The House Appropriations Committee will release its version of the budget on Monday and it’s expected to contain millions of dollars in cuts, though where those cuts will fall remains a mystery. At the same time, the House Ways and Means Committee will consider tax bills that could help fix (or in some cases exacerbate) both the $440 million shortfall for next fiscal year and the looming $1.4 billion fiscal cliff. Tyler Bridges and Elizabeth Crisp write for The Advocate that House Speaker Taylor Barras is optimistic that revenue-raising instruments can pass:
Barras on Thursday said many tax bills remain to be vetted, with overlap on proposals related to income tax changes, sales tax and corporate tax. “I think we have the menu that we need to have a healthy discussion,” he said. “My hope is to get a good deal of that to the floor.” To try to get a total comprehensive package is something we can build toward and work on,” Barras added.
One idea that’s reportedly gaining some traction is to lower the corporate income tax rate but remove its myriad exemptions, exclusions and deductions. Rep. Kenny Havard’s House Bill 648 does not yet have a fiscal note but is intended to be a small part of solving for the fiscal cliff. Gannett’s Greg Hilburn notes that Havard’s plan was received favorably by The Tax Foundation:
Scott Drenkard with the Tax Foundation called Havard’s bill “an attractive piece of legislation in that it will broaden the base and lower rates. It’s in line with the recommendations we’ve made,” he said. … “It scraps the current corporate income tax structure, which is desirable,” Drenkard said of Louisiana’s convoluted and complicated concoction of rates, credits and exemptions. “The goal of the bill is to introduce a broad-based business tax that doesn’t have pyramiding and in that regard it’s successful.”
No vote on AHCA…for now
Republican leaders in Congress have once again decided to hold off on a vote for their unpopular healthcare bill. The bill is strongly opposed by doctors, nurses, hospitals, the AARP, the American Cancer Society and a host of other patient advocacy groups. Noam Levey of the Los Angeles Times reports on how congressional leaders have completely ignored the country’s most important health care organizations.
“To think you are going to revamp the entire American healthcare system without involving any of the people who actually deliver healthcare is insanity,” said Sister Carol Keehan, president of the Catholic Health Assn., whose members include many of the nation’s largest medical systems. … Opposition among those who work in healthcare has only deepened amid the current GOP efforts to win over conservative lawmakers with the new amendment, with the American Medical Assn. and the American Hospital Assn. restating their rejection of the House legislation.
In an effort to woo the House Freedom Caucus, a recent amendment makes the AHCA worse by gutting key consumer protections and eliminating basic coverage requirements for health plans.
The latest on gas tax push
Despite Louisiana’s roads and bridges receiving a D and D+, respectively, from the American Society of Civil Engineers, the effort to raise money to fix the state’s crumbling transportation infrastructure appears stuck in traffic. Still, backers of infrastructure improvements, led by business leaders in Baton Rouge, are shifting their efforts into high gear. The Advocate’s Will Sentell:
Transportation backers hope a late session push, combined with other bills aimed at improving confidence in state transportation spending, will pay dividends before adjournment on June 8. … In addition, leaders of a 32-member business coalition, including the Baton Rouge Area Chamber, are expected to repeat their calls next week for a $500 million increase in spending for roads, bridges and other transportation needs.
Laughable Laffer curve
The Financial Times editorial board challenges the idea- popularized by economist Art Laffer- that tax cuts “pay for themselves” via economic growth. The editors cite examples at the federal level though, here in Louisiana, we can look to recent history to debunk this myth: revenue lost through large tax cuts in 2007 and 2008 mirrors the size of our looming fiscal cliff.
The (Trump) administration — channelling Ronald Reagan’s adviser Arthur Laffer — says tax cuts will create economic growth, offsetting the fall in revenue. While the cuts should provide a temporary demand stimulus, there has been little evidence in the past 20 years that tax cuts sustainably boost growth. Tax cuts in 2001 and 2003 during George W Bush’s administration did not jump start growth. Neither did Obama-era cuts. Yet in 1990, when President George HW Bush raised taxes, gross domestic product growth went up for five years. Bill Clinton’s presidency included tax rises and strong growth. History has not been kind to Mr Laffer’s ideas. There is no alchemy in which tax cuts pay for themselves.
Uncertainty over TOPS
The popular TOPS scholarship program received the first cut in its history last year, with the state covering only about 70 percent of qualified students’ tuition. Gov. John Bel Edwards proposed the same amount of cuts in his executive budget for next fiscal year, though he’s insisted TOPS is first on a priority list if the Legislature raises additional revenue. Meanwhile, graduating high school seniors are making decisions about higher education. Some are looking out-of-state, even at the community-college level. Nola.com/The Times-Picayune’s Danielle Dreilinger reports:
Sheena Reed of the Collegiate Academies charter group mentioned Southern Miss and Pearl River Community College. For Pearl River, Louisiana efforts are a recent development, recruitment/marketing director Delana Harris said. The college upgraded its out-of-state scholarships last spring and offers “affordable rates for room and board.” She pitched PRCC as a great option “for students seeking a traditional college experience while remaining close to home.”
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