Friday, May 22, 2015

Friday, May 22, 2015

Budget bill passes House; Who is being asked to pay?; Economic miracle or mirage?; How low can you go?


Budget bill passes House

After six hours of debate, the House approved House Bill 1–the state budget–by a vote of 65-37 on Thursday. Melinda Deslatte with the Associated Press has details:


Higher education, which started the legislative session facing cuts of up to 80 percent of its state financing, would be spared slashing – a point that won praise from University of Louisiana System President Sandra Woodley, who thanked House members for making “extremely difficult decisions.” But under the budget heading to the Senate for debate, cuts still would fall across public health care services, state parks, museums and agricultural services. Without additional dollars, the LSU privatization deals are $95 million short of what the hospital operators say they need to continue providing the current level of services to the poor and uninsured who rely on the facilities. That figure includes $36 million in state financing to draw down federal matching money.In addition, LSU’s medical schools in New Orleans and Shreveport would be left with $56 million in insurance and retiree costs from the privatization deals that medical school leaders say could leave them struggling to stay afloat.


In addition to the $615 million in new revenue the House passed earlier this month, the budget is balanced with $440 million in “one time” money–a major improvement from the $1.1 billion legislators stuffed into the 2014-15 budget that is causing much of this year’s budget problems. Of course, given the governor’s “swim lanes,” there is still much work to be done. The Senate Finance Committee takes up the budget on Monday.


Who is being asked to pay?

On Wednesday, the Legislative Fiscal Office put out its detailed analysis of the proposed budget, which included a breakdown of the House-passed revenue bills (see page 3). And while most of the public debate and media attention has focused on the Legislature’s push to cut business tax credits and cap incentive programs to close the budget shortfall, the numbers tell a more nuanced story. Looking at the Fiscal Office analysis and each bill’s fiscal notes, here is LBP’s quick math on where the money could come from next year:


  • Corporations (tax credit changes): $289 million
  • Individuals (income tax changes and cigarette hike): $146 million
  • Temporary one-year suspension of penny business utility tax: $103 million
  • Incentive program reforms: $78 million


Of course, the bills are likely to be amended as the move through the process, so these numbers could change. But as it stands now, legislators have settled on shared sacrifice to save higher education.


Economic miracle or mirage?

Louisianans have been hearing from state leaders for years that we are in the midst of an economic renaissance. But as Bob Mann points out in his column, it sure doesn’t feel like that:


You’ve noticed that Louisiana has the nation’s fourth-highest unemployment rate, some of the deepest poverty, the worst health outcomes and an incarceration rate that is the envy of Uzbekistan. Despite overflowing prisons, violent crime plagues us. Our roads crumble, our coast vanishes and chaos reigns in public education. The state’s economy is so decrepit it does not produce enough tax revenue to support higher education, health care and other vital services. As you read this, Louisiana lawmakers are trying to avert disaster and eliminate a $1.6 billion budget shortfall.


Mann notes that even as business trade publications and conservative think tanks rank Louisiana high on the  their “business friendly” lists, our job growth is actually trailing the rest of the country. And while taxpayers have given away billions in corporate incentive packages and tax break deals–a main reason we have risen in business rankings lists, yet ironically now targeted by the governor as “corporate welfare”–we aren’t seeing the bang for our buck, while colleges and hospitals pay the price.


How low can you go?

Some politicians seem obsessed with finding new ways to shame the poor. Recently, Kansas has been turning it into an art form. First, the legislature passed a law banning people from using cash welfare benefits at place like liquor stores and casinos, despite no evidence that this was a problem. But then, they added actual injury to the insult, the Washington Post reports:


The legislature placed a daily cap of $25 on cash withdrawals beginning July 1, which will force beneficiaries to make more frequent trips to the ATM to withdraw money from the debit cards used to pay public assistance benefits. Since there’s a fee for every withdrawal, the limit means that some families will get substantially less money. It’s hard to overstate the significance of this action. Many households without enough money to maintain a minimum balance in a conventional checking account will pay their rent and their utility bills in cash. A single mother with two children seeking to withdraw just $200 in cash could incur $30 or more in fees, which is a big chunk of the roughly $400 such a family would receive under the program in Kansas.


Keep in mind, this punitive policy impacts the poorest families raising young children. Truly shameful.


Number of the Day


26 – Out of every 100 families with children in poverty, number who receive welfare benefits, down from 68 in 1996 (Source: Center on Budget and Policy Priorities)