Monday, March 9, 2015

Monday, March 9, 2015

Governor through the looking glass; Budget built on ‘shaky funding’; More support for capping film giveaways and; A federal program that works

Governor through the looking glass

“When I use a word,” Humpty-Dumpty said, “it means just what I choose it to mean – neither more nor less.” And the same apparently holds true for Gov. Bobby Jindal, whose plans to raise much-needed revenue for the state budget without running afoul of Washington lobbyist Grover Norquist was excoriated on the weekend’s editorial pages. It marks one of the few times when Nola.com’s Bob Mann and The Advocate’s Quin Hillyer agree on something.

 

Hillyer’s column takes us through the history of the inventory tax credit, where the state reimburses companies for certain property taxes paid at the local level – even if it’s more than the companies owe to the state in taxes. Jindal is proposing to save $377 million by getting rid of the refundability portion of the credit. Hillyer doesn’t buy Jindal’s contention that curbing the refunds does not violate Norquist’s “anti-tax” pledge.

 

A state refund that subsidizes a favored business is far different from a state refund that merely repays a business for taxes it sends to local governments. The end result of eliminating the inventory tax credit is not that businesses stop getting paid for doing business in a state; the end result is that businesses, yes, pay more money to government. No matter what one calls it, therefore, Jindal’s proposed elimination of this particular “refund” is, in practical effect on the businesses involved, a tax increase.

 

Neither does Mann, who decries the governor’s “silly machinations” aimed at hewing to the tax pledge.

 

If you think capturing this new revenue is not a tax increase, then your name is probably Bobby Jindal or Grover Norquist. Even Stephen Waguespack, Jindal’s former chief of staff and now head of the Louisiana Association of Business and Industry (LABI), rightly declares the proposal a tax hike on business.

 

Where Mann and Hillyer differ is on the best way to fix things. Hillyer suggests keeping the inventory tax refund while finding revenue elsewhere, such as by curbing film giveaways and raising the cigarette tax. Mann says getting rid of the inventory tax altogether – which would force local governments to turn elsewhere for revenue – is a “grand idea” that lawmakers should consider.

 

But as Mark Ballard points out in his “Political Horizons” column, abolishing the inventory tax would wreak havoc on parish governments that depend heavily on the levy to maintain basic services such as schools and police protection.

 

“The sheriffs will lose millions. The schools will lose millions,” (St. James Parish President Timmy) Roussel said. “We will lock arms. We are getting into protective mode.” On average across the state, inventory taxes account for 11 percent of parish and municipal revenues, said Rapides Parish Tax Assessor Rick Ducote, who, as vice president of the Louisiana Assessors’ Association, has pulled together the figures. “A lot of the local taxing authorities are unaware, at least they are right now, of how hard this is going to hit,” Ducote said.

 

Budget built on ‘shaky funding’

The AP’s Melinda Deslatte notes that the stakes are high in the upcoming budget debate, as Gov. Bobby Jindal’s executive budget calls for significant cuts to higher education and health-care services that would get much worse if legislators refuse to go along with the governor’s revenue-raising proposals.

 

If higher education officials, health care leaders and their allies want the dollars, they’re left to try to persuade lawmakers to vote against the wishes of businesses in their communities and industry lobbying groups that donate heavily to political campaigns. Or they have to come up with somewhere else to get money when the legislative session begins April 13. “Clearly they’ve pitted groups against groups, and I think that’s concerning obviously. It does draw the question are these really long-term solutions? It raises a lot of question on our part about the sustainability of any of this,” said Paul Salles, president of the Louisiana Hospital Association.

 

Meanwhile, the inimitable Jim Beam of the Lake Charles American Press reminds us how the budget looked before the current administration came to power.

 

Educators were looking forward to Blanco’s plan to spend $600 million more on education. Teachers were scheduled for $2,400 annual raises, support personnel were getting $750, and college faculty members were getting 5 percent increases. State workers were in line for $1,500 or higher annual raises. Blanco planned to fully fund higher education at the Southern regional level for the first time since 1981 with $115 million in new money. Former Gov. Mike Foster had increased education spending by $800 million during his administration, and that helped Blanco reach the new level of funding.

 

On the downside, 2007 was also the year legislators began dismantling the Stelly Plan by restoring excess itemized deductions – blowing a $400 million hole in state finances that we’re still trying to plug eight years later.

 

More support for capping film giveaways

Add The Advocate’s editorial page to the list of voices urging that Louisiana’s film subsidy program be capped in a way that preserves the movie industry but frees up state dollars to be spent on other things.

 

Capping the program’s annual cost makes sense. Right now, the subsidies are unlimited, which explains how the program grew by more than 500 percent. But legislators should demand that the cap number reduce the cost of the program, not expand it, especially since every dollar added to the film subsidies subtracts from state aid to higher education and medical care for the poor.

 

The newspaper’s recommendation echoes those of LBP Director Jan Moller in a guest column for LaPolitics.

 

Let’s be clear on a couple of things: First, film industry leaders are right when they say Louisiana needs to diversify its economy, and movies should continue to be a part of that mix. But the way to do that is not through endless open-ended subsidies. A better approach is to invest in the fundamentals of economic growth and prosperity: great schools, colleges and universities; world-class health care; good roads and safe communities. Second, if colleges, health-care providers and other state services have to live within a budget, so too should Hollywood South. Louisiana’s filmmakers have been living by their own set of rules – and an unlimited claim on state tax dollars – for far too long. With the state facing historic challenges to its budget, it’s time for that to change.

 

A federal program that works

The New York Times takes an in-depth look at the Nurse-Family Partnership, a home-visitation program that’s been around since the 1970s but received a substantial boost from the Affordable Care Act.

 

The program is unusual because it is based on a series of clinical trials much like those used to test drugs. In the 1970s, a child development expert, Dr. David Olds, began sending nurses into the homes of poor mothers in Elmira, N.Y., and later into Memphis and Denver. The nurses taught mothers not to fall asleep on the couch with their infants, not to give them Coca-Cola, to pick them up when they cried and to praise them when they behaved. The outcomes were compared with those from a similar group of women who did not get the help. The results were startling. Death rates in the visited families dropped not just for children, but for mothers, too, when compared with families who did not get the services. Child abuse and neglect declined by half. Mothers stayed in the workforce longer, and their use of welfare, food stamps and Medicaid declined. Children of the most vulnerable mothers had higher grade-point averages and were less likely to be arrested than their counterparts.

 

Number of the Day

10.6 – Percentage of Gov. Bobby Jindal’s appointees to Louisiana’s higher education governing boards who are women (Source: Bob Mann, “Something Like the Truth”)