The Legislature now has one job

The Legislature now has one job

When the Legislature reconvenes in Baton Rouge next Monday to address what remains of the fiscal cliff, it will look far different than the special sessions that came before.

Number of the Day

$506.4 million - Amount of funding needed to fill the remaining gaps in the 2018-19 state operating budget. Most of the gaps are in higher education, public safety and social services. (Source: Legislative Fiscal Office)

When the Legislature reconvenes in Baton Rouge next Monday to address what remains of the fiscal cliff, it will look far different than the special sessions that came before. Gov. John Bel Edwards’ call for the 10-day special session is tightly drawn to focus on raising the $507 million needed to avoid unnecessary cuts to higher education, public safety, food assistance and other vital services. Here’s the catch: Lawmakers won’t have the ability to cherry-pick the services they want to fund with revenue they raise during the special session, as the money will be applied on a pro-rata basis to the things that are unfunded in the budget bill. Julia O’Donoghue, of Nola.com/The Times-Picayune, has a detailed look at what’s on the chopping block:

The budget protects the Louisiana Department of Health, judges and court programs as well as the Legislature’s own budget. The judiciary is actually receiving more money than it got for the current year, regardless if any taxes are increased.  Significant reductions are in store for higher education, the TOPS college scholarship program, corrections, sheriffs and food stamps – unless lawmakers produce more revenue in the special session. If they agree to less than a 4.5 percent sales tax, lawmakers won’t be able to direct funding to prioritize higher education or TOPS over other areas of the budget.

The AP’s star reporter, Melinda Deslatte, zeroes in on the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, which would be eliminated if the Legislature doesn’t come up with the funding to maintain it.

The Department of Children and Family Services is slated to take a cut of around $34 million in the budget passed by lawmakers in the final minutes of the just-ended special session. The agency says that will force it to shutter the food stamp program in 2019 because it won’t be able to pay for administration of the federally funded benefits. Nineteen percent of Louisiana residents receive assistance from the food stamp program — known as the Supplemental Nutrition Assistance Program or SNAP. The Department of Children and Family Services said about half of those recipients are children. “It’s a gut-wrenching decision to make,” said Children and Family Services Secretary Marketa Garner Walters. “I hope and pray that none of this is going to be necessary.”

The Advocate’s Tyler Bridges writes that the focus will be on the 20 House members who supported the tax bill favored by GOP leader Lance Harris, but refused to vote for the slightly larger tax bill by Speaker Pro Tem Walt Leger III.

The only path for a future bill that preserves half of the penny sales tax goes through the 20 Republicans who voted for the smaller renewal on Monday night but not the 1/2-cent renewal. Nearly all of those Republicans are either part of the conservative House Republican leadership or allies of the leaders. Several said they are open-minded about voting for the 1/2-cent renewal during the upcoming special session. “I’m not committed to being one way or the other,” said state Rep. Johnny Berthelot, R-Gonzales. “I’m still listening.” … (Rep. Stephen) Dwight said having more time to study the contents of HB12 might have given him the comfort to vote for the 1/2-cent renewal. … For Nicholas Muscarello Jr., a Republican from Hammond who just took office after winning a special election, the key to getting his vote for the 1/2-cent renewal is to ensure Southeastern Louisiana University gets more funding.

 

Put children first
While the previous special session broke down over one-sixth of a penny of sales tax, the Nola.com/The Times-Picayune editorial board writes that Louisiana continues to rank at the bottom on national indicators of child welfare, part of which can be traced to the state’s ongoing failure to invest in its youngest citizens.

The United Way of Southeast Louisiana found that 46 percent of working families in the state make too little money to cover basic necessities, including food. “They live above the federal poverty level but are forced to make tough choices like whether to pay for child care or to pay their rent. A single unexpected car repair, medical emergency or harsh storm can push … families over the edge,” United Way leaders said in a letter to the editor to NOLA.com and The Times-Picayune Friday. That is why it is maddening to watch the Legislature starve children’s programs of funding. The budget passed in the second special session of 2018 cut child welfare services, TOPS and higher education, all of which could put more pressure on young people. TOPS has been a moving target in the past few years, leaving families unsure how much they can count on from semester to semester.

 

Italy on the Mississippi
The Advocate’s editorial board, meanwhile, notes that the continued uncertainty surrounding the state is taking its toll on the state’s reputation. Louisiana is starting to resemble Italy – rich in culture and delicious food, where political chaos is the norm.

The biggest obstacle to reform becomes the growing assumption, over time, that this is simply how things are supposed to be. You can see that kind of creeping ambivalence in the halls of power in Baton Rouge. There was a time in recent memory when a special session of the Legislature was, as its name suggested, an extraordinary instrument of governance — a gathering to galvanize a sense of urgency about a pressing and temporary challenge to civic well-being. But state lawmakers have had six special sessions in two years and will soon meet in a seventh one. That kind of kick-the-can expedience simply cultivates crisis as a continuing theme, a prevailing reality. The risk is that we’re coming to accept the anarchy at the State Capitol as okay.

 

The ‘blue-state workaround’
A key point of contention in the federal tax-cut bill was a provision that capped the deduction for state and local taxes (the ‘SALT’ deduction) at $10,000, which was seen largely as a blow to wealthy taxpayers in “blue” states such as New York and California where state income and property taxes tend to be higher than elsewhere. But as Politico’s Brian Faler reports, several states have found a creative way around that limitation.

New York, Connecticut and New Jersey have adopted proposals to allow taxpayers, to varying degrees, to evade the SALT cap by recharacterizing their state and local tax payments as charitable contributions. Similar proposals are pending in other blue states, such as California and Illinois. … The specifics of the state programs vary, but they generally offer taxpayers a credit against their non-federal taxes in exchange for payments to state- or local-run charities, which then use the funds for government operations. That’s designed to allow taxpayers to characterize their tax payments as charitable donations, which remain fully deductible at the federal level.

As LBP’s Davante Lewis reports in a new blog, Louisiana has a similar loophole that is ripe for exploitation by ultra-rich taxpayers with large federal tax bills. That’s because Louisiana is the only state that currently allows uncapped donations to private Student Tuition Organizations (STOs) that provide scholarships for children from low-income families and a dollar-for-dollar state tax credit for donors.

Eighteen states have created similar tuition donation programs, but Louisiana is the only state that doesn’t have a cap on the total amount of tax credits that can be paid out by the state in any given year. According to Legislative Fiscal Office staff, there were 62 donors who donated to three STOs last year, giving a total of $5.4 million under the program. These numbers are likely to be much, much higher in the years to come.

 

Number of the Day
$506.4 million – Amount of funding needed to fill the remaining gaps in the 2018-19 state operating budget. Most of the gaps are in higher education, public safety and social services. (Source: Legislative Fiscal Office)