Lack of courage prevents reform of any LA budgeting

As talk of the state’s operating budget dominates Louisiana political discourse, highlighting how a failure of will by policy-makers makes this an annual exercise in contortion, an enterprising piece reminds how the capital outlay budgeting process suffers from the same.

Jeremy Alford writes about that latter exercise, which, while just a couple of billion dollars in cash and about twice that in bonds of which only a few hundred million goes to new projects compared to the operating budget that is over four times that combined total, itself nonetheless causes dysfunction. Unlike with the operating budget, the bizarreness of which comes from a straitjacketed fiscal system that poorly matches revenues to expenditures on the basis of need largely because lawmakers have given themselves so little discretion over it, with the capital outlay process legislators have a great deal of discretion but then in effect hand it over.

In both cases, these convolutions have evolved because they suit the needs of legislators. With the operating budget, passing so many statutes and along to eventual voter approval so many constitutional amendments has set aside about four-fifths of all state-generated revenues for particular purposes. Many years this manufactures a crisis among the few areas unlinked to money, causing great agitation as some portion of funds ends up backing low priority needs while those considered most important face cutting and tremendous gymnastics to get covered whatever of them can be.

Avoid convoluted funding scheme with tuition increase

Why go to all this trouble? Peripherally attached to a budget somewhat contortioned, perhaps the most convoluted item of Gov. Bobby Jindal’s fiscal year 2016 effort is a request (not actually in the budget) that cuts in state monies for higher education could be offset partially by an extra fee put upon students, the cost of which would be claimable as a tax credit, financed by an increase in cigarette taxes. Why such a Rube Goldberg device when there’s a far less complex answer to bolster higher education’s resources?

Administration and higher education officials have put forth preliminary ideas on the subject, pegging an amount of $2,000 per student (per what unit of time left as of now unsaid, but it may be for an academic year), although that could vary by field of study and institution. Whatever structure it takes, for this to happen it would take two sets of two-thirds majorities in each legislative chamber, one to add the fee and one to increase the cigarette tax, while then needing a majority vote in each to introduce the tax credit. And then it would cost extra to administer the complicated thing and probably (the history of tobacco tax hikes show) take in fewer dollars than anticipated, meaning taxpayers pick up the tab to pay for the credits – which may not do much or any good for the small portion of households whose tax liability does not equal the fee.

The far more obvious and elegant solution to bring in more money to higher education is to raise tuition. As noted previously, with average Louisiana tuition and fees the fourth-lowest among the states and the District of Columbia for baccalaureate-and-above institutions and 39^th overall for community colleges, with the state ranking in proportion of family income going to pay for higher education 38^th and 32^nd, respectively, with its former students having the lowest proportional student loan debt of any state in the south and among the lowest in the nation, and with a per capita income ranking 29^th nationally, clearly the ability for Louisiana families to pay more for their members’ education is present – especially as historically taxpayers have disproportionately paid for higher education in Louisiana compared to the rest of the country. It’s time the major beneficiaries of higher education – the students themselves – pay their fair share as a response to the lowering of the taxpayer subsidy instead of finding another way to have a portion of taxpayers make up the difference.

Commissioners must stop suit, withdraw from program

As if the Caddo Parish Commission wasn’t getting enough unfavorable publicity in January, in February more came down the pike that reinforces the notion that service on the body seems more in self-interest than in the public interest.

The Louisiana Legislative Auditor issued a letter that questioned the legality of parish commissioners – at least 15 since Art. III, Sec. 2-52 of the parish’s ordinances went into effect in March, 2000 – being allowed to participate in the Caddo Parish Employees Retirement System. The Louisiana Constitution was amended in 1996 to prevent elected after beginning of 1997 any part-time official, mentioning by name kinds of bodies that serve as governing authorities, from participating in a retirement plan run by that subdivision. Every present sitting member of the Commission was elected after that date (with Ken Epperson and John Escude having breaks in service even as they had served prior to that date).

Ridiculously, the parish wasted taxpayer dollars by filing for a declaratory state court judgment about the ordinance (which was amended in 2005) even though Art. X, Sec. 29.1 of the Constitution seems very clear about this. Only absurdly concluding that as the literal wording excludes members of a “police jury” or “parish council,” somehow a “parish commission” would be exempt, extraordinarily contrary to what is meant by and the spirit of the law (as argued in two separate attorney general opinions).

Couple inventory tax credit change with broader reform

Thrust into the spotlight by becoming the crucial fulcrum on which Louisiana’s fiscal year 2016 budget balances, the state’s inventory/ad valorem tax credit reflects the inefficient, strange outlier tax behind it where the abolition of which would promote fairness and better potential for economic development.

Gov. Bobby Jindal has asked the Legislature to remove the refundable portion of this tax, or about three-quarters of its take and equals about $377 million, in its upcoming regular session. This could take the form of a suspension lasting around a year, which may require only simple majority votes, or outright repeal, which would need two-third supermajority votes from each chamber. It rebates back to corporations not only part or all of their income and franchise taxes, but also part or all of local property taxes.

This odd element that state taxpayers forgo revenue on the basis of parish taxing decisions, and the lack of clarity and accountability for voters in understanding the impact of policy, may be the strangest aspect of the credit and its underlying tax. Only 10 states have such a comprehensive tax on the value of most movable property, comprised of domestic, non-transitory resources, and finished products, and only Louisiana oddly does not levy the tax at all at the state level, but allows parishes to do so; only a couple of other states allow levying at the local level even as they also levy one at the state level.