As the 2015 regular
session lumbers closer towards its close, at first glance a great collision
seems in the offing. In order to manufacture a balanced budget as required
constitutionally, Jindal has said he will accept no tax increases without
offsets of these, while the Legislature has insisted on building a budget
dependent upon several such hikes that don’t appear to have enough commensurate
tax cuts elsewhere. Thus, it looks as if the grand
bargain would not materialize and one faction would have to overpower
politically the other in order to stave off large spending reductions that
no one, for no well-defined reason, seems to want.
But taking
another glance, perhaps maybe things aren’t so conflicted. It turns out
that the Jindal Administration generously defines, and appropriately as it
imposed the condition in the first place, the idea of an “offset” as a
multi-year concept. Secretary of Revenue Tim Barfield has stated that the period
in question constitutes not a single year, but five years. Thus, a
measure that raises taxes immediately, such as HCR 8
that would suspend into Aug., 2016 business utility sales tax exemptions partially
to the tune of $103 million in additional revenue, could be offset and then
some by the impact of HB 828,
which erases the corporate franchise tax over five years that by then would
grow to a forecast
$912.5 million, even though the next year’s forgone revenue totals only
$36.5 million.
However, the
problem is to date there simply aren’t enough of these to go around. HB 624,
which mindlessly would lop off 20 percent of certain corporate tax breaks
would raise an extra $970
million over the next five years, and HB 629,
which equally thoughtlessly pares 20 percent off credits to be used against
income and franchise taxes (if passed with HB 828 this figure would
decrease) siphons $1.107
billion more from the economy over five years. With a figure of around $1.5
billion in arrears after the most recent
Revenue Estimating Conference declaration to keep spending at a
standstill level for the affected unprotected areas of the budget subject
to cutting, clearly offsets come up short, making them subject to a Jindal
veto.
Perhaps of
more immediate concern should be that bills like HB 624 and HB 629 were
passed extra-constitutionally, not garnering the necessary two-thirds votes
in the House to repeal a tax. Here, representatives
cling to a faulty interpretation of the law out of the belief that their
bravado will discourage any challenge to that, as assumption which will
prove mistaken if they continue this course. The fallback plan then depends
upon any adverse court ruling not to come prior to a special session at the
start of next year inevitably called by a new governor in order then to
deal with it. This assumes that the proponents of this approach could
somehow get the 70+ affirmative votes in the House to override an expected Jindal
veto in the first place, the level they could not rig the first time
around.
Yet instead of
taking these risks, the much more and eminently sensible approach would be
to convert these bills into resolutions like HCR 8, which require only
simple majorities to pass. Add in the likes of HB 119,
which increases cigarette taxation by 32 cents a pack and did receive the
needed two-thirds margin in the House (although there’s an offset bill
for that as well), and the one-year bump in taxation does not exceed
the five-year decline solely from HB 828 and meets the immediate revenue
needs given the levels of spending that the Legislature seems sacred and
bound to allow.
Besides
achieving constitutional standards and conforming to Jindal’s requirements,
reliance mainly on temporary tax boosts would not try to put into statute
an uncoordinated, half-baked approach to tax policy. The predictable
special session of next year could look at the issue holistically,
determining the appropriate necessity of spending in the state, deciding
which revenue measures to embed, and what exceptions to these make the most
sense for economic development, rather than extend or attenuate at the
margins a system best described as irrational, put together over decades to
meet discrete constituencies at specific times with no thought to the
overall picture. Any constitutional amendments as part of this could go up
for vote on the spring election date, and any adjustments to all items if
required made during the regular session to have a sane fiscal structure in
place for the FY 2017 budget.
This roadmap
seems so obvious that any continued movement by legislators on their
present trajectory suggests, even among some alleged conservative
Republicans who said one thing until recently but whose febrific urge to
jack up taxes says another thing, a simple lust for more revenues taken
from the people to spend on more things without doing the hard work of
making choices best suited for economic development and the safeguarding of
the citizenry’s liberty. Hopefully, better sense will overtake them in
these last two weeks of the session.
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