Deepening the budget hole

Deepening the budget hole

Rather than heeding the recommendations of experts who suggested reducing the proliferation of tax exemptions and credits, the House Ways & Means Committee is creating new tax breaks and extending old ones.

Number of the Day

8.9 -  Percent of discretionary federal grant dollars Louisiana would lose under President Trump’s 2018 budget blueprint. Programs funded with discretionary federal money include Community Development Block Grants, Supplemental Education Opportunity Grants, and 21st Century Community Learning Centers.  (Source: The Pew Trusts)

Rather than heeding the recommendations of experts who suggested reducing the proliferation of tax exemptions and credits, the House Ways & Means Committee is creating new tax breaks and extending old ones. While business lobbyists left Monday’s committee hearing feeling accomplished, legislators have yet to confront the looming $1.3 billion fiscal cliff. The Advocate’s Tyler Bridges reports:

The various tax exemptions, if ultimately approved by the Legislature, not only would worsen the state’s budget problems but also would move Louisiana’s tax system away from what a legislative-created blue-ribbon task force recommended in January – that lawmakers ought to end tax breaks so they could lower tax rates. The votes came a day before the full House, for the first time during the legislative session, will indicate its appetite for raising revenue to offset the loss of $1.3 billion in temporary taxes that will roll off next year. It is known inside the state Capitol as the “fiscal cliff.”

Notably, the committee approved a new tax credit program for private companies that invest and create jobs in rural areas of the state. The program, which may appear to be a good idea at first glance, would cost the state $30 million per year, and has a questionable track record in others states:

The bill that would cost the most was House Bill 641 by state Rep. Jack McFarland, R-Winnfield. He said the measure would reinvigorate rural communities by permitting investment firms to act as brokers for private companies that would receive tax credits for their investments. However, a recent report by Philadelphia-based Pew Charitable Trusts, found that many states “are falling prey to a complex economic development approach, pushed hard by investment firms that stand to benefit, that has failed to live up to its promises.”

While some reform-minded bills are still alive – awaiting debate on the House floor this afternoon – the AP’s Melinda Deslatte notes that months of work by a blue-ribbon task force on how to overhaul Louisiana’s broken tax system has gone largely ignored by those in power:

Baton Rouge Rep. Ted James, a Democrat on the committee, expects the Legislature will ignore the study’s recommendations, despite the looming loss of $1.3 billion in expiring taxes in mid-2018. “I take no pride in saying this, but I predicted last year that the task force would be a waste of time,” James said. “I don’t see anything substantial getting out of here that could be called reform.”

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Robin Hood in reverse

President Donald Trump’s plan to enact deep tax cuts, increase spending on the military and infrastructure, leave Medicare and Social Security untouched, and balance the budget means that substantial cuts would have to be made to non-defense discretionary programs. If the conservatives running the federal government get their way, the upcoming budget negotiations could end the safety net as we know it. Politico’s Rachel Bade and Sarah Ferris:

President Donald Trump’s refusal to overhaul Social Security and Medicare — and his pricey wish-list for infrastructure, a border wall and tax cuts — is sending House budget writers scouring for pennies in politically sensitive places: safety-net programs for the most vulnerable. Under enormous internal pressure to quickly balance the budget, Republicans are considering slashing more than $400 billion in spending through a process to evade Democratic filibusters in the Senate. If enacted, such a plan to curb safety-net programs — all while juicing the Pentagon’s budget and slicing corporate tax rates — would amount to the biggest shift in federal spending priorities in decades.

Robert Greenstein, president of the Center on Budget and Policy Priorities, rebuffs the idea that the Trump tax cuts will pay for themselves and describes the effect the president’s budget would have on millions of low-income Americans and the economy:

Moreover, if the President and congressional leaders were truly concerned about the nation’s long-term fiscal challenges, they would consider raising revenues rather than proposing huge, costly tax cuts that, despite preposterous Administration claims, can’t come anywhere near “paying for themselves” through higher economic growth. If enacted, the proposals from the President or House Republicans to cut core support for tens of millions of struggling Americans — including millions of low-wage working people who voted for Trump — likely would have serious long-term consequences, not only increasing poverty, destitution, and inequality, but potentially reducing long-term economic growth as well.

 

More bad AHCA news

The news that the American Health Care Act would take health insurance away from 24 million Americans came months ago, but new concerns are cropping up about the specific impacts the bill would have on children and their health care providers. According to a new analysis by Fitch Ratings, children’s hospitals are particularly at risk if Medicaid funding is reduced, because nearly half of Medicaid enrollees are children. Forbes’ Bruce Japsen explains:

If enacted, AHCA would create credit risks and related financial concerns for children’s hospitals, Fitch Ratings said in a report last week. “Proposed reductions to Medicaid and other supplemental healthcare funding cuts currently contemplated in Congress are likely to pressure these hospital providers over the longer term if enacted,” said Fitch director Emily Wadhwani. “Children could see their healthcare cut by tens of billions of dollars,” the Children’s Hospital Association, which represents more than 220 hospitals, said. “Other changes contained in the bill would make the healthcare system worse for children, not better.”

 

A painful and personal debate

Twenty-three members of the Louisiana Legislative Black Caucus walked off the floor of the Louisiana House of Representatives last night, after the lower chamber voted to block the removal of historical monuments. Two hours of emotional debate preceded the vote, during which many members shared how deeply offended they are by the bill and the statues it aims to protect. The Advocate’s Mark Ballard was there:

House Bill 71 would forbid the removal, renaming or alteration of any military monument of any war, including what is referred to in the bill as the “War Between the States,” that is situated on public property unless a majority of the voters in the municipality or parish approve. “This bill is very much about white supremacy and divisiveness,” said Rep. Patricia Smith, a Democrat who represents a Baton Rouge district that includes the State Capitol and which is 62 percent African-American.

New Orleans Mayor Mitch Landrieu, who is overseeing the removal of four Confederate monuments that were at the center of last night’s debate, explained the city’s decision in a letter to the Washington Post:

The record is clear: New Orleans’s Robert E. Lee, Jefferson Davis and P.G.T. Beauregard statues were erected with the goal of rewriting history to glorify the Confederacy and perpetuate the idea of white supremacy. These monuments stand not as mournful markers of our legacy of slavery and segregation, but in reverence of it. They are an inaccurate recitation of our past, an affront to our present and a poor prescription for our future.

 

Number of the Day

8.9 –  Percent of discretionary federal grant dollars Louisiana would lose under President Trump’s 2018 budget blueprint. Programs funded with discretionary federal money include Community Development Block Grants, Supplemental Education Opportunity Grants, and 21st Century Community Learning Centers.  (Source: The Pew Trusts)