Thursday, May 7, 2015

Thursday, May 7, 2015

Tax showdown on House floor; Senate waits on House, trying to avoid veto pen; Senate expands Equal Pay for Women Act; and Louisiana successfully sells bonds

 

Tax showdown on House floor
The Legislature’s willingness to raise new revenue to help support state colleges, hospitals and other critical services will become clearer today, when the House will debate a package of bills designed to raise $880 million. Julia O’Donoghue of Nola.com reports that legislators will not look at reforming the state’s enterprise zone tax credit or internet sales taxes – two options that were abandoned because lawmakers felt any revenue stream produced would be unreliable. The bills affect both businesses and individuals. Tyler Bridges of The Advocate provides a breakdown:

 

In all, legislative leaders want to raise $880 million to prevent budget cuts for next year. Of that, $206 million would go for health care; $50 million would provide extra money for K-12 public schools statewide; and $50 million would go for tourism, the Secretary of State’s Office, the Department of Agriculture and other state programs. Of the $880 million, the largest amount ­— $573 million — would go to Louisiana’s colleges and universities to give them the same amount of funding next year as in 2015. If no taxes are raised to cover the $573 million, the institutions would face an 82 percent funding loss from this year, which they have described as the “doomsday” scenario. They would suffer a 30 percent cut in state aid next year if the Legislature ultimately comes up with only $372 million of the $573 million.

 

Senate waits on House, trying to avoid veto pen
While the House is looking to raise $880 million, Senate President John Alario of Westwego thinks $1 billion  is needed – with the extra money going to support the new University Medical Center in New Orleans and to cover retiree benefits and insurance resulting from the privatization of the state’s charity hospital system. But even if those dollars are realized through legislation, the real question is how to avoid Jindal’s veto pen. Julia O’Donoghue of Nola.com reports:

 

The question that hangs over the session is how do legislators generate the extra $1 billion while also complying with Jindal’s national “no tax” vow? The pledge — issued by Americans for Tax Reform — requires all tax increases be offset with an equivalent state spending cut. In other words, any new tax or tax increase must be revenue neutral. Jindal is likely running for president in 2016 and ATR is a force in Republican national politics. If the organization thinks Jindal has broken the “no tax” pledge, it will work against him.  … Though several House leaders said their members aren’t concerned with approving a budget that satisfies ATR guidelines, Alario, head of the Senate, said he will try to comply with the governor’s wishes. “I will try my very best,” he said. If the Legislature passes a state budget that raises taxes — resulting in net new revenue, a violation of ATR rules — it will risk a Jindal veto. Louisiana legislators try to avoid the governor’s veto pen, and very rarely override the executive branch.

 

Senate expands Equal Pay for Women Act
It would be illegal for any Louisiana business with at least 20 employees to pay female employees less than men for the same work under legislation that cleared a Senate committee on Wednesday. The bill by Sen. Ed Murray of New Orleans cleared the Senate and Governmental Affairs Committee despite opposition from several business groups. According to Jeremy Alford of LaPolitics, the bill would protect male workers as well.

 

No one spoke against the bill, but Louis Reine, president of the Louisiana AFL-CIO, said he was compelled to testify on behalf of his four granddaughters. He said he shouldn’t need to tell them that one day they’re only going to make “two-thirds” of what their male counterparts bring home. “How do I look at them and tell them that every day it’s important what you do in school?” Reine asked.

Louisiana successfully sells bonds

Despite the budget uncertainty facing Louisiana, the state was able to generate $335 million through bond sales in order to address state building repairs, college campus improvements and to fund economic development initiatives. According to Nola.com, despite the state’s financial woes, the bonds sold at market rate.

 

“This is a very good result, and it’s consistent with the way the market has been acting,” said Renee Boicourt, an outside financial consultant who works with Louisiana on bond matters. The 3.3 percent interest rate the state will pay on the bonds is slightly higher than the last time it put general obligation bonds up for sale, but Boicourt said that is normal given the current financial climate. “The market had a lot more confidence in Louisiana than some other folks have,” said Senate President John Alario, about the successful bond sale.

 

Number of the Day:

 

$880 million – Amount of new revenue House leaders hope to raise through a package of tax bills being debated on Thursday (Source: Nola.com)