Tuesday, June 9, 2015

Tuesday, June 9, 2015

Three days left: No deal yet; Are state budgets a ticking time bomb?; Sometimes, low taxes end up costing more; and Tuition autonomy falls short again


Three days left: No deal yet

The SAVE plan–acknowledged by almost everyone except the Jindal administration to be a gimmick fee paired with a phantom tax credit–failed in the House on Monday when its sponsor refused to bring it up for a vote. That prompted another veto threat from the governor. Tyler Bridges with the Advocate has details:


That proposal would create tax credits through the SAVE fund that would allow Jindal to accept the other tax measures that would raise $500 million to $600 million of new revenue next year. State Rep. Alan Seabaugh, R-Shreveport, withdrew the proposal in the face of certain defeat. “We don’t have a plan at this point to comply with the governor’s veto threat,” Seabaugh said in a brief interview immediately afterward. Minutes later, Jindal countered with a move to put legislators in a political box. His chief of staff called reporters to say the governor would veto the separate revenue-raising bills passed by legislators intended to prevent deep cuts for higher education and public health care if the final version of the budget includes the net tax increase that the SAVE fund is intended to prevent.


A veto of any revenue bills would trigger across the board cuts to services that depend on that money – public colleges, the state Medicaid program and the charity hospital partnerships, Louisiana’s two state medical schools (which say they are going bankrupt trying to cover “legacy costs” they were saddled with during the charity hospital privatization) and other state agencies. In short, it is a road back to the “doomsday” budget scenario legislators have spent this entire session trying to avert.


Countering the afternoon veto threat from the governor, on Monday evening the House unanimously passed House Resolution 183–a symbolic gesture stating the chamber’s intent to override any veto that threatens funding for higher education or health care. But there is no sign that the Senate has any desire to buck the governor.


Are state budgets a ticking time bomb?
Paul Volcker, the former Federal Reserve chairman who tamed inflation and a literal giant in the world of banking and government, has found a new problem to tackle: shoddy state budgets. Volcker says states are balancing their budgets on paper, but really pushing costs on to future taxpayers. Sound familiar? The New York Times reports:


When the states live beyond their means in this way, Mr. Volcker said on Monday, their budgets may seem balanced every year, but they are in fact piling up hidden mountains of unpaid bills. The invisible mountains grow bigger every year and eventually become crushing — something that seems to be happening in several states this summer as lawmakers find themselves at a loss to close their deficits. “The never-ending sense of crisis leads to stop-and-go funding of vital programs,” Mr. Volcker said in his first report since establishing the Volcker Alliance, a foundation devoted to rebuilding public trust in government at the federal, state and local levels.


As a result, bridges and roads are being left to crumble, public schools and state universities are being starved, “rainy day” funds are being drained, and public workers are counting on pension plans that may melt down at some point, the report said.


Sometimes, low taxes end up costing more
Louisiana has some of the lowest taxes in the nation (with the exception of the sales tax). Good news right? Not exactly. When it comes to Louisiana’s 20 cents a gallon gas tax, a low rate may actually be harmful to taxpayers. As Bruce Alpert with nola.com reports, advocates say poor roads cost taxpayers in other ways:


The Louisiana Good Roads and Transportation Association, which is backed by highway contractors, says the state’s 20-cent-per gallon gasoline tax, unchanged since it was approved in 1989, is about 10 cents below the national average. Kenneth Perret, the association’s president, says that the lower tax saves Louisiana motorists about $50 a year, on average, compared to drivers in other states.


“The great irony is that, in exchange for savings $50 a year in lower taxes, the average Louisiana driver pays more than $1,000 extra a year in higher insurance rates and extra car repairs,” Perrett said at a recent Senate field hearing organized by Sen. David Vitter, R-La. in Baton Rouge. “This doesn’t even address the value of time and fuel wasted while we’re sitting in congestion, thinking about the $50 a year we are saving.”


Tuition autonomy falls short again
A constitutional amendment to take the Legislature out of the tuition setting business fell far short of the vote it needed to pass the House on Monday, killing the effort for the session, the Associated Press reports. Louisiana requires a two-thirds vote of the Legislature to raise tuition. No other state has such a high bar. The bill needed 70 votes, but only garnered 47.


Number of the Day


$1,000 – Amount the average Louisiana driver spends in higher insurance rates and car repairs due to poor infrastructure, far above the  $50 a year saved by having a gas tax 10 cents below the national average (Source: Louisiana Good Roads and Transportation Association via nola.com)