Update: Jindal considers tax break change to help colleges

BATON ROUGE To offset steep higher-education cuts next year, Gov. Bobby Jindal’s administration is considering ways to reshuffle Louisiana’s spending on tax- break programs to steer more dollars to college campuses.

Ideas being discussed include the creation of new 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 new outside financing for the campuses, and the state could pay for them by scaling back other tax-break programs.

Jindal’s chief budget adviser, Commissioner of Administration Kristy Nichols, described the ideas Wednesday as under consideration as the state grapples with a $1.6 billion budget shortfall in the fiscal year that begins July 1.

Colleges could face reductions in state financing next year of up to $400 million to balance the budget, cuts that higher-education leaders say would devastate campuses and could shutter some entirely.

Lawmakers and the Jindal administration are trying to find ways to lessen the impact, but the Republican governor has said the proposals have to be “revenue neutral,” so if a tax break is scaled back in one place, a tax cut has to be made elsewhere.

The higher-education tax breaks would meet that requirement, though House Ways and Means Committee Chairman Joel Robideaux said the logistics of structuring the tax credits to make sure the dollars flow evenly to campuses would be difficult.

Jindal also said Wednesday that he would be willing to consider a 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.

Jindal suggested he views any spending on a tax break above the taxes owed as “an expenditure,” a loophole that could get him around his self-imposed “revenue neutral” limitation. He said capping such tax credits wouldn’t raise anyone’s taxes.

Nichols explained the rationale: “It is an expenditure that the state incurs above and beyond the existing tax liability, and to that extent is considered a state expenditure, not a pure tax liability.”

The administration, however, didn’t have estimates of how much new money such a cap could generate for the state, if approved by lawmakers.

Jindal’s budget proposal for the upcoming 2015-16 fiscal year is due to lawmakers Feb. 27. Nichols warned that even with the ideas being considered, substantial cuts will be included.

“We’re going to have cuts. That’s going to be part of the long-term solution for closing the gap,” she said.

Robideaux, R-Lafayette, said legislative leaders haven’t come up with a specific plan of their own and instead seem to be waiting to see what Jindal proposes. Meanwhile, he said legislative staff is drawing up a list of ways to generate new money for the budget.

He added: “Right now, we’re a long way from having this solved.”