Don't introduce more irrationality into capital outlay

Following up on the previous post, irrational tax policy that plagues Louisiana concerns not just items related to its operating budget, but also, if a pair of legislators have their way, to the capital outlay budget as well.

Among several bills that would address the illogical taxation of inventory – local governments may treat it as property for this purpose, firms pay it but then file from the state for a rebate of it if any beyond their corporate and franchise tax liabilities – state Sen. Robert Adley’s SB 85 does the best job by not only getting rid of it but also in preventing local governments from raising artificially their assessments to cover the difference. But he only exacerbates the problem he seeks to resolve in that one by signing on to state Rep. Karen St. Germain’s HB 712 that would raise taxes statewide on fuel purchased at retail.

This adds four cents per gallon sold to the 16 already charged as the base rate and the extra four charged to pay off special transportation projects begun over a quarter of a century ago, with some still not completed and paid off for another three decades. This 20 percent hike would go to the Parish Transportation Fund, which apportions out money to parishes for transportation projects they undertake by a formula based upon population.

Political courage needed to fix irrational tax structure

Part of the reason why Louisiana’s fiscal situation has gotten to this point of relative revenue penury is incoherent taxation policy between state and local governments. There are ways to improve that, but you wouldn’t know that listening to some policy-makers.

As things stand, what to do with the inventory tax rebate promises to generate the most discussion at the Legislature’s regular session starting next week. The Gov. Bobby Jindal Administration has made this the revenue-generating centerpiece of its proposed budget. Local governments may levy the tax but for nearly a quarter century the state has rebated that back to businesses, after first covering corporate income and franchise tax liability.

In essence, this means that parishes with a high concentration of industries in manufacturing and vehicle retail have the impunity to raise property taxes all they want because state taxpayers cover it, allowing them to keep bigger government as they already charge above-average property and sales tax rates. Thus, state taxpayers subsidize spending by local government. So it’s no accident that politicians in these parishes, both those of parish governments and their subgovernments and of school districts with coterminous boundaries, express opposition to ending the rebate or, worse to them, ending the ability for local governments, as is the case in most states, to impose inventory taxation at all.

Jindal's CCSSI gambit continues on test funds issue

The politics over Common Core States Standards Initiative high-stakes testing got more high stakes as a Louisiana Legislature panel reviewed non-higher education spending prior to the start of this year’s regular session. Yet the highest stakes of all from this may appear in the national political arena.

Yesterday, the House Appropriations Committee heard testimony regarding the education budget, minus higher education, much of it featuring Superintendent John White. He argued that the reduction in money given the administrative activities from the general fund, which Gov. Bobby Jindal recommended going from $48 million to $25 million, would prevent the Department of Education from administering standard testing as required by state law. He said with an extra $10 million boost he could manage to contract for the tests, aligned with the Partnership for Assessment of Readiness for College and Careers.

White believes the nearly-halved general fund allotment continues an attempt by Jindal to prevent the state from administering the PARCC tests – the budget identifies a reduction of $13.9 million in professional services – and with good reason as the governor went to court to try to negate the current contract. That has yet to succeed, and less than a year ago Jindal had not expressed opposition to CCSSI but then turned against it, saying his thinking had evolved on the matter that made it appear to him that use of the PARCC tests promoted too much imposition of national standards dictated by Washington.

Bill protecting religious belief merits becoming LA law

HB 707 importantly protects religious freedom in Louisiana and deserves swift passage, in spite of the mindless demagoguery already regurgitating against it.

The bill, by state Rep. Mike Johnson, would prevent the state from taking punitive actions against individuals and non-public corporations in the conduct of business who refused to engage in commerce where that action would violate their religious beliefs on the subject of marriage. It most significantly differs from other states’ recent efforts in that it limits conscientious objection only to beliefs regarding marriage and applies only to state government actions.

Practically speaking, using the hackneyed but real-world example of as bakery asked to supply a cake to celebrate a marriage between two people of the same sex, if this becomes law then legally a baker could refuse to engage in that commerce by declaring his participation would create tacit consent to an arrangement his religious beliefs about marriage find morally repugnant. This would occur regardless whether such marriages have legal recognition in the state.

Letting higher education out of TRSL makes sense

The time has come for the idea behind SB 18, which would expand the direction in which Louisiana higher education already has headed on retirement matters that both would serve in general its employees better and improve its financial position without harming any others’.

The bill, by state Sen. Robert Adley, would allow any or all of the four higher education systems plus employees of the overseeing Board of Regents to pull out of the Teachers Retirement System of Louisiana after paying off its portions of TRSL’s voluminous unfunded accrued liability. This could be accomplished by issuing revenue bonds that pay the amount in full, leaving the elector agency to make periodic payments on those to debt holders.

The advantage of this arrangement comes if the periodic payment amounts are less than the extra amount the elector pays in now and in the future to offset the UAL, which constitutionally must be extinguished by 2029. Because TRSL is on the hook for nearly $12 billion while its total assets (as of the end of fiscal year 2014), agencies part of it currently pay a staggering amount to address the UAL each year. Typically, the employer would match the employees’ paid in, but, because of the UAL, last year employers contributed over $750 million more into TRSL, a 10:3 ratio instead of 1:1. For higher education, the amount may be even more severe; Louisiana State University Baton Rouge had 83 percent of its employer contributions go to paying down the UAL.

Easter Sunday, 2015

This column publishes every Sunday through Thursday around noon U.S. Central Time (maybe even after sundown on busy days, or maybe before noon if things work out, or even sometimes on the weekend if there's big news) except whenever a significant national holiday falls on the Monday through Friday associated with the otherwise-usual publication on the previous day (unless it is Thanksgiving Day, Independence Day, Christmas, or New Year's Day when it is the day on which the holiday is observed by the U.S. government). In my opinion, in addition to these are also Easter Sunday, Memorial Day and Veterans' Day.

This Easter Sunday, I invite you to explore this link.