Tuesday, April 28, 2015

Tuesday, April 28, 2015

Committee approves modest cigarette tax increase; Tax credit changes move, but will they raise revenue this year?; Movie subsidy bills up today; and Don’t worry about a thing


Committee approves modest cigarette tax increase

The tax-writing House Ways & Means committee took its first steps toward solving Louisiana’s $1.6 billion budget gap on Monday, and the results weren’t inspiring. A proposal by Rep. Harold Ritchie to increase Louisiana’s cigarette tax by $1.18 per pack was voted out of committee, but not before it was  significantly watered down. The new version would raise the tax by 32 cents per pack, putting Louisiana in line with Mississippi.


House Bill 119 was strongly supported by public health advocates, who noted that a strong increase would help prevent kids from becoming smokers. But in the end, the committee gave in to arguments from the tobacco industry and convenience store owners that an increase would somehow cost jobs. As Tyler Bridges with the Advocate reported, the outcome left the bill sponsor discouraged:


Monday’s votes represented the first test of legislators’ willingness to raise taxes in an election year to balance the budget, a test they failed, according to state Rep. Harold Ritchie, D-Bogalusa, who is sponsoring the anti-tobacco legislation.“I think it’s going to be tough to put a deal together to get out of this (budget) mess,” Ritchie said after the vote. “We’re not even close.”


Fiscal analysts had originally estimated the bill would raise $240 million. The gutted version would bring in $67 million a year. The Advocate also reported that modest bills to increase fees faced a tough slog on the House floor last week, which doesn’t bode well for tax measures that also require a two-thirds vote:


In one vote, the House failed to approve a measure, House Bill 773, that sought to impose a fee of up to $250 on companies that apply for incentive programs from Louisiana Economic Development. In another vote, the House failed to approve a $100 fee on businesses to provide more funding for the state agency that regulates financial institutions, even though the agency operates at a deficit and businesses supported the increase.


Tax credit changes move, but will they raise revenue this year?
The House Ways & Means committee, meeting well after dark on Monday night after the full House adjourned, also approved a number of proposed changes to solar tax credits, Enterprise Zone subsidies and various other corporate tax measures with minimal dissent. Those bills now head to the floor, where they are expected to be consolidated–an important step, considering that some bills take different approaches to the same issue–reports Julie O’Donoghue with nola.com:


“I don’t know where the body stands [on the different tax credit bills],” said State Rep. Joel Robideaux, R-Lafayette, head of the Ways And Means Committee, about why so many approaches were getting committee approval.


Movie subsidy bills up today

The first two bill to make changes to the state’s expensive movie subsidy program will be heard today by House Ways & Means. House Bill 276, by Rep. Lance Harris, seeks a $50 million cap on the program and phases it out by 2019. House Bill 829 by Rep. Joel Robideaux seeks a $226 million cap, but also adds additional subsidies for certain productions. Legislators filed two dozen bills affecting the movie program, dealing with a wide range of issues. As LBP’s Steve Spires explains in a new blog, the top issue for taxpayers is what type of cap legislators place on the program, which will determine whether the movie industry is left untouched or asked to take a haircut to help Louisiana’s colleges and hospitals.


Don’t worry about a thing

If you thought Gov. Bobby Jindal administration was fretting over the state’s dicey budget situation – caused largely by its own policies – think again. The governor’s top budget advisor, Kristy Nichols, took to the pages of the Times-Picayune to assure readers that the budget would be fine. Wrongly blaming a budget shortfall that threatens to shut down colleges on falling oil prices (the fact is that only a quarter of the problem is due to oil prices), Nichols resolved that “raising taxes is not the answer.” Of course, given the state’s severe budget problems, there is a chance that legislators will take bold steps to raise revenue and save colleges, granted they keep in mind Nichols’s words that “leadership requires the ability to see past the short-term and create sustainable solutions that make our state better.”


Number of the Day


68 percent – Share of movies subsidies that went to productions in the New Orleans metro area from 2009 through 2014 (Source: LBP)