Follow the logic

The Advocate has some really bad news for higher education. As reporter Jordan Blum writes, the Jindal administration has announced another $85 million in budget cuts that must be implemented this year.

And Jindal's commissioner of administration, Angelle Davis, predicts that there may be even more cuts coming because of declining tax revenues.

And why are tax revenues in decline?

One reason, of course, is the national economic crisis. The recession, which economists say is slowly ending, certainly dragged our economy down. But it's not the only reason.

Another reason for our situation is the orgy of tax breaks that two governors and successive legislatures indulged in over the past few years.

Not to sound like a broken record, but the unfortunate decision by lawmakers to curtail the Stelly plan's tax reforms have cost our state hundreds of millions of dollars that could be shoring up higher education right now.

The Stelly plan was done in by demagogues who falsely claimed that it broke a promise by raising taxes on higher income citizens. In actuality, Stelly worked exactly as it was supposed to. By cutting tax rates for the lowest income citizens, abolishing some regressive sales axes and increasing rates on higher-income earners, Stelly gave Louisiana a fairer, more progressive and more sustainable tax system. One, by the way, that significantly reduced our dependence on income from the volatile oil patch.

The best defense of the Stelly plan we've yet heard comes from the author himself, retired Republican Representative Vic Stelly of Lake Charles.

As Stelly wrote in this letter to The Advocate, his plan "provided a slowly growing revenue stream to cover inflation. That’s why the plan would be bringing in more today, eight years after passage, than it did in 2002."

So while Louisiana would certainly be feeling the pinch had we not so foolishly abandoned the most reasonable tax plan to come down the pike in many years, we might not be talking about such breathtaking cuts to our colleges and universities.

Which brings us to the final stop on this logic trail. Even in the face of massive cuts to education, Jindal is adamant about his "no taxes" pledge.

As this article in the Alexandria Town Talk confirms, Jindal will not seek more revenue, "No matter how much sacrifice is involved."

And it looks like higher education will be the sacrificial offering demanded by the gods of fiscal conservatism.

Economist says bring back the Stelly Plan

As LFT President Steve Monaghan pointed out before the current legislative session began...

And as Lt. Governor Mitch Landrieu noted on May 5...

An economics professor and member of Louisiana's Revenue Estimating Conference has now confirmed: The legislature made a serious error last year when it reversed the so-called Stelly Plan tax reforms. And unless they undo that reversal, our state will continue its long, painful slide.

LSU economist Jim Richardson spoke to the Press Club of Baton Rouge yesterday, and as Advocate reporter Michelle Millhollon writes here, he said that last year's massive tax cuts were a mistake.

To briefly recap: the Stelly plan was an effort to make our tax code more progressive and less dependent on the price of oil (as it was in the 1980s, the last time an oil bust ruined our economy).

The Stelly plan reduced sales taxes on food, utilities and prescription drugs because those taxes were disproportionately high for poor people. It lowered income tax rates for the poorest citizens, and raised them slightly for the wealthiest.

But when some of those better-off citizens had to pay a bit more, they ran screaming to the legislature. And because the price of oil last year was over $150 per barrel, lawmakers felt free to ratchet back the Stelly Plan.

Now oil is hovering somewhere around $60 per barrel, and losing the Stelly Plan is costing the state $359 million.

That is why economist Jim Richardson, a member of the state's Revenue Estimating Conference, says that lawmakers should take another look at Stelly and perhaps reinstate its tax rates.

Which could very well be why Speaker of the House Jim Tucker, a Republican and great friend of tax cuts, says he does not believe the Revenue Estimating Conference needs to meet again before the end of the current legislative session.

It is customary for the conference to meet in May, but Tucker, according to this article by Times Picayune bureau chief Robert Travis Scott, does not want a meeting in which Richardson could express his views.

Tucker and Richardson are two of the three conference members; the third, Senate President Joel Chaisson, a Democrat, says he believes the conference should meet.

Advocate editorial hits Stelly repeal

The Advocate gets it exactly right in this editorial. When the legislature overturned the tax reforms in the Stelly plan, the stage was set for the fiscal crisis facing Louisiana today.

Problem is, that's pretty much water under the bridge. The Stelly reforms have been so thoroughly poisoned by political opportunists that bringing up the subject is close to pointless.

But there is a gold mine of information in the Budget Project report that can move the debate beyond Stelly. More than 440 tax expenditures - those are tax revenues that are spent on various rebates and tax incentives - cost the state some $7 billion a year.

No doubt, many of those breaks are valuable and necessary. But repealing just a fraction of them would solve our budget woes.

When shills for big business claim that Louisiana has the highest business taxes in the nation, they are right. But thanks to the myriad exemptions, most businesses don't pay those taxes.

Next year's legislative session will be fiscal. Now is the time to open the discussion on Louisiana's hidden budget, and to question the list of tax breaks offered up by the state.

Fooling the people

When Abe Lincoln said the thing about how you can fool all of the people some of the time, he might have had the Louisiana legislature in mind. During the last session, not one of the solons voted against an ill-conceived bill that abolished most of the reforms adopted by voters in 2000.

Yes, we’re talking about the Stelly plan, which lowered sales taxes on food and prescription drugs in exchange for higher income tax rates on wealthier citizens. It was viewed at the time as a good step toward making our tax system fairer and reducing our dependence on petroleum revenues. But when it started to work as planned, the demagoguery began.

Last year, while we were flush with oil money and hurricane reconstruction funds, the anti-tax crowd bullied lawmakers into turning back the Stelly reforms. Now, with petroleum in the tank and reconstruction money almost exhausted, the state budget is facing a huge shortfall.

But at least the average citizen has more of his own money to spend, according to the zealots who frothed against Stelly. Said one, "I think taxpayers can rejoice. For once, we've done something about cutting taxes. This time, the people get it back."

Not so fast. As Gannett reporter Mike Hasten notes in this article, the new tax structure does very little for most citizens. Joint filers with incomes of $50,000 or less get nothing back. For joint filers at $81,000, the payoff is $355. The maximum benefit of $1,000 doesn’t kick in for joint filers unless their income is $161,000 or more.

In return, we get bad roads, crumbling schools, a disappearing coastline, inadequate health care, polluted air and a moribund economy.

Post-holiday catch up edition

Much has happened during the short Easter break. The legislature is back in session, but unlike previous years, the opening was marked by dissension.

Leadership issues: Because former Speaker Pro Tem Karen Carter Peterson was elected to the Senate, the House had to choose a new pro tem. Normally, that's not a big deal. The guys gather in a back room, agree with the governor's pick for the post, and hold an election to make it official.

But as Times-Picayune reporter Ed Anderson writes here, this year there were actually two candidates: Independent Joel Robideaux of Lafayette, who had the nod from Speaker of the House Jim Tucker, and Democrat Noble Ellington of Winnsboro. Surprisingly, Ellington came within a handful of votes of beating Robideaux.

Retribution from Speaker Tucker was swift and harsh, as reported here by the Picayune's Jan Moller. Ellington and some of his supporters lost plum committee assignments, and Ellington was threatened with the loss of his digs at the prestigious Pentagon Barracks near the capitol.

Jindal losing his luster? A poll from LSU's Public Policy Research Lab revealed that Governor Jindal's direction for the state may no longer be supported by a majority of residents.

As reported here by Advocate bureau chief Mark Ballard, a solid majority oppose the governor's rigid opposition to taxes in the face of the state's economic crisis, and 51% say the repeal of the Stelly tax reforms was a mistake "because it cost state revenue and contributed to the current budget shortfall." Nearly 60% say the Stelly reforms should be reinstated.

College shake-up in the works? Higher education in Louisiana probably won't look the same after this legislative session. As Bill Barrow of The Advocate reports here, several plans are floating around the capitol that would restructure governance of colleges and universities. The most drastic would replace the state's four college boards with one 15-member board of trustees.








http://www.nola.com/news/t-p/capital/index.ssf?/base/news-7/127059361068810.xml&coll=1 college shakeup

http://www.2theadvocate.com/news/89752752.html Jindal plan unpopular

Looking back, looking ahead

As Times-Picayune reporter Jan Moller puts it in this article, Gov. Bobby Jindal was at the center of a whirlwind in the first year of his term:

Since taking office a year ago this week, Bobby Jindal presided over three legislative sessions, weathered two major hurricanes, was courted to run for vice president on the Republican ticket and endured the public furor that ensued when the Legislature voted to more than double its take-home pay.

The part about the legislature and the pay raise wasn't the lowest point in Jindal's first year (although that is probably the bit that will make his relationship with lawmakers the most difficult in the coming session).

The worst was his support for the orgy of tax breaks that left our state vulnerable to the economic collapse now looming. After voters decided in 2000 to make our tax code a bit more progressive and less dependent on the petroleum industry, Jindal willingly gave in to the demagogues and helped undo the reforms of the Stelly plan.

Interviewing LFT President Steve Monaghan for the story, Moller came away with this nugget:

Monaghan faulted Jindal and the Legislature for repealing the 2002 "Stelly" income-tax increase, which will cost the state an estimated $360 million next year. Combined with other tax cuts ushered through by Jindal, the move will exacerbate the budget shortfall and will make it harder to finance public education, Monaghan said.

"All of these tax credits went hastily through the process when
Louisiana looked at itself as being flush," Monaghan said. "Now we're looking at the state in the position that perhaps it wouldn't have had to be in if it hadn't been so cavalier with its resources."

Stelly plan: told ya so

The chickens come home to roost. As has been pointed out umpteen times by EdLog, Governor Jindal and the legislature drove the ship of state into disastrous straits by undoing the Stelly tax reforms of 2002.

We now know that one victim of the tax cut fever that swept Baton Rouge in the past few years is our flagship university, which is about to be downsized to a dinghy.

As reported here by LSU Reveille reporter Xerxes A. Wilson, some 25,000 people have signed a petition "demanding state tax reform and constitutional change."

English instructor Tania Nyman told a rally over the weekend, “Gov. Jindal claims we must suffer this devastation as we tighten our belts in these tough economic times. But we know these cuts are not a result of the downturn in the economy. We know these cuts are a result of the governor and legislature’s decision to repeal tax reforms the people of Louisiana voted for almost 10 years ago.”

Some 400 non-tenured instructors at LSU have received termination letters, mirroring similar cuts at other state colleges and universities. Programs and even whole departments are on the line, at the same time that our so-called "leaders" hypocritically claim that education is Louisiana's hope for a better future.

Landrieu: Maybe all those tax cuts weren't such a great idea

With the state teetering on the brink of fiscal disaster, Lt. Governor Mitch Landrieu delivered a much-needed dose of reality to members of the Press Club of Baton Rouge on Monday.

Landrieu told the press that if the state remains on its current track, this year's $1.3 billion deficit could grow to as much as $6 billion within three years. Because the state cannot adopt a deficit budget, we would have to endure cuts much more drastic than those under consideration now.

As Advocate reporter Sarah Chacko writes here, Landrieu said lawmakers should reconsider last year's elimination of the Stelly plan reforms. Those changes to the tax code slightly increased income taxes for upper income citizens. As a tradeoff, our dependence on the price of oil was finally abated.

Last year, state finances seemed rock-solid, so lawmakers repealed the Stelly plan. But with the national economy in recession and the price of oil less than half of what it was just a year ago, the move no longer seems very smart at all. The $359 million surrendered by lawmakers last year could certainly be used now.

Another fine mess

Comic Oliver Hardy ended any number of the classic short films he made with partner Stan Laurel with the line: "This is another fine mess you've gotten us into."

The comment comes to mind after reading the last line of this Advocate editorial about how the state got into the sorry economic mess we're facing.

It was the questionable actions of our so-called "leaders" that made Louisiana's mess worse than it ought to be. By reversing the reforms embodied in the 2002 Stelly plan, they made the current situation inevitable. As the Advocate puts it:

When the Legislature was flush with money, just two short years ago, the
warning signs were already out: Record-high oil prices and hurricane-recovery
revenues would not last forever. But the temptation was too great, and lawmakers
under Govs. Kathleen Blanco and Bobby Jindal drastically cut state income
taxes.

Now, the Gray Lady of Baton Rouge says, it's time to fix the mess. If not, it will get worse because federal tax changes could cost Louisiana another $200 million per year in lost revenues.

The problem is, any fix will require our wealthier citizens to pony up a bit more, and they are the same ones who pitched such a fit over the Stelly reforms. We could see the coming of another fine mess they're getting us into.

Bad choices land Louisiana in a crisis

As LFT President Steve Monaghan pointed out at the Black Monday press conference, much of Louisiana's current fiscal crisis is a result of choices made by our leaders over the past several years.

Billions of dollars worth of tax cuts were granted while the price of oil kept rising. Lawmakers undid the Stelly reforms which, for the first time, had freed us from dependency on the petroleum market.

Then came the double whammy. The national recession hurt us, but the damage was compounded by the collapse of oil. Just as in the 1980's (have we learned nothing?), we were left with gaping budget holes and dwindling revenue streams to fill them.

And things aren't getting any better in Baton Rouge: true tales from the legislature

Example one: On Monday, a bill that would tie the state gasoline tax to the inflation rate was aborted with the help of the Jindal administration. The bill, sponsored by Republican Hollis Downs of Ruston, was a good-faith effort to chip away at our $14 billion backlog of road and bridge repairs.

According to this article by Advocate reporter Marsha Shuler, Jindal advisor Chris Gillot brought the governor's anti-tax message to the committee. When asked just what plans the administration has to deal with road construction, Gillot admitted that there is no plan.

Downs voluntarily deferred his bill, so that it may be resurrected later in the session. As a parting shot at Jindal's ideological dogmatism, Downs said, “I call on leadership to step forward and be leaders, not just philosophers.”

Example two: The governor led the charge against Rep. Karen Carter-Peterson's (D-New Orleans) failed effort to raise the cigarette tax. The two-fold benefit of the tax: it would have reduced smoking and it would have enabled the state to gain hundreds of millions of federal health-care dollars (remember that health care is one of the areas slated to be slashed by the governor's budget).

As blogger Stephen Sabludowski reports here, that led another Republican, Ways and Means Committee Chairman Hunter Greene of Baton Rouge, to blast the governor for once again valuing ideology over reality. Greene's request for suggestions about how to curb the state's smoking habit was answered with the simple statement that the governor opposes taxes.

Capitol insiders mostly agree that the governor's presidential aspirations motivate his insistence on tax cuts. For a critical segment of his political party, tax cuts are a litmus test. But for a state floundering on the brink of disaster, leadership requires thinking beyond the narrow interests of the political base. As Rep. Downs put it, the governor needs to exercise leadership that transcends political philosophy

Senator: Raise taxes for education

Senator Ben Nevers, the Bogalusa Democrat who chairs the Senate Education Committee, took a brave stand at the Baton Rouge Press Club meeting on Monday, saying that the state must find more money for education or else “the dismantling of education will be the coffin that we bury Louisiana in for decades to come.”

Sen. Nevers suggested a temporary reinstatement of the Stelly plan, which would raise income taxes on the highest earners in the state, and taking a look at the billions of dollars in tax breaks and loopholes that the state offers to big business.

LFT President Steve Monaghan, who joined Sen. Nevers at the luncheon, said “The senator is taking a brave and principled stand. While some are saying that we must make do with less, Sen. Nevers understands the long-term harm that more cuts to education will cause our state.”

Read the full story here.