BATON ROUGE – As they look for solutions to next year’s budget problems, lawmakers are finding themselves boxed in by Gov. Bobby Jindal’s rhetoric and trying to find loopholes.
Even Jindal is looking for technicalities in his positions, so he can claim he isn’t violating his philosophical stances while also identifying ways to fill a budget gap that has reached $1.6 billion next year.
At issue is Jindal’s steadfast refusal to support anything that can be construed as a tax hike by national anti-tax groups who could be helpful if he decides to enter the 2016 presidential race.
The Republican governor has gone so far as to oppose a cigarette tax renewal to keep his purity on the issue of tax increases. He also refuses to scale back tax breaks, unless the money generated is used to lower taxes elsewhere — staying what Jindal calls “revenue neutral.” Otherwise, he says the lessening of tax breaks is akin to a tax hike.
Even if a tax break program is performing poorly, not producing the jobs expected or spending millions with little to show for it, Jindal won’t support reining in the giveaway without an offset somewhere else. And he’s maintained that position as the cost of tax break programs has ballooned by more than $600 million in the last five years.
That strict adherence to “revenue neutral” is a problem for lawmakers and an administration grappling with a $1.6 billion shortfall in the budget year that begins July 1 and trying to find money to keep health care services and colleges from deep slashing.
Though some lawmakers are talking about ways to sidestep Jindal or override a governor’s veto, they’ve rarely shown such willingness to buck the governor, making those ideas a long-shot at best in the legislative session that begins in April.
So now, Jindal and lawmakers are sifting through complicated ways to funnel new dollars to colleges and state programs while letting the governor continue to claim he hasn’t raised taxes — rather than the governor and the Legislature taking a straightforward look at the value of tax breaks the state has had on the books for years.
The most direct proposals include further tuition increases and fee hikes on college students and new user fees for people who rely on the state for services. Other ideas being floated try to reshuffle Louisiana’s tax break spending to help college campuses.
More tax breaks?
For example, the Jindal administration is talking about the possibility of creating tax breaks for businesses that donate directly to public colleges or for parents who will then be asked to spend more on college student fees. The proposals would generate outside financing for campuses, and the state could pay for them by scaling back other tax breaks.
The tax break swaps would meet the governor’s “revenue neutral” requirement, so he wouldn’t have to explain to national political watchers that he was willing to raise taxes or eliminate tax breaks to preserve education programs.
But problems have quickly cropped up, including how to ensure the dollars help campuses equally and arrive in time to avoid cash flow problems.
Cap on credits
One of the more surprising ideas Jindal has raised is a possible cap on certain types of tax credits to keep the state from paying out more than a tax liability.
For tax credits deemed “refundable,” a tax break can exceed the actual taxes a business or person owes. In such instances, the state simply writes a check to cover the cost of the rest of the tax break. A cap would lessen state spending on the programs.
Without any complicated shuffling of funds, this would simply keep more money in the state treasury to close the budget gap.
To make this fit with his anti-tax hike rhetoric, Jindal has found a way to spin the issue away from tax talk entirely. He’s says he views any spending on a tax break above the taxes owed as “an expenditure” and a cap on such tax credits wouldn’t raise anyone’s taxes.
As the legislative session grows ever nearer, the search for workable loopholes continues.