The $24.3 billion budget bill passed last week by the Louisiana House is about $163 million short, the Jindal administration told state senators who gathered on Memorial Day to take a first look at the state spending plan for next year.
That shortfall can be handled as the Senate tackles the legislation detailing how state government will spend taxpayer dollars for the fiscal year beginning July 1, Senate Finance Chairman Jack Donahue said in an interview after taking the first official look at the operating budget proposal.
Of more immediate concern is what to do about the 11 tax bills on which House Bill 1 relies.
Budget season began with lawmakers having to sort out a $1.6 billion deficit. But a series of bills that raise revenue along with some good luck as the economy improved and a potpourri of financing ideas closed about $860 million of that gap; spending cuts closed the rest.
The House’s version of the budget staved off draconian cuts in state support for colleges and universities while funding public elementary, middle and high schools along with some health care programs.
Not included in House Bill 1 is enough money to fully fund the charity hospitals that the poor and uninsured use, as well as covering a lot of the costs for the LSU medical schools in New Orleans and Shreveport.
Commissioner of Administration Kristy Nichols summarized the list of goals set by House leaders that went unfunded.
Depending on the Senate’s spending priorities, the budget proposal comes in about $155 million short of balanced, with an additional $8 million also needed to close out the budget year that ends June 30.
After the briefing, Donahue pointed out that most of those dollars were included in the House’s budget proposal, contingent upon the state Senate raising the money necessary.
Donahue views it as a wish list, more of a statement of how the House would like to see any new-found monies spent. “It’s not an obligation on our part,” he said.
His first focus has to be on the House-passed revenue-raising measures that generate about $615 million on which the budget proposal relies.
The House passed a bill that would increase the tax on a pack of cigarettes along with 10 other measures that adjust various tax breaks, including those for motion picture investors and solar energy systems. Those measures are pending in his Senate Finance Committee.
The business community views all the legislation rolling back tax exceptions, exemptions, rebates, deductions and credits as nothing more than tax increases on businesses. And Gov. Bobby Jindal has indicated that he too generally opposes the ideas.
But Donahue said Jindal’s opposition to individual revenue-raising bills may not translate into vetoes if the total amount raised by the tax increases is offset by the same total amount of decreases in other taxes.
Jindal insists that Louisiana’s budget must be balanced following the “revenue neutral” guidelines set by anti-tax crusader Grover Norquist’s Americans for Tax Reform, the Washington, D.C.-based group so influential in national Republican politics.
“From what I understand,” Donahue said, “it’s going to be a more wholesale approach to revenues raised and how many dollars have been given back.”
Standing nearby was state Revenue Department Secretary Tim Barfield, who said the aggregate balance between the total tax increases and total tax decreases will be calculated over a five-year period.
“It’s OK to have some things front-loaded” or raising more revenue in the early years, Barfield said. “We’ve had some real finite discussions, particularly with Sen. Donahue and others, now that these bills are coming over (from the House), on what we are looking for in terms of that offset.”
A handful of bills are in process that could be used to balance the tax increases, he said. The two largest tax decrease measures would be House Bill 828, by Rep. Cameron Henry, R-Jefferson, to phase out the corporate franchise tax, and Donahue’s Senate Bill 284, which would create a Student Assessment for a Valuable Education, or SAVE, credit program for higher education.
Henry’s HB828 is scheduled for debate by the full House on Thursday.
Donahue’s SB284 was debated Monday evening when the full Senate convened. (The House took the day off.)
The plan in SB284 would have no impact on students or their parents, but a fee would be included on the bills of the state’s 220,000 students in colleges and universities. Students would never pay the fee but would assign a refundable tax credit to the university, which would then bill the state for the amount.
“Isn’t there a simpler way?” New Orleans Sen. Karen Peterson, who also chairs the Louisiana Democratic Party, asked.
“Perhaps,” Donahue responded.
Calling the bill superfluous, Peterson said the fancy wording of SB284 appeared to be just a way to accommodate the governor’s promise to Americans for Tax Reform.
Donahue said he also likes “revenue neutral.”
“It may be accommodating to somebody else, but it’s accommodating to me, too,” he said.
The Senate passed Donahue’s SAVE legislation on a vote of 29-10. It now goes to the House for consideration.
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