Wednesday, April 20, 2016

Wednesday, April 20, 2016

TOPS at center of budget debate; Corporate tax collections a “cross-your-fingers” situation; Editorial: Expanding Medicaid a good deal for Louisiana; and Another special session in the works

TOPS at center of budget debate

The future of the popular TOPS college scholarship program continues to be at the center of the budget debate. The latest budget proposal by Gov. John Bel Edwards proposes to slash the program by $184 million, which could leave more than 30,000 students and families without a state tuition stipend. But House Appropriations Committee Chairman Cameron Henry, of Metairie, told Gannett’s Greg Hilburn that funding TOPS is his top priority – even if it means cutting deeper in other areas of state government.

 

“It will require reductions in other agencies members feel are a lesser priority as well as looking as (unlocking) statutory dedications,” he said. Henry pointed to the lieutenant governor’s office as an agency that could possibly stand a bigger budget reduction, although Lt. Gov. Billy Nungesser and his Culture, Recreation and Tourism Secretary Robert Barham said the cuts already announce will result in the closure of some state parks, historic sites and museums. … Henry said the committee will also “look at vacant positions that are funded and annualizing cuts from the last session like advertising, travel and things of that nature” to find money for TOPS.

 

Meanwhile, the Senate voted unanimously Tuesday for a bill that would make sure any TOPS reductions are applied across the board to every scholarship recipient. Otherwise, the state would respond to shortfalls by changing eligibility criteria so that some students would keep their full scholarships while others would get no state aid.  The bill is a part of Gov. John Bel Edwards’ legislative agenda. The Advocate’s Mark Ballard has the story:

 

Instead of cutting the lower-achieving students out of the awards, the measure would give all TOPS-eligible students an equal slice of whatever funds are available for the program. “Everyone will get something,” Morrish said. If the funding for TOPS is ultimately at 50 percent, then everyone would receive 50 percent of their scholarship. Additionally, the legislation would allow TOPS-qualified students who could not pay their portion of the tuition — and therefore could not attend college next year — to keep the merit-based scholarship until a time the program is fully funded. Current law drops TOPS eligibility for students who don’t stay in school. … Morrish said under the law, money is only available to students who make a 26 or higher on the ACT. The average ACT score for recipients of the TOPS Opportunity award is a 22.

 

Corporate tax collections a “cross-your-fingers” situation

Louisiana needs to collect more than $500 million in corporate taxes over the next three months to meet its target for the year – a hefty task in a fiscal year when state government continues to pay out more in rebates than it takes in through taxes. As The Advocate’s Tyler Bridges reports, the state revenue forecast predicts net collections of $359 for the year ending June 30. But through the end of March, the state was upside down by $152 million.  

 

That would require a $511 million turnaround over the next three months. “That will be tough,” said Jim Richardson, an LSU economics professor, who noted that corporate tax collections are usually highest in April. “We really need a good, positive month in April.” … Greg Albrecht, the state’s chief economist, finds a silver lining in this year’s March numbers. While down by $152 million, corporate tax collections through February were even deeper in the red, $218 million. “March is typically a month when we see positive numbers,” Albrecht said. “It appears to be moving in the right direction. But it’s still a cross-your-fingers situation.” … Albrecht blames the decline in collections on three factors. One is a three-year tax amnesty program that, he said, mostly causes companies to advance tax payments they would have paid in later years after settling their disputes with the state. Two other factors, he said, are the decline in oil prices and the appreciation of the dollar, which has dampened exports.

 

Editorial: Expanding Medicaid a good deal for Louisiana

There has been no stronger proponent of Medicaid expansion in Louisiana than The Nola.com/The Times-Picayune’s editorial board, which spent years assailing former Gov. Bobby Jindal for refusing to take advantage of federal dollars and now is getting behind Gov. John Bel Edwards’ push to extend coverage to low-income adults. The latest installment emphasizes the huge savings the state budget will see as a result of the expansion:

 

The federal government is picking up almost all of the cost of the expansion, so Louisiana will have only a small match to pay. In addition, the state should save money on its health care system for poor residents because far fewer people will be uninsured. Over time, that should reduce the number of Louisiana residents who end up in hospital emergency rooms because of chronic conditions like high blood pressure and diabetes. That will be better for them and for the state’s bottom line. …  Gov. Jindal and his health officials played down the excellent financial terms President Obama offered: no cost to the state for three years with the match topping out at 10 percent in later years. They emphasized a worst-case scenario in which Louisiana might have to spend as much as $1.71 billion over a decade. But the Public Affairs Research Council pointed out that the variables in that projection were unlikely to materialize.

 

Another special session in the works

As Gov. John Bel Edwards celebrated 100 days in office on Tuesday, the AP’s Melinda Deslatte reports that Louisiana’s budget crisis continues to overshadow other priorities. With lawmakers unable to raise taxes in the current session and a $750 million deficit still looming over the fiscal year beginning July 1, the options to close the gap are pretty slim. Edwards hopes lawmakers in the House will soon come around to seeing why the second special session is necessity:

 

“I happen to believe that at the end of the day once the Legislature finishes its effort putting together a budget for next fiscal year that is short $750 million in state general fund that they are going to conclude in sufficient numbers that more revenue is necessary,” the governor said in an interview with The Associated Press. … He’s hoping lawmakers – who can’t raise taxes in the regular session that ends June 6 – will gather ahead of the July 1 start of the budget year and support tax hikes to stop those cuts from happening. … After raising more than $1.2 billion in taxes for next year, some Republican lawmakers, particularly in the House, are reticent about additional taxes. House Speaker Taylor Barras, R-New Iberia, thinks another special session will be necessary. But he suggested it might take longer than June to get consensus and it will need to be coupled with spending reform.”As we go through the appropriations process if it’s determined that we have shaved every department as much as we can shave them and they are living within what they can live with, does that give some momentum to seriously considering revenue? Possibly,” Barras said.

 

Number of the Day

$152 million – Difference between the amount paid to corporations through corporate income and franchise tax rebates and those collected by the Louisiana Department of Revenue during the first three months of 2016. (Source: The Advocate)