Although the state’s revenue picture is expected to brighten by up to $300 million once federal tax changes take effect, the extra revenue won’t be nearly enough to plug the $1.5 billion shortfall in next year’s state budget that is mostly due to temporary taxes expiring on July 1. The Nola.com/Times-Picayune editorial board looks at the poor decisions that landed Louisiana in its current predicament – and says it’s long past time to consider structural tax reforms.
[Legislators] spent the entire surplus Gov. Kathleen Blanco left them and gave away billions of dollars in tax credits and exemptions the state couldn’t afford. They also reversed smart income tax reforms crafted by former Rep. Vic Stelly — costing the state roughly $600 million per year in revenues. Without that money for state services, they spent down trust funds that were supposed to last for decades. A Baton Rouge judge ruled that was unconstitutional in 2014, but legislators kept doing it. All those things led to the mess Gov. Edwards, a Democrat, inherited in 2016. He tried to get the Legislature, which is dominated by Republicans, to make lasting changes then to state finances, but they refused. Now here we are again facing a deficit of more than $1 billion. Higher education and health care were slashed during the Jindal years, and legislators ought to protect them this time. That will take a different approach, though, particularly in the House.
The Advocate’s Lanny Keller writes that returning to the income tax brackets that voters approved in the 2002 Stelly Plan, while eliminating excess itemized deductions, would be a good start toward solving Louisiana’s long-term structural budget problems. The current cycle of budget shortfalls, midyear cuts and special sessions can easily be traced back to Stelly’s repeal in 2007 and 2008, making a return to Stelly the obvious, if not politically easiest, solution.
Those were two key elements in the Stelly Plan. Restoring the Stelly brackets will take a simple majority in the House, 53 members, instead of a two-thirds vote. And that’s still only part of the whole. The governor told the Press Club of Baton Rouge that he’s got about 56 or 57 House members backing tax reforms, but getting to 70 votes for a full package requires the leadership of the chamber to help. The state has about $3 billion to $4 billion in the general fund that is really discretionary, the governor said; cutting a full billion or more would devastate colleges and health care, among other services.
Student loan forgiveness
Sarah Pool is a 31-year-old single mom in rural Staunton, Va., with a job she loves as a children’s librarian and $69,000 in student loan debt. Although she’s made monthly payments on time for three years, her balance has grown from $60,000. As The Washington Post’s Ellen McCarthy reports, Pool is one of many debt-ridden students pinning their hopes on a federal program that’s aimed at people who work for the government or nonprofits.
The glimmer of hope Sarah clings to is her enrollment in a public service student loan forgiveness program that would clear her remaining debt if she puts in seven more years of work with the government and continues to make payments on time. But she’s heard horror stories of borrowers being disqualified from the program — which is available to people who work for the government or certain nonprofits after they have paid their loans on time for 10 years — because of a paperwork error. And she’s terrified the program will be quietly eliminated.
Expiring Medicare provision hurts elderly
A federal rule that allowed home-care providers in rural areas to be paid higher rates than their urban counterparts was recently allowed to expire. The result, advocates say, is that some elderly patients will be forced out of their homes and into nursing homes, which can often end up being far more expensive. Gannett’s Greg Hilburn explains.
Medicare reimbursement rates for rural patients had been 3 percent higher than for urban patients before the provision expired on Dec. 31. Advocates insist the subsidy helped to offset increased costs to serve rural patients. “A nurse in a rural area may have to drive 20 to 30 miles to get a patient and may only be able to see four patients a day, where a nurse in a city might be able to see eight patients in the same apartment complex,” Myers said. More than 3.5 million Medicare patients use home health, including about 69,000 in Louisiana. A provision making reimbursement rates higher for rural patients has been in place since 2000 and has been extended at some level four times since then.
ACA repeal not a GOP priority in 2018
GOP members of Congress convened at Camp David last weekend to discuss their 2018 legislative agenda. Upon return to their offices, Sen. John Cornyn told reporter Peter Sullivan of The Hill that repealing the Affordable Care Act is not among their priorities this upcoming year. As GOP leadership has signaled previously, they’re instead choosing to focus on shrinking social safety net programs, with conflicting reports on what that looks like in practice. That means the GOP’s signature health care accomplishment is likely to be the repeal of the federal mandate that individuals buy health insurance – which will result in higher premiums for people with pre-existing health conditions as healthier people forgo coverage.
Republicans have hailed their victory in repealing ObamaCare’s individual mandate as part of the tax bill, which takes out a central feature of the law and one of the most unpopular parts. Still, some experts have warned that removing the mandate will destabilize markets and cause premium increases. It is possible that Congress could pass measures aimed at stabilizing ObamaCare in the coming weeks, though House conservatives are opposed to those bills.
Number of the Day
323,000 – Square feet of office space that Louisiana is renting from New Orleans Saints owner Tom Benson at above-market rates, costing the state nearly $2 million a year. (Source: Gannett Louisiana)