Monday, March 23, 2015

Monday, March 23, 2015

The “roots of the structural deficit”; Property taxes could rise under Jindal plan; Steve Scalise is proud of film giveaways and; Budget “uncertainties” worry health providers

The “roots of the structural deficit”

The Advocate’s editorial board continues its examination of Louisiana’s budget woes, this time looking at the root causes of the $1.6 billion gap in next year’s budget. Not surprisingly, the newspaper concludes that Louisiana simply isn’t collecting enough revenue to keep up with expenses, despite years of well-intentioned efforts to cut the budget. And that revenue shortfall is largely due to a series of misguided tax cuts.

 

In 2008, we warned about the poor decision to repeal the income taxes established in 2003 as part of the larger Stelly tax reform plan. That bad judgment, compounded by the recession later that year, has been further compounded by shoddy budget practices on Jindal’s part, abetted by many of the same unhappy legislators of today. The income tax hurts, because much of the growth in incomes has come for higher earners, the same folks Jindal’s tax cuts favored. During the last fiscal year, the personal income tax brought 16 percent less money into the Treasury than it did six years earlier, when the Stelly plan was in place. Adjusted for inflation, the drop comes to 22 percent.

 

Property taxes could rise under Jindal plan

Gov. Bobby Jindal’s plan to raise $377 million by eliminating the refundable portion of the state inventory tax has run into a solid wall of opposition from the business community, making its passage unlikely in the upcoming session. That, in turn, has led to calls for the tax to be eliminated entirely. But as David Mitchell explained in Sunday’s Advocate, that could result in higher residential property taxes as parishes try to make up the revenue they currently collect from property taxes that corporations pay on their inventories.

 

Officials in parishes that rely most heavily on inventory taxes, such as St. John, St. James and others, are raising concerns that in addition to making draconian cuts to services, they would ultimately have to pass on tax increases to homeowners and small businesses to recoup some of the revenue lost for the benefit of the biggest industries and the state budget. “We are going to shift the tax burden,” St. Charles Parish Assessor Tab Troxler said. Jindal administration officials and their legislative allies are promising to help find replacement revenues for local governments, possibly through a higher cigarette tax or more aggressive sales tax collections. But officials like Joseph and St. James Sheriff Willy Martin Jr. say they are skeptical of such promises from a state government that has had trouble balancing its books.

 

Steve Scalise is proud of film giveaways

Louisiana taxpayers have spent more than $1.5 billion over the past decade on subsidies for film and TV productions, and the cost is escalating. This likely would not be happening but for the work of U.S. Rep. Steve Scalise of Jefferson, who was a member of the state House when he authored Louisiana’s first film subsidy law in 2002. Despite the spiraling cost, Scalise told Nola.com that he remains proud of his creation.

 

“In the past 10 years, Louisiana has produced more than 400 movies and developed a billion dollar a year film industry as a direct result of the passage of the Motion Picture Incentives, and I’m proud of that success,” Scalise said. “Throughout the history of this program, the Legislature has made reforms to the incentives to reflect the rapid growth of this new industry to ensure that taxpayer dollars are maximized, and I expect that to continue this year.”

 

Budget “uncertainties” worry health providers

With some notable exceptions, Gov. Bobby Jindal’s executive budget includes few cuts to Medicaid-funded services, and proposes no changes to the rates paid to Medicaid providers such as doctors and hospitals. But that is likely to change if legislators, as expected, refuse to go along with some of the revenue proposals in the governor’s plan. And that’s making health care providers nervous, The Advocate’s Marsha Shuler reports.

 

According to a Louisiana Hospital Association analysis, the governor’s budget has a $165 million cut to hospitals, not counting dollars supposed to be coming from the tax credits. The budget plan lacks $142 million in Medicaid funding that private hospitals say is required to meet their obligations to operate LSU hospitals and care for the poor and uninsured who traditionally have gone to them. The proposal also eliminates a program that provides care for medically fragile infants — those in neonatal intensive care units — and it provides fewer dollars for emergency room services. If the tax credit plan is not approved, hospitals could face an additional $368 million cut, (LHA President Paul) Salles said. The DHH budget also relies on the approval of the federal Centers for Medicare and Medicaid Services, or CMS, for the change in LSU physician reimbursement. About $177 million in Medicaid funding is tied to the proposition.

 

Number of the Day

$17.4 million – Projected loss in state gambling revenue over two years thanks to a drop in cigarette smoking in New Orleans, according to State Police (Source: The Associated Press)