The proposal’s been called a sham, a fake, a gimmick, even money laundering. It’s also become the linchpin of a budget deal between lawmakers and Gov. Bobby Jindal’s administration. And it’s all about protecting Jindal’s record as he eyes a presidential campaign.
Without it, a financing proposal that shields public higher education and health care services from deep cuts could go down in flames.
The dispute centers on a bill by state Sen. Jack Donahue, R-Mandeville, chairman of the Senate Finance Committee, that would create the Student Assessment for a Valuable Education, or SAVE, tax credit.
Only it wouldn’t lessen anyone’s taxes at all.
The proposal would involve raising a new “assessment” on college students. The students wouldn’t actually pay the fee because it would be covered by the state through the tax credit, paid directly to colleges.
It’s a pass-through that doesn’t provide any net new revenue to the state or to colleges.
If no one pays the new fee and no one actually gains any new revenue from the tax credit, what’s the point of the bill?
Creating a tax credit — at least on paper — can be used as an offset to count against tax increases used to generate new money for the state’s budget, like a cigarette tax hike.
And that matters very much to Gov. Bobby Jindal, so he can claim Louisiana didn’t raise taxes to balance the budget.
Jindal, expected to announce his White House bid in New Orleans on June 24, won’t support any tax changes he — or national anti-tax activist Grover Norquist — considers a net tax increase.
Protection of that record has bogged down the budget negotiations and stymied debate over how best to address the state’s financial problems.
With a $1.6 billion budget shortfall for the fiscal year that begins July 1, lawmakers and the governor have acknowledged they must find ways to drum up new dollars to keep from devastating higher education and public health care programs.
Senate President John Alario, R-Westwego, said a deal with Jindal can’t be struck without the tax credit bill. “You have to have this.”
“We think that’s a big part of what needs to be done to prevent (the financing) bills from being vetoed,” Alario said.
The Senate has been willing to create the faux tax credit and give Jindal the loophole he needs to claim he’s upheld his no-tax pledge, but the House has been resistant to the idea.
House Ways and Means Committee Chairman Joel Robideaux, R-Lafayette, called the higher education tax credit “a facade,” and he helped bottle the bill up in his committee. Senators, however, continue to push the idea through other legislation.
While some lawmakers simply bristle at the idea of crafting a tax credit to honor a no-tax agreement they didn’t make, Robideaux has broader philosophical issues with the bill.
He said it’s absurd to look only at decisions made during the current legislative session to determine if Jindal and lawmakers raised taxes. Robideaux said over the nearly eight years Jindal’s been in office, lawmakers have passed $2 billion in tax cuts. Trimming some of those back this year, he said, won’t equal a net tax hike.
“We’re extremely pro-taxpayer and pro-business when you use an eight-year window, which is what we should be judged on,” Robideaux said.
The Ways and Means chairman also said by creating a “fake” assessment and a “fake” tax credit to offset it, a governor and lawmakers could raise exorbitant taxes on anyone and try to claim they didn’t cause a net tax hike.
“It provides a cover to raise unlimited taxes. Why would conservatives be for that?” Robideaux said.
If the House won’t go along with the tax credit creation, lawmakers could try to rally the votes to override Jindal’s veto if he chooses to jettison the financing bills that make up a budget deal. But such veto overrid are rare, and lawmakers, even when angry at Jindal, have never been willing to go to an override session.
Only days remain to try to reach an agreement. The legislative session must end by Thursday.
Melinda Deslatte covers the Louisiana Capitol for The Associated Press.