It’s certainly not something anyone has seen in Louisiana for a long, long time. Legislative committees have passed out a slew of bills that would have the overall of effect of raising hundreds of millions of dollars in new tax revenues for the state.
And while, for the most part the bills don’t specifically raise or create new taxes, they do reduce or eliminate a number of existing business tax exemptions and credits. At the same time committees have also advanced bills that would give colleges and universities much greater flexibility to raise student tuition and fees and for the first time ever, the Senate has overwhelmingly approved legislation to put some limits on the TOPS scholarship program.
Suffice it to say, none of this is what people are accustomed to seeing at the Louisiana Legislature. The reason, of course, is the $1.6 billion shortfall the state is facing and the very real threat it’s creating for higher education. And though we’ve faced large shortfalls before, this one is the biggest and it comes at a time when the state has depleted most of the reserves and ideas it’s used in the past to make ends meet.
While nothing is totally set in stone, it seems lawmakers generally want to try to come up with a little more than a billion dollars in “new” revenue, while closing the rest of the gap with additional budget cuts. That’s a pretty tall order, especially when no real plan has yet to emerge.
The fact that committees are passing all these bills isn’t an indication that every one of these tax exemptions will be removed, suspended or even reigned in. But since there isn’t a clear plan in play, it appears lawmakers are trying to give themselves all the options they can bring to bear to try to cobble something together that gets them close to meeting their targets.
Complicating things is the fact that Governor Bobby Jindal has put some pretty hefty restrictions on how they can raise revenue. Basically, he’s saying if they raise any new revenue – such as through a cigarette tax, which is also getting some traction – they have to offset it with some corresponding decrease in state expenditures.
Since certain types of tax credits are seen as expenditures by the state, eliminating some of them accomplishes two things: 1) it reduces the amount of money flowing out of the treasury to pay for the credit, and 2) it creates an opportunity to actually raise a regular tax as long as whatever it brings in doesn’t exceed the spending that is reduced by lowering the credit.
Yes, it’s a totally artificial set of restrictions lawmakers are dealing with and, yes, there are things they can do to get around them. But given statements that continue to come from the governor, he’s ready to go so far as to veto the entire budget if lawmakers break any of the tax “rules” he’s imposed on them.
Of course, government has checks and balances and the Legislature can override a gubernatorial veto with a two-thirds vote. But that would take a certain amount of political will that lawmakers, so far, have not seemed willing to exercise.
In the meantime, the clock ticks, legislators struggle to figure out a plan, businesses wait to see how much their taxes might go up and higher education gets more and more anxious about its uncertain future.
It’s not exactly the best way to run a state, but, like it or not, that’s where we are.