges are in line for $211 million in reductions, while the health-care cuts include $7.7 million that supports community health clinics in New Orleans serving more than 50,000 people. Should legislators refuse to go along with the governor’s tax proposals, the cuts to these programs would be even larger unless other revenue sources are found.


The executive budget document is here.  The AP’s write-up is here. A summary of the plan from is here.


Film and enterprise credits are spared

Notably absent from the budget proposal is any mention of two subsidy programs that have drawn fire from outside groups (including LBP), the media and the administration: film credits and enterprise zone credits. Both programs are a drain on state tax dollars, and the film program continues to be beset by scandal as unscrupulous producers take advantage of the state’s generosity.


The Advocate’s Gordon Russell notes that films may have been spared because it would be difficult to achieve savings in the upcoming budget year, and because cutting it may violate the “no-tax” pledge Gov. Bobby Jindal signed at the behest of a Washington lobbyist.


The film tax credits are transferable but not refundable, though those who receive them may sell them back to the state for 85 cents on the dollar.  Even if Jindal has left them alone, the film incentives are hardly safe from the ax, and supporters of Louisiana’s film industry are scrambling to craft a proposal that will rein in the program’s excesses enough to satisfy those who say it is a fraud-laden boondoggle.


DOE eyes early childhood upgrade
Amid all the talk of budget cuts, Louisiana’s Department of Education is working to improve the quality of early-childhood education, spurred on by a new state law that calls for uniform standards in the various programs – public and private – that serve children from birth until they start school. Charles Lussier of The Advocate has the story:


It’s a sea change for day cares, which are being pushed to function more and more like schools. While any day care can opt into the system, those that accept students through the Child Care Assistance Program, a federal subsidy aimed at helping low-income families, will be required to participate starting this summer. As part of the change, participating facilities are being inspected at least twice a year for the quality of their instruction. And, starting in 2019, their teachers will all need a Child Development Associates credential. “We’re shifting from a world where child care was perceived as baby-sitting to one where every activity is an opportunity to help a child learn and grow,” said Jenna Conway, assistant superintendent for early childhood at the Louisiana Department of Education.


Louisiana ranks worst for business
More proof that all those “business climate” rankings that politicians love to boast about should be taken with a giant grain of salt. While Gov. Bobby Jindal touts Louisiana’s climate as No. 1 in the country, a new report says the exact opposite, and puts Louisiana at the very bottom. Turns out it’s all about what factors are used in determining the ranking. For example, the report from 24/7 Wall St. looks at things like the percentage of adults with bachelor’s degrees, the number of patents issued to state residents and the predicted growth (or decline) of a state’s working-age population.


It wasn’t all bad news for the Pelican State:


The state is not the worst place to run all businesses, however. The manufacturing sector accounted for more than 20 percent of Louisiana’s economic output in 2013, the fourth highest such contribution in the country. Despite the strong sector, Louisiana generally provides poor conditions for business.


Number of the Day:


4.7 percent – Decrease in overall spending, over current-year levels, proposed in Gov. Bobby Jindal’s executive budget. (Source: Executive budget presentation)