Jindal’s tax breaks another example of bad choices

This Louisiana Federation of Teachers press release is featured in Bayou Buzz.

(Baton Rouge – February 17, 2011) Governor Bobby Jindal’s announcement that he will seek even more tax breaks, adding to the more than 440 already in place, is an example of the poor choices that have contributed to Louisiana's current fiscal crisis, Louisiana Federation of Teachers President Steve Monaghan said today.

“Just one day after announcing that education funding will be frozen for another year, the governor now says that he wants to add to the more than $7 billion in tax loopholes that are starving the services Louisiana families depend on,” said Monaghan.

“We understand that leadership involves making choices,” Monaghan said. “However, we do not understand the wisdom governing the choice to freeze education funding one day and to choose to expand tax breaks the next.”

The LFT president said the governor and legislature should refrain from extending tax incentives or starting new ones until their effect on the economy and Louisiana communities is understood.

“Last year, the legislature passed bills asking for a thorough review of the 441 tax incentives currently offered by the State of Louisiana,” Monaghan said. “Lawmakers said they want to know how effective the incentives are. Do they attract jobs and grow the economy, or do they add to the bottom line of giant corporations at the expense of health care, education and the quality of life in our state?

“So far, there have been no hearings, and no reports filed on the effect these tax breaks have on our economy,” Monaghan said. “In his statement yesterday, the governor stated that he does not know how much this new round of tax loopholes will cost the state.

“But we already know some of the cost of the current policy. A number of school districts have already declared fiscal exigency, and school districts around the state have announced or are discussing layoffs of teachers and school employees. Access to health care is shrinking. Whole disciplines are being eliminated from our colleges and universities.”

More cuts to vital services and programs are anticipated this year. Lawmakers will enter the legislative session on April 25 facing a $1.6 billion shortfall.

“At the very least, if our teachers, our schools, and our children are asked by our Governor to do more with less, our governor should say ‘no’ to tax breaks are until we know if these breaks or helping or hurting the state.”

Connecting the tax loophole dots

On Tuesday, Gov. Bobby Jindal announced that he will freeze spending for K-12 education for a third straight year.

On Wednesday, Gov. Jindal announced yet more tax breaks for big business in the state.

Also this week, it was reported that teacher layoffs are "imminent" in Livingston Parish. They're not alone. School districts around the state considering layoffs reportedly include Jefferson, Tangipahoa, East Baton Rouge, Webster, St. Martin and others.

Connecting the dots, it's easy to see where our leaders' priorities lie and where their choices are taking us.

Better choices can be made. We don't have to provide even more tax loopholes without, as the governor admits, even knowing how much they will cost the state.

How bad can it get?

How bad can things get for public education in Louisiana? As the old song says, “You ain’t seen nothing yet.”

On Monday, the Senate Finance committee killed any hope of increasing funds for public schools when it refused to increase public education’s Minimum Foundation Program by the traditional 2.75%.

Then on Tuesday, the state’s Revenue Estimating Conference revealed that we face yet another shortfall of perhaps as much as $100 million this year. That’s on top of the $319 million budget hole already confronting lawmakers as they struggle to balance the state ledger.

Anticipating a dark economic future, school boards around Louisiana are announcing Reductions in Force. In plain English, that means they are firing teachers and school employees.

The state has a “rainy day fund” that should be tapped to help stave off the growing crisis. But a deep and profound disagreement between the Senate and House of Representatives is keeping that fund off-limits.

Both Senate President Joel Chaisson (D-Destrehan) and Speaker of the House Jim Tucker (R-Terrytown) say they are willing to withdraw $198 million from the fund to help plug the budget hole. They have very different opinions about how and when the fund should be paid back, and that is stalling any movement on the issue.

Sen. Chaisson says the law allows the state to repay the rainy day fund when state revenues reach the peak of the post-Katrina economy of 2008. Rep. Tucker says the state must repay the rainy day fund next year, using revenues from a tax amnesty program.

If Rep. Tucker prevails, it means the rainy day fund cannot be tapped again next year, when another budget deficit is already projected. According to Sen. Chaisson, Rep. Tucker’s plan is therefore “absolutely pointless.”

The Revenue Estimating Conference must certify that rainy day funds are available for use. But decisions by the Conference must be unanimous. Both Sen. Chaisson and Rep. Tucker are Conference members, and until they come to an agreement, there will be no movement to fix the budget.

What are we to make of this awful situation?

LFT President Steve Monaghan says state leaders simply are not focused on the real issues.
“There is mounting evidence that this session is all about things that it should not be about, and is not facing the real issues,” says Monaghan. “They should be focused on the fiscal crisis, not just for teachers and school employees, but for all the citizens of Louisiana.”

For certain, this is a case of chickens coming home to roost. When the state seemed to be in good economic shape, lawmakers and governors doled out hundreds of millions of dollars in unnecessary and unwise tax giveaways to corporations and high-income earners. Anti-tax demagogues rolled over anyone who questioned the wisdom of severely reducing state revenues.

And as bad as the situation is now, the governor and legislature still refuse to consider any revenue measures. The mantra of the Jindal administration is “we must do more with less.”

The sad truth is, you can’t do more with less. You can only do less with less. Until the administration and legislature come to grips with that reality, Louisiana faces a bleak future indeed.

Strange bedfellows

What idea can be so bad that it brings together such disparate groups as the Louisiana Federation of Teachers, Louisiana Association of Business and Industry, Council for a Better Louisiana and the City of New Orleans?

You can read the answer in this editorial in today's Shreveport Times. Here's a hint: it's increasing the homestead exemption.

Leges look at property taxes

On the same day that Lt. Gov. Mitch Landrieu told the Press Club of Baton Rouge that the state economy is on the brink of disaster because of overly generous tax cuts, a legislative committee began consideration of more tax cuts that could devastate local governments.

As Robert Travis Scott of the Times-Picayune reports here, the House Ways and Means Committee is looking at some 28 plans that would affect property taxes. Since there is no state property tax, these bills would only have an impact on local governments such as school boards.

Gov. Bobby Jindal supports at least some of the property tax cuts, which would increase the homestead exemption for home owners. That puts him at odds with some of his loyal supporters, the big businesses represented by the Louisiana Association of Business and Industry. LABI is concerned that local governments would increase taxes on business if revenue from homeowners falls.

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

Lawmaker suggests that we pay for public services

A Republican state representative from St. Tammany Parish has mentioned the unmentionable: perhaps we need some kind of realistic tax base to pay for the services we expect from government.

Other lawmakers are fighting to see who can bring the biggest tax cuts to the legislature, and Gov. Bobby Jindal swears that he will veto any new taxes. But Rep. Kevin Pearson (R-Slidell) is swimming against that current. He believes we have to pay for what we want government to provide.

Under Pearson's proposal, homeowners would still have a generous tax exemption. He'd like the first $10,000 of a home's assessed value to be taxed, and the next $75,000 to be exempt.

The problem, Pearson told New Orleans CityBusiness for this article, is that the actual tax burden in Louisiana is not spread around enough. Fifty percent of the property in the state is untaxed, piling the cost of state services on a relatively small population:

"The homestead exemption, while attractive to potential homebuyers, has
drastically cut necessary funding for our local taxing bodies," he said.
“This bill is not about taxes. It’s about education. It’s about
fire protection. It’s about law enforcement. And it’s about economic
development. Every community will benefit from this measure.”

Pearson's proposal would require a constitutional amendment. That means he will have to get two-thirds of the House and Senate to agree, and then win a vote of the people. As he told CityBusiness, “I have no illusions that this will be an easy bill to sell.”

Pearson will talk about his plan at a public forum on April 6 at 6:00 P.M. in the Slidell Municipal Auditorium

When your only tool is a hammer, every problem looks like a nail

Last year, the Louisiana Legislature and Gov. Bobby Jindal handed out tax cuts that amounted to hundreds of millions of dollars. Now, partly as a result of their largess, the state is facing a budget deficit that could reach well over $1 billion.

Lawmakers' response to the crisis? Cut taxes.

As Gannett's Mike Hasten reports here, of the nine bills prefiled thus far for the session that begins in April, seven are either tax cuts or tax credits.