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Tax, budget process reforms loom over Louisiana legislature

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January 31, 2013

Louisiana

By Phil Sletten

BATON ROUGE, Louisiana: Louisiana lawmakers and media are already discussing the upcoming legislation for this spring's session. The session, which is set to begin on April 8, will likely feature two major debates with long-lasting impacts on Louisiana's budgetary future. The Louisiana State Legislature could tackle the state's tax structure in a substantial manner, and may also find ways to reform the budget process.[1][2]

The first debate, initiated by Governor Bobby Jindal (R), focuses on tax revenues and reforms. Jindal proposed eliminating the personal and corporate income taxes levied by the state, and making up for the lost revenue through increased sales taxes, in an effort to spur economic growth and job creation. This proposal has garnered national attention and led to much political speculation in Louisiana, both about the policy reforms themselves and implications for Governor Jindal's political future.[3][4]

The Jindal administration has not offered many details about the new taxes, which has lead to considerable speculation and unease among state legislators. The administration has stated that it is still meeting with state legislators and will have a full plan together for the start of the session on April 8.[5] Legislators have reported mixed feelings from constituents, but most have expressed interest in simplifying the tax code in some manner. Some Democrats, including Representatives Roy Burrell and Herbert Dixon, have expressed concern over the regressivity of switching to sales taxes.[6] The Institute for Taxation and Economic Policy released an analysis of the basic proposal that indicated eliminating personal and corporate income taxes and raising sales taxes would increase taxes on approximately 80 percent of Louisiana citizens, leaving the top 20 percent of income earners with a lower effective tax rate.[7] This report, alongside concerns that the plan would be especially hard on retirees, has contributed to the wariness of legislators toward the plan.[8] Some Republicans, including Representatives Stuart Bishop and Chris Hazel, support the broad concepts but have indicated that the details of the proposal will determine whether or not they support it in April. Others, including State Senators Neil Riser and Page Cortez, expressed concern over the proposals impact on revenues and the subsequent changes in service provision.[6][4] However, the group Americans for Tax Reform has come out in support of the plan.[9]

Other governors around the country have followed Jindal's lead. Nebraska Governor Dave Heineman (R) has also proposed eliminating Nebraska's personal and corporate income taxes in favor of sales tax increases, and Kansas Governor Sam Brownback (R) pushed for further cuts to state income taxes and the retention of temporary sales taxes in an effort to phase out income taxes entirely.[10] Republican governors in Virginia, Ohio, Idaho, New Mexico and Florida have also recently proposed policies to cut income taxes, gasoline taxes, or business taxes and, in many cases, replace the lost revenue with sales tax increases. Alaska was the last state to phase out its income tax entirely, a task completed 33 years ago, and Oklahoma Governor Mary Fallin's attempt to phase out the state income tax did not pass the Oklahoma State Legislature.[11] Without details, some Louisiana political insiders suggest that Governor Bobby Jindal's proposals could suffer a similar fate.[12]

The second major issue that the legislature may face centers on proposals to reform the budget-making process in Louisiana. Governor Jindal and significant portions of the State Legislature have had significant and high-profile legal disagreements over the handling of the budget process and the unilateral actions by the governor's office. These disagreement have added fuel to discontent over the actions of the administration regarding expenditures, including the privatization of five public hospitals, changes to the state pension system, ending state university involvement in a truancy program, and proposals to cut money for hospice services.[13][14][15][16]

A group of legislators known as the "fiscal hawks," who have spearheaded the Louisiana Budget Reform Campaign, have proposed a package of changes to alter the state's budgeting process. The broad outlines of the proposal, which suggest some changes to the Louisiana Constitution, would limit the ability of legislators to procrastinate on budget work and constrain the use of one-time sources of revenue to balance the state budget.[17]

The proposals focus on reinforcing sound budgeting practices and would require the use official revenue estimates from sources recognized by the Revenue Estimating Conference, more checks on efforts to make cuts to state education and health care funding, and a five-day long-period between the end of a legislative session and the passage of a budget.[18] Specifically, the proposals would require the submission of two spending bills to the legislature during budgets that may require cuts to education and health care, with one spending bill including all of the non-discretionary spending and the other including programs that could be easily altered by legislators. The proposal would also require the Revenue Estimating Conference to identify which sources of revenue were one-time sources and which ones could be considered recurring or sustainable sources.[19]

Legislators supporting the proposal recognize that these plans may not easily pass, esepcialyl the changes to the Louisiana Constitution. These changes would require a two-thirds vote in the legislature and approval by the people at the ballot box to take effect.[18]

"We’re going to get heard. The question is can we get passed," said Representative Brett Geymann (R), who leads the Budget Reform Campaign. "Its not going to be an easy thing, but it's going to be the right thing and it's certainly what we heard from the people."[18][19]

See also

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References

  1. The Daily Comet, "Governor’s income tax plan likely to dominate session," January 21, 2013
  2. The Advocate, "‘Fiscal hawks’ seek changes to budget process," January 30, 2013
  3. The Washington Post, "Don't look now but the 2016 race is already underway," January 17, 2013
  4. 4.0 4.1 The Lens, "Few details so far on how Jindal would pay for income tax cut," January 18, 2013
  5. Christian Science Monitor, "Will your state taxes go up? How legislatures are leaning," January 29, 2013
  6. 6.0 6.1 Gannett Louisiana, "With few details shared, Louisiana lawmakers shrug at questions about tax plan," January 28, 2013
  7. Institute for Taxation and Economic Policy, "Proposal to Eliminate Income Taxes Amounts to a Tax Increase on Bottom 80 Percent of Louisianans," January 2013
  8. The Advocate, "Critics say tax plan would hit retirees," accessed January 25, 2013
  9. Americans for Tax Reform, "ATR Supports Gov. Jindal's Tax Reform Proposal," January 15, 2013
  10. The Times-Picayune, "GOP governors join Jindal in going after state income taxes," accessed January 16, 2013
  11. USA Today, "GOP governors seek to reshape taxes," January 13, 2013
  12. The National Review, "Jindal’s Bold Tax Reform," January 23, 2013
  13. Atlanta Journal-Constitution blog post, "In Louisiana, Jindal slashes aid to the dying" January 23, 2013
  14. Associated Press, "Jindal administration announces fifth public hospital takeover," January 19, 2013
  15. Associated Press, "Louisiana budget cuts block anti-truancy effort," January 24, 2013
  16. Associated Press, "Gov. Jindal’s achievements overturned," January 29, 2013
  17. Associated Press, "Lawmakers propose restructuring Louisiana budget process," January 29, 2013
  18. 18.0 18.1 18.2 The Advocate, "‘Fiscal hawks’ seek changes to budget process," January 30, 2013
  19. 19.0 19.1 The Times-Picayune, "Louisiana budget critics unveil legislative package," January 29, 2013