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18.10.16

LA 2016 amendments: first three up, next three down

If it’s fall, it’s time to contemplate amendments to the Louisiana Constitution and, as always, this space is here to help readers sort it all out. So, what do we have?

Amendment #1 would place educational or experiential qualifications on registrars of voters. None currently exist, making it easier for insiders and relatives of registrars to nab these jobs, to which parish governing authorities appoint. The experiential qualification does nothing to discourage this, particularly in smaller jurisdictions, but the other educational criteria at least prevents blatant favoritism for certain candidates. Yes.

Amendment #2 would move tuition and fee authority in higher education from the Legislature to the four college management boards. While statute gives some authority for this to happen presently, that could change and put Louisiana back entirely into the situation where it and one other state are the only ones whose legislatures micromanage in this fashion, making flexibility more difficult to achieve in optimal pricing decisions. This change would not produce runaway increases, not only because market forces control pricing, but also as elected officials, who will not want that scenario to occur to stay in voters’ good graces, appoint members to these boards. Yes.

Amendment #3 would trade the federal income tax deduction on state corporate income taxes for a flat corporate rate higher than currently paid by the typical corporate filer. Depending upon their mix of activity, some corporations will pay more, typically smaller ones, and others will pay less, typically larger ones. But the numbers indicate this would come out as revenue neutral and as smaller entities could opt to file as limited liability companies or as a sole proprietorship at the lower individual rates, the benefits of tax simplification win out. Yes.

Amendment #4 would create yet another local property tax exemption, in this instance doubling the current $75,000 standard for the surviving spouses of members of the armed forces or of public safety personnel losing their lives in the act of duty, as long as the widows or widowers live, beginning in 2017. While this would reduce local government tax revenues marginally and an exemption already exists for deceased veterans with a service-connected disability rating of 100 percent unemployability or disability, these exceptions negatively impact local tax bases and each additional one encourages more, adding up to a significant reduction over time. Further, with the ill-conceived Obergefell v. Hodges decision that decoupled the regulation of marriage from the achievement of important state objectives, Louisiana now derives no societal good from granting benefits to anybody in a married state, past or present. No.

Amendment #5 would create the Revenue Stabilization Trust Fund. This would capture mineral revenues in a certain dollar range that now go to the general fund and divert some of that to pay down the roughly $20 billion of unfunded accrued liabilities in Louisiana’s pension funds. The investment earnings of the account where these dollars land lawmakers could appropriate for any purpose, but the principal below $5 billion with supermajorities they only could take out under undefined “emergency” situations, or if above that amount as much as 10 percent could go to infrastructure. In effect, the idea is to grab episodic revenues for long-term purposes rather than leave these eligible for immediate spending.

But the state need not implement such a complicated method. By uncapping the Budget Stabilization Fund, adjusting down the threshold at which mineral revenues go into it, and allowing its investment earnings to go for infrastructure, policy-makers essentially achieve the aims of this amendment. There’s no need to create yet another fund in state government that won’t do anything that already could be done more simply. No.

Amendment #6 would trade off thresholds for tapping discrete legally-defined funds with protecting more of these. It would make easier shifting up to five percent of statutory funds and adds as available one percent of unprotected constitutional funds in the case of a future year forecasted budget deficit to general fund spending. However, it would double about the list of separately protected constitutional funds exempt from any draining in the event of forecasted deficit, and does not apply to current year budget deficits.

While on the surface this might appear to offer greater flexibility to policy-makers, the additional exceptions and that it would not apply to current year deficits in fact creates just a different set of constraints. Comprehensive fiscal reform wiping out most dedicated funding streams would work better. No.

There you have it – just like a baseball pitcher’s perfect inning of work, three up, three down.

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