Another look at tax exemptions

Another look at tax exemptions

Louisiana gives away more money through corporate tax exemptions and credits than it collects from corporations in income taxes. That much has been known for years.

Number of the Day

79,379 - Louisianans who buy health coverage on the individual marketplace and benefit from federal cost-sharing reductions (Source: Centers for Medicare & Medicaid Services)

Louisiana gives away more money through corporate tax exemptions and credits than it collects from corporations in income taxes. That much has been known for years. But a new rule from the little-known but influential Governmental Accounting Standards Board means citizens in Louisiana and elsewhere will soon have a better idea of how much money states and cities are spending to attract and retain corporations. The Advocate’s Mark Ballard made it the focus of his Sunday column:

“The main message is quit putting so many eggs in the petrochemical basket. You’re spending money in ways that aren’t effective,” (Greg) LeRoy said in an interview from his Washington, D.C., office at Good Jobs First. Created in 1998 to study tax exemptions, the think tank operated off of $861,400 in donations in 2016. LeRoy argues that Louisiana surrenders tax collections too promiscuously — 469 exemptions in all, leaving $6.9 billion on the table according to the House Fiscal Office — and is nevertheless creating jobs at a rate that lags the nation.

LeRoy will be in Louisiana this week for a meeting hosted by Together Louisiana, whose research and activism has paved the way for reforms in the state’s lucrative industrial tax exemption program. While state government has done a good job over the years of tallying up the cost of various tax breaks, the same cannot be said for local governments. The new accounting rule aims to change that.   

Reports from about 1,200 taxing authorities are coming in now. But a few hiccups need to be worked out for the accountants hired by the Louisiana Legislative Auditor. Louisiana Legislative Auditor Daryl Purpera’s staff this week is developing rules that get down in the weeds of what auditors need to include on the financial reports. For instance, how should they handle tax breaks that are in law as opposed to those granted to specific companies? Everybody receives a homestead exemption. So, should that be counted? asked Bradley Cryer, the certified public accountant who heads local government services for the auditor’s office. “We’re trying to make it consistent,” he said.

 

“Clarity” needed on health care fix

A bipartisan agreement in the Senate that aims to shore up health insurance marketplaces through 2019 remains in limbo amid conflicting signals from President Donald Trump on what type of bill he is willing to sign. The Washington Post reports that the White House is making demands that could make it difficult to keep Democrats on board.

Last week, Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) announced an agreement to restore federal payments that help offset out-of-pocket health insurance costs for low-income Americans. The deal would give states more flexibility in how they regulate health coverage, a conservative goal. But the administration signaled to Senate Republican negotiators Friday that it also wants to give individuals and employers retroactive relief from the Affordable Care Act’s insurance mandate, according to individuals briefed on the matter, a request sure to anger Democrats.

The Alexander-Murray bill is a response to Trump’s unilateral decision to cut off federal subsidies to insurers that reduce deductibles and co-pays for people who buy coverage on the individual marketplace. The Advocate’s Bryn Stole reports on how Trump’s sabotage would hurt consumers:

That’s because, even if the federal government doesn’t pay the billions in payments to insurers, the Affordable Care Act still mandates they offer the plans with reduced deductibles and lower out-of-pocket costs to lower-income people. With the government no longer covering the tab, insurers would likely pass on the cost to customers through higher premiums. Louisianans buying health insurance on the individual market who earn too much to qualify for subsidies would likely end up getting hit hardest by rising premiums triggered by Trump’s end to cost-sharing payments, said Jan Moller, director of the Louisiana Budget Project, which advocates for low- to moderate-income families.Taxpayers may get left paying more as well. Many of those buying health insurance on the individual marketplaces receive federal subsidies, which rise with the cost of insurance and cap the amount of money individuals pay in premiums.

 

No consensus on fiscal cliff

Gov. John Bel Edwards is wrapping up his series of closed-door meetings with business leaders this week with an event in Lake Charles, and plans to release a report in November on the results of those conversations. So reports the AP’s Melinda Deslatte, who notes that despite a flurry of activity there is no consensus forming on how to solve the $1.5 billion state budget shortfall that is largely due to the expiration of a temporary sales tax.

No one in the State Capitol has suggested a detailed list of cuts to strip that much money without devastating public colleges, the TOPS tuition program and health care services. There’s a tacit expectation that some package of tax changes — whether removal of tax breaks, renewal of the expiring 1 percent state sales tax or something else — will be required to avoid deep, damaging reductions. The conversations suggest officials understand the gravity of the looming shortfall and the implications for state services. Eventually, however, someone elected to help lead Louisiana has to step forward publicly with ideas, or everyone’s careening off the cliff together.

 

DA’s are resisting criminal justice reforms

Add East Baton Rouge Parish District Attorney Hillar Moore to the list of Louisiana law enforcement officials who don’t like the historic criminal justice reforms that are prompting the early release of 1,500 non-violent offenders on Nov. 1. The issue got national attention earlier this month when Caddo Parish Sheriff Steve Prator complained that “good” inmates – who perform menial maintenance tasks for the sheriff’s office – would be released. Moore told Kevin Frey of WAFB-TV that the early release could backfire due to the state’s high rate of recidivism. But Corrections Secretary Jimmy LeBlanc had this response:  

They’re getting out anyway,” said LeBlanc, noting that on average, these 1,400 inmates are only getting out about 60 days early. LeBlanc says his agency has also received a $500,000 grant to cover the costs of overtime for probation officers, allowing them to handle the additional caseload. Probation officers, LeBlanc notes, are already stretched thin. They each have a caseload of about 148 individuals. LeBlanc calls 100 individuals “manageable.”

 

Number of the Day

79,379 – Louisianans who buy health coverage on the individual marketplace and benefit from federal cost-sharing reductions (Source: Centers for Medicare & Medicaid Services)