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.

LA lawmakers must reject hate, silver; support freedom

Louisiana’s lawmakers should not let the bigots and those whose faiths are by convenience win by failing to pursue legislation to clarify protection of religious freedom.

State Rep. Mike Johnson, a foremost legal authority on religion and the First Amendment, is considering a bill that would make changes to Louisiana’s Preservation of Religious Freedom Act. It largely mimics the federal law enacted in 1993, because a court ruling a few years later said the federal law could not apply to states. The law mandates that any government action that circumscribes practice of religious belief had to show a compelling interest to do so and in the least restrictive way.

Controversy over similar laws and changes to them in other states have arisen this year with an expansion of the definition, in the context of Louisiana’s version, of the concept of the “person.” Presently, that means consideration of religious rights of individuals and religious organizations. That definition would be expanded to include businesses as well, the impetus for this being a past U.S. Supreme Court decision signaling business transactions could be included in this calculus and whether this summer the Court conjures up protection to individuals on the basis of attitudes and behaviors other than those related to religious or political beliefs, namely practicing homosexuality, through a redefinition of marriage that prohibits states from confining it to between a single man and a single woman. Already in a majority of states same-sex marriages legally can be performed, in most instances forced upon the state by judicial fiat, meaning that the state may compel violation of conscience.

Little improvement unless LA academia mindset changes

A report that illuminates a portion of why Louisiana higher education suffers from resource problems also serves as a metaphor for the whole, directing to a solution for that – one if not pursued threatens to undo the recommendations made in the policy brief.

The Public Affairs Research Council, to noises of approval including those in higher education, described the good, bad, and ugly of how state policy inhibits leveraging of university research, with recommendations garnered from other states’ system to allow Louisiana to better fit higher education into economic development, describing benefits that would accrue to the micro, university level and to the macro, state level. Its underlying ethos makes for a reform agenda that could bear considerable revenues in the future.

In a sense, the major criticism of the current conduct of research enhancing these efforts by the state serves emblematically for the notorious weakness in Louisiana’s entire higher education structure. PAR wrote that research return missed its potential by an outdated model of the state spreading resources for it too thinly. There it is in a nutshell: the overbuilt higher education system, accentuated by the state’s peculiar populist political culture, likewise squanders potential by creating a situation of too few four-year capable and willing students chasing too many baccalaureate-and-above universities, and every time some politicians and higher education bureaucrats bray for more money for/fewer reductions of it, this reveals a single-minded captivity to the old centralized planning model of delivery that stubbornly refuses to recognize the world for what it is.

Compulsory voting, automatic registration bad ideas

Data surrounding recent local elections demonstrates why the compulsory voting idea floated by Pres. Barack Obama is a bad idea for Louisiana to adopt.

For example, in Bossier City, a whopping 6.6 percent of voters cast their ballots for two tax renewals to fund public safety services. In Caddo Parish, a special election and a couple of district tax measures prompted turnouts between 6 and 7 percent. In Ouachita Parish for district tax measures, stunningly-high 3.6 and 2.2 percentages bothered to participate. Such turnout is typical for these kinds of items, especially when there are no jurisdiction-wide or wider contests decided with them.

Obama had suggested that it would do the country good to be under some kind of scheme that required people to vote in elections, presumably along the lines of a place like Australia where people who do not cast a ballot in an election for all federal offices get fined a small amount, about US$16. He argued that this would “counteract money,” alleging that elections in the U.S. are not a product of rational decision-making by the electorate, but whoever spends the most.

Incremental TOPS bill requires substantial followup

At least it moves the ball down the field a little bit, the first bill in some time that has a political chance to improve the problem of Louisiana’s open-ended commitment to the Taylor Opportunity Program for Students having been prefiled for the Legislature’s upcoming 2015 regular session – but moves it only a tiny fraction.

SB 48 by state Sen. Jack Donahue would give the Legislature a cost-control mechanism over the TOPS award. Presently, the amount given per student is linked to tuition paid to Louisiana public colleges and universities, up to the highest amount charged by each kind (or a weighted average of each kind of these for a student wishing to attend a Louisiana nonpublic school). The bill locks in the amount at the academic year 2017 level – beginning almost 18 months from now – and gives the Legislature the discretion whether to raise the award for any future tuition increases past that level. This means tuition could go higher without TOPS fully paying for it.

As far as reforms of the program go, this is about as close as it can be to being no reform at all. It treats the symptom – escalating costs pegged at $267 million for this fiscal year for which the only control the Legislature has is its bizarre two-thirds majorities requirement to raise tuition more than 10 percent (for schools that meet certain qualifications; otherwise, no autonomous raise is permitted) – instead of the disease: a program so lax in its requirements (requiring for an award to pay for attending a baccalaureate-and-above institution only the national average score on the American College Test and a mediocre high school grade point average, and less demanding strictures to attend a community college or technical school) that it pays for too many marginal students to attend post-secondary education institutions, encouraging waste and making schools work less efficiently. Any serious reform must start with raising standards and graduating award amounts depending upon performance that reward excellence, which in turn creates incentive for more efficient learning and higher achievement in doing so.