Tepid restructuring in budget can induce more reform

If readers, like myself, missed at the annual meeting of the Louisiana Political Science Association today the discussion of Louisiana’s fiscal year 2016 budget submitted yesterday by the Gov. Bobby Jindal Administration, this space will try to substitute in part for that.

This budget was in rickety shape from the moment the FY 2015 budget went into effect, courtesy of the bizarre fiscal structure of the state where four-fifths of revenues are dedicated to some purpose (state- or federal-determined) and the remainder of these responsible for health care, higher education, and constitutional offices. As problematic as that is, it was manageable, but the legs got kicked out from under it when extraction royalty and severance tax revenues took a nosedive due to sharply falling oil prices.

Thus spurred ideas to balance, leading to three interrelated aspects of the FY 2016 budget, which drops total state spending from enacted levels for FY 2015 over a billion dollars – although notably that amount still is higher than actual spending of two years ago by about $800 million, which is an increase about at the rate of inflation. In order to accomplish this, higher education was reduced from FY 2015 enacted to FY 2016 budgeted almost as much in that year as the entire $228 million (not adjusted for medical education) decline from FY 2009-15. Only because of an assumption built in that the Legislature would excise the refundable portion of a dozen tax credits did it not amount to an additional $526 million cut. And the budget turned in also suggested that the Legislature and higher education combine forces to infuse perhaps $100 million or so more in revenues into that system through various operational means and fees.

Any LA EITC retention unwise in upcoming budgeting

When Gov. Bobby Jindal reveals his fiscal year 2016 budget tomorrow, it looks as if he will continue the trend of advocating tepid solutions to Louisiana’s pressing budgetary difficulties and bypassing substantial reform of an inefficient and ineffective fiscal system.

As a consensus builds that the state must rein in overgenerous tax exceptions, Jindal offered that the state should cap tax credits that paid out beyond tax liability incurred at that liability. This week his administration estimated this amount at around $590 million. Retaining some portion in that neighborhood would go a long way to closing a budget gap between forecast revenues apportioned to dedicated purposes plus those going into the general fund and current expenditures plus an inflation factor that equals $1.6 billion.

But the Jindal Administration also indicated that some of this “excess” amount would end up off limits to retention, citing approximately $3 million in the form of the School Readiness Tax Credits and $21 million in the Earned Income Tax Credit that would continue to go to eligible recipients beyond their tax liabilities. The former, actually several related items with the one in question the only of five payable to families, kicks back money for a child under the age of six that attends a decently-rated or better child care facility, which essentially could be 150 percent of its federal version (unreduced by federal income tax liability, if any) for a family making $25,000 or fewer, with a $2,100 maximum credit. The latter allows for as much as 3.5 percent of its federal version, graduated by filing status and number of children; for example, a married couple with no qualifying children would have to earn less than $20,330 of which less than $3,400 could be investment income, and some of it would have to be earned through at least part-time work. A family with three or more children could be credited for $218.

Proposed film tax credit reform needs more robustness

The film industry has scrambled successfully to keep from drying up its mother milk from Louisiana taxpayers, if the suggested “fixes” to the Motion Picture Investor Tax Credit contained in proposed bills by a pair of timid legislators serves as an indicator.

In separate bill drafts, state Sen. J.P. Morrell and state Rep. Julie Stokes propose reforms of the state’s film subsidy, which through the life of the program to 2012 had cost the state $800 million more in taxpayer dollars than it brought in and which at the current rate of project approval will have topped $1 billion by the end of last year. Neither adequately address the hemorrhaging of taxpayer dollars.

Morrell’s bill closely tracks the industry’s preferences, which don’t align well with taxpayers’, with an increased emphasis on preventing improper or fraudulent subsidization, limitations of expenditures that qualify, and (the one major item not acceded to by the industry) a $300 million annual cap that, if not entirely used, could roll over. Stokes’ would allow transferability of credits just once (in effect, eliminating brokerage and leaving it all in the hands of the state) but raise the state’s buyback from 85 percent to 90 percent, institute better procedures to capture tax revenue that could be generated from the industry (an industry request), and make administrative changes that clarify the process and place more of that cost in the hands of that industry.

Democrats continue fool's errand for magic candidate

If it isn’t official, it should be: it’s John Bel or bust for Louisiana’s Democrats, as the filing of New Orleans Mayor Mitch Landrieu’s campaign finance report subsequent to his last year’s reelection shows – also indicating the dire straits in which the party finds itself largely through its own self-deception.

As recently noted, state Rep. John Bel Edwards’ non-trivial fundraising totals for the governor’s race this year revealed both that a consensus was forming that he was an adequate draw from the poor options out there to bear the party’s standard in 2015 and that Landrieu could not feel as if he was the natural selection by party activists to lead this charge. As late as last week, others still made noise about Landrieu possibly running, such as an official of the Democratic Governors Association thinking that Landrieu was “carefully considering” running and would be quite competitive.

Which tells us he doesn’t really know Landrieu or is whistling into a gale. Landrieu’s succinct report showed all he did was transfer the meager remains of his mayoral campaign account to a “future office” account. No funds were raised nor spent outside of that account aside from that election in 2014. Nobody not deluded about chances of victory runs for governor with $33,000 or so in the bank with just under a year to go.

Filings point to Nungesser-Young winner next lt. gov.

Having reviewed the implications of financial reporting for Louisiana statewide candidates’ chances for the governor’s and attorney general’s contests, it’s time to review the last of the hotly contested races to date, lieutenant governor. (It’s unlikely strong challengers will emerge to battle incumbents for the jobs of Secretary of State, Commissioner of Insurance, and Commissioner of Agriculture and Forestry, and add to this list of competitive races  Treasurer if incumbent John Kennedy chooses not to run for governor.)

State Sen. Elbert Guillory, a Republican, clearly rests on the back foot, reporting a less than zero balance. While adept at social media campaigning and able to rely upon the historical ability of black candidates to operate with a high voter per dollar rate, two factors will crimp his chances going forward, both having to do with his opponents.

One is that Baton Rouge Mayor-President Kip Holden not only is black as well, and therefore Guillory has no advantage over him with that considerable segment of the statewide vote, but also and unlike Guillory is a Democrat. That alone makes Guillory’s job tough because he could be competitive with those voters with resources to back his message, but he obviously doesn’t have the money at this point. Holden doesn’t have much either, cribbing off his local office account to have around only $30,000, but black Democrat candidates have the highest voter per dollar potential and he won’t need to raise a large amount to make a runoff – if he were the only black in the race. As long as Guillory continues in it, he’ll need to do somewhat better to get there.

LA inspection tax by another name needs abolishing

Louisiana may be grubbing for revenues at this time, but it acts best to emulate its neighbor by eliminating the almost totally useless vehicle general inspections and fees that are close to being a joke.

A number of states do not require vehicle inspections, and Mississippi look set to join the bunch as a bill to wipe out its inspection that carries a $5 fee makes its way through that Legislature. The activity might have been a good idea 50 years ago, but that time has come and gone.

Vehicles since then have become much more durable and safer, complete with required computer diagnostics to point out any serious problem instantly. As a result, data from about a decade ago when cars were significantly less safe than now show only a little over one percent of all accidents occur because of something wrong with the vehicle that would be part of an inspection – and involved items that easily could fail in between annual, or now in Louisiana biannual, inspections with little warning, meaning it would be blind luck if an inspection happened to pick up on it right before failure.