EITC in the spotlight
The Earned Income Tax Credit is a refundable credit that helps working families afford basic needs. The size of one’s credit depends on two factors: income and number of children. The EITC incentivizes work by phasing in the benefit amount as workers earn more. The credit flattens at a maximum benefit level as workers’ earnings continue to rise, then phases out slower than it phased in. As the Center on Budget and Policy Priorities reports, Louisiana is one of 26 states and the District of Columbia that has its own EITC. Our state credit is 3.5 percent of the federal credit, which is less than one-fourth of the national average.
In 2013, more than 515,000 Louisiana households filed for the state credit, claiming an average of $96.16.
Why is all this important? Because the Senate Revenue & Fiscal Affairs Committee is reviewing all the tax credits outlined in the Tax Exemption Budget. With next year’s state budget nearly $800 million in the hole, legislators are taking a fresh look at reducing tax expenditures as an alternative to cutting TOPS, healthcare and other popular programs. But the EITC is a credit that deserves to be maintained.
The EITC only goes to families who earn income through work and helps them afford basic necessities like food and utility payments. The EITC has been proven to help families transition off welfare, and it is the nation’s single most effective tool for combating child poverty. Additionally, the credit is good for small businesses and local economies because it helps families keep more of what they earn, which they spend at businesses in their communities. Children in families that claim the EITC do better and go further in school, which allows them to work more and earn more as adults. And returning veterans rely on the credit to supplement their income as they make their way back into the civilian workforce. A boost in the value of the EITC would be a sound investment for a stronger Louisiana.
For more information about the EITC, including a breakdown of its effect in every region of the state, check out LBP’s website.
Budget showdown looms in House
With the legislative session now past its midpoint, The Advocate’s Mark Ballard looks at the lack of communication between House leaders and Gov. John Bel Edwards as they try to hammer out a deal on the budget. House Speaker Taylor Barras and Edwards recently had their first face-to-face meeting since March 9. And Appropriations Committee Chairman Cameron Henry is still struggling to come up with a plan that restores funding for the popular TOPS scholarship program.
Henry paused for maybe 10 seconds when asked the last time he met with Edwards. Aside from the governor’s April 12 testimony before Appropriations? “Back during the special session, I think,” recalled Henry, a Metairie Republican. Henry’s open to talks. But the process, really, is for the members to throw out their budget-balancing ideas as amendments during Appropriations committee hearings and see which ones float enough votes to survive. What legislators have been telling him of late is that they’re leaning towards across-the-board spending cuts for all agencies, coupled with continuing through next year the reductions made during the first special session. Maybe, there’s some way to work with the fees agencies are asking legislators to approve and, perhaps, some way to rearrange one-time money to free up other dollars to pay for recurring expenses, Henry said.
Lawmakers looking at fees to close budget gaps
Legislators are barred from raising taxes during the ongoing regular session. But that hasn’t stopped dozens of bills seeking to raise various fees from working their way through the process as state agencies look for ways to plug budget gaps. As the AP’s Melinda Deslatte reports, the fees would affect everything from ambulance services to regulating medical marijuana and food vendors at the New Orleans Jazz and Heritage Festival.
Agencies say the fees they’re seeking to charge or boost higher only cover the costs of providing the service — and often not fully. When he faced pushback on the medical marijuana fees, (Agriculture Commissioner Mike) Strain said he can’t afford to do the required inspections, lab testing and oversight without new money. He estimates the work will cost his agency between $500,000 and $750,000 a year. “We’re not trying to make a cash cow of this,” Strain told lawmakers. During discussion of a list of public health fee hikes, Rep. Rogers Pope, R-Denham Springs, raised concerns. “We’re going to impact a lot of people in this state with additional costs. Call it tax, fee, I don’t care, the people are going to pay this additional cost.”
Another newspaper backs Medicaid expansion
Add the editorial board of the Lafayette Daily Advertiser to the growing list of major Louisiana papers supporting the expansion of Medicaid. The Gannett-owned newspaper isn’t wild about the federal Affordable Care Act, but says the opportunity to take advantage of federal dollars for covering low-income adults who can’t otherwise afford insurance makes too much sense to turn down.
Nonetheless, Louisiana will likely see the benefits Edwards promised, at least in the short term. The feds will pick up most of the cost of the program for the decade, pumping new dollars into Louisiana. Those dollars will do additional good when multiplier effects play out in the state’s economy. The state’s safety net hospitals will likely benefit from the guaranteed payments for working poor who show up at their doors. Most importantly, families with incomes of 138 percent of the poverty level — about $16,000 for individuals, $33,000 for families of four — will get some medical attention they’ve previously been denied.
Number of the Day
515,445 – Number of Louisiana families who claimed the state EITC in 2013, worth more than $49.5 million in refunds (Source: LBP)