Eleven different tax bills that would raise a total of $615 million next year sailed out of a state Senate committee Monday, in the Legislature’s latest step toward ending a fiscal crisis that threatens to impose deep spending cuts that would devastate public colleges and universities and health care.
But legislative leaders still don’t have a clear idea of how to reach their ultimate goal: raising enough revenue to prevent the deep cuts without running afoul of Gov. Bobby Jindal’s no-tax-increase pledge.
The bills approved unanimously Monday by the Senate Revenue and Fiscal Affairs Committee ratified the tax package approved by the full House on May 7.
Its next stop is the Senate Finance Committee, next week at the earliest, before moving on to the Senate floor.
The measures would raise the state cigarette tax by 32 cents per pack, scale back tax subsidies for the film and solar energy industries and trim a number of tax breaks that allow businesses to reduce their tax liabilities and even get tax rebates from the state.
Monday’s votes reflect lawmakers’ conclusion that they have to make businesses pay more to prevent the cuts to higher education institutions and health care, as they seek to fill a projected $1.6 billion budget deficit next year.
Lawmakers say they don’t want spending cuts to account for more than $600 million of the $1.6 billion. With the $615 million approved so far and another $75 million certified last week in higher tax collections, lawmakers say they need another $300 million or so.
How they will get it is not clear.
“There are only two ways to do it,” Senate President John Alario, R-Westwego, said after Monday’s committee votes. “You either cut programs or find new sources of revenue.”
That has put lawmakers in a quandary because they don’t want to raise more taxes or cut spending for the higher education institutions or for the nursing homes, the developmentally disabled, the working poor without health insurance or the public hospitals now under private management.
The House on Thursday is scheduled to approve its version of next year’s budget. In its current form, the House is giving all $615 million in new money to the higher education institutions so they will have as much state aid next year as they are getting this year.
But doing so means shorting health care, not meeting the enrollment growth in the state’s K-12 public education system and not funding an array of other government programs, including some state parks and museums. That adds up to the $300 million or so.
Nor is it clear how lawmakers will raise enough new money while at the same time meeting Jindal’s tax guidelines, which were established by Americans for Tax Reform, a Washington, D.C.-based lobby group that is influential in Republican Party politics.
Legislators have taken to saying that meeting ATR’s guidelines requires them to stay within the governor’s “swim lanes.” To do that, every dollar they raise in taxes has to be offset by what ATR defines as a tax decrease.
Four of the tax bills approved by Revenue and Fiscal Affairs on Monday would raise $515 million, meaning lawmakers would have to find $515 million of offsetting tax decreases.
“That’s the toughest part of the job, staying within the swim lanes the governor has established,” Alario said. “We won’t have accomplished a lot if the governor vetoes the budget bill.”
Staying within those swim lanes led Revenue and Fiscal Affairs to approve Senate Bill 223, by state Sen. Jack Donahue, R-Mandeville, which would create the SAVE fund.
In a convoluted deal, lawmakers would direct new tax money into the fund while asking the higher education institutions to impose a new fee on students that the students wouldn’t actually have to pay through the creation of a tax credit equal to the amount of the new fee. Through this maneuver, lawmakers could offset some of the tax increases.
The need to create another offset is behind the push for House Bill 828, which would phase out or repeal the corporate franchise tax. The Ways and Means Committee on Tuesday will hear HB828, which is sponsored by Rep. Cameron Henry, R-Metairie.
Lawmakers would create the tax offset by accelerating the tax reduction for business while pushing back into later years the hit to the state treasury.
Businesses like the proposal because it would allow them to negate at least some of the higher tax burden they would have to pay under the measures approved by Revenue and Fiscal Affairs on Monday and the House earlier.
Three measures were sponsored by Rep. Katrina Jackson, D-Monroe, and they would slice a variety of corporate income and franchise tax breaks by 20 percent. Altogether, House Bills 624, 629 and 635 would raise about $410 million next year.
The committee also approved House Concurrent Resolution 8, by Rep. Jack Montoucet, D-Crowley, that would reinstitute 1 cent of the tax exemption that businesses receive on their utility bills. His bill would raise $103 million and would be on the books for only 16 months.
“This is just a temporary stoppage,” Montoucet told the committee members.
Business lobbies made a tactical decision not to testify against the bills that would make them pay more.
“Everyone knows of our opposition,” said Stephen Waguespack, president of the Louisiana Association of Business and Industry, the state’s most powerful business lobby. “It was obvious that the committee wants to have more of a debate before the Senate Finance Committee.”
The measure that generated the most discussion Monday, House Bill 829, would cap Louisiana’s film tax credit at $200 million per year and $30 million per project.
The Public Affairs Council of Louisiana Research, a Baton Rouge-based think tank, is the latest group to question the program’s benefits.
The state awarded $226 million in tax credits last year, so a $200 million cap — which was opposed by several industry supporters — would cause the program to be scaled back.
The $200 million per year might not save the state any money next year because film makers have qualified for hundreds of millions of tax credits in past years that they haven’t cashed in. The savings would come in later years. But the cap would harm immediately an industry that has made Louisiana one of the favorite states for filming movies, said Will French, who is president of the Louisiana Film Entertainment Association.
Several film industry officials testified in support of the bill because, they said, it would direct more of the incentives to Louisiana-based filmmakers.
“This bill will go a long way for indie filmmakers,” said David DuBos, who is president of MTH Productions, which is based in New Orleans.
The committee also approved House Bill 779, by state Rep. Erich Ponti, R-Baton Rouge, which would impose a $10 million per year cap on the amount of tax credits for installing solar energy systems through leasing.
The bill would impose the cap retroactively as of Jan. 1. That would penalize hundreds of families that have already leased a system this year expecting to qualify for the state’s tax credits, said Beth Galante, an executive at Metairie-based PosiGen, a solar energy company.
Ponti’s bill would shave $15 million off the $63 million the tax credit program cost last year.
Under a 2013 agreement, even without Ponti’s bill, the solar tax credits are scheduled to disappear by the end of 2017.
Follow Tyler Bridges on Twitter, @TegBridges. For more coverage of the state capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog/.