Tuesday, March 3, 2015

Tuesday, March 3, 2015

What is a tax increase?; Nursing home scores are down; Krugman: Walmart’s Visible Hand and; College funding still uncertain

What is a tax increase?

Gov. Bobby Jindal’s budget proposes to eliminate a state refund for property taxes that companies pay at the local level. Yet two subsidy programs that have sometimes drawn criticism from the administration – the Enterprise Zone and film tax credit programs – are not being considered for reforms. And that, in turn, raises the question of what the governor’s office considers to be a tax increase. The Advocate’s Gordon Russell has the story:

 

No one in the Jindal administration would dispute that the governor’s budget plan, which contemplates curtailing a refund the state has long paid on a local property tax assessed on businesses, would mean that businesses would wind up — on a net basis — paying substantially more in taxes. But here’s where the semantics come in: The inventory tax is assessed and paid by businesses at the local level; it is not a state tax. So when the state stops refunding those tax payments, nobody’s state taxes are going up. In fact, no one’s taxes are going up, period: Businesses just aren’t getting refund checks.

 

But another reason, the governor’s office admits, is the “anti-tax” pledge Jindal signed at the behest of Washington lobbyist Grover Norquist – so much so that the tax proposals were vetted in advance to make sure they pass muster with Norquist’s Americans for Tax Reform.

 

“The governor takes his pledge to not raise taxes seriously,” Jindal spokesman Mike Reed said Monday. “That is why the administration regularly discusses with ATR proposals that impact the tax code to make sure it does not violate the governor’s pledge to not raise taxes.”

 

Nursing home scores are down

A new, tougher federal scoring system for nursing homes is bad news for the industry in Louisiana, as New Orleans-area homes scored considerably lower. Last year seven of 32 homes received the highest five-star rating,  with only three receiving the lowest score.  This year, only three facilities  achieved top scores and six received the lowest ranking. Louisiana continues to have

 

WWL TV’s David Hammer reports that the Louisiana Nursing Home Association blames the low scores on the new scoring method, and says the quality of service hasn’t changed. But that’s not exactly good news, as  Louisiana nursing homes lead the country in incidence of bed sores and the use of  physical  restraints and have the lowest nursing staffing levels.

 

And yet, the state issues only an average number of fines against the nursing homes, compared with the rest of the country. Donchess questioned those findings by ProPublica, saying the fines are plenty harsh in Louisiana. Meanwhile, the legislative auditor’s report also identified waste at the state level.

 

The Jindal administration drained almost every penny out of the $830 million Medicaid Trust Fund for the Elderly over the last seven years. Louisiana is also one of the only states that reimburses nursing homes with Medicaid dollars for their non-Medicaid patients as well as for their Medicaid ones, leading to what the audit called excess capacity costs of more than $15 million a year.

 

Krugman: Walmart’s Visible Hand

The New York Times’s Paul Krugman takes a look at Walmart’s decision to raise wages for its employees, and suggests that millions more employed by other companies will also benefit due to a spillover effect. He argues that the conservative view that the market will – and should – drive wage increases is flawed.

 

Specifically, this view implies that any attempt to push up wages will either fail or have bad consequences. Setting a minimum wage, it’s claimed, will reduce employment and create a labor surplus, the same way attempts to put floors under the prices of agricultural commodities used to lead to butter mountains, wine lakes and so on. Pressuring employers to pay more, or encouraging workers to organize into unions, will have the same effect. But labor economists have long questioned this view. Soylent Green — I mean, the labor force — is people. And because workers are people, wages are not, in fact, like the price of butter, and how much workers are paid depends as much on social forces and political power as it does on simple supply and demand.

 

College funding still uncertain

Louisiana colleges and universities appeared to have fared better than many predicted in Gov. Bobby Jindal’s budget proposal. State support would be chopped by $211 million under the plan presented Friday – and those cuts could be avoided if legislators go along with some other money-raising ideas. But , the damage could be much more severe if legislators don’t go along with the governor’s tax proposals. As Melinda Deslatte of the AP reports:

 

If lawmakers and the governor don’t settle on ways to raise annual revenue streams, higher education faces a worst-case of losing up to $583 million in state financing next year — more than 63 percent of the state general fund money it receives this year. Jindal and lawmakers are grappling with a $1.6 billion budget shortfall next year, so they need to drum up new sources of cash if they want to continue paying for many of the state’s programs and services.

 

Number of the Day:

$284 million – The amount of money in the governor’s budget proposal to fully fund TOPS scholarships – a $34 million increase over current levels.  (Source: Executive budget presentation)