Political Horizons: A budget accomplishment awash with glitches _lowres

Advocate Photo by MARK BALLARD -- State Treasurer John N. Kennedy waits Monday to address the Press Club of Baton Rouge.

In many ways, the state budget the Senate undoubtedly will pass Monday — with final passage likely later this week — is a remarkable feat for the Louisiana Legislature.

With little to no help from a largely absent governor, the legislators came up with their own plan to bridge a $1.6 billion gap in revenues through a series of tough votes on ideas that teed off the state’s powerful business community. At the same time, they’re trying to weave some labyrinthine wording acceptable to anti-tax activist Grover Norquist, who is influential in GOP politics and to whom Gov. Bobby Jindal has sworn fealty.

“Herculean,” is the word Senate Finance Committee Chairman Jack Donahue said after another late-night hearing, eyes red, popping breath mints like popcorn. And he’s right.

Still, this budget will come back to haunt.

“For months, we’ll be figuring out different issues that maybe weren’t thought of or addressed because it has been a fast-moving process,” said Stephen Waguespack, the head of the Louisiana Association of Business and Industry.

The budget is full of short-term fixes, and the new governor and new Legislature to be elected this fall will have to find hundreds of millions of dollars next year.

To ensure that the money is available in time for this fiscal year, most of the bills have a July 1 start date. This causes all sorts of unfairness to taxpayers.

Ron Gitz, executive director of the Society of Louisiana Certified Public Accountants, has been hanging around the halls of the State Capitol, helping legislators correct the unintended problems. But solutions are complicated by the need for cash soon.

Gitz uses the Louisiana Citizens FAIR Plan Regular Assessment to illustrate one fix.

Homeowners can write off all the fees — tacked onto insurance policies — that are used to help recoup the losses suffered by the Louisiana Citizens Property Insurance Corp. For the taxpayer who timely filed by May 15, the entire assessment (make it $100 for this example) is refunded. Starting July 1, taxpayers who filed for an extension on their 2014 returns would receive an $80 refund and the remaining $20 would be paid out over the next three years.

There’s a real possibility of a lawsuit arguing the rules changed midstream and treated taxpayers in the same situation differently.

Court action is possible on another front: The business community argues that rolling back exemptions, credits and deductions to raise more state revenues amounts to paying more taxes. Raising taxes requires the approval of two-thirds of the Legislature.

The House’s position, generally, is that the state constitution allows the Legislature to do whatever it wants unless specifically constrained by law. Because the constitution says nothing about how to handle these tax breaks, the Legislature can approve such changes with 53 votes, rather than the two-thirds majority of 70.

State Treasurer John N. Kennedy went back and read the floor debate of the 1973 constitutional convention. The framers of Louisiana’s constitution, at least in Kennedy’s eyes, did not intend to differentiate between changing tax breaks that lead to higher taxes and increasing the taxes.

“This house of cards could come tumbling down,” Kennedy said of the budget plan.

Then there is the Student Assessment for a Valuable Education act. Its future this weekend remains up in the air. SAVE would create a complex system of phantom fees applied to the invoices of 220,000 university and college students. The fees would be offset by credits that would be turned over to the institutions, which then would collect the money from the state. The scheme satisfies Norquist, which would allow Jindal to tell Republican presidential primary voters that the budget is “revenue neutral.”

House Ways & Means Committee Chairman Joel Robideaux, R-Lafayette, says the concept could be used in the future to obfuscate all sorts of tax increases with make-believe fees and fake credits that would allow lawmakers to proclaim “revenue neutral.”

Robert Scott, of the Public Affairs Research Council of Louisiana, points out that SAVE rolls back one of Jindal’s earliest achievements: The notion that funding for higher education should be based on performance, rather than enrollment.

Basically, House Bill 1 — the legal authority that gives state government the ability to spend public money — requires locking into law projections of economic activity for next year.

So, all of this could work. But if it doesn’t, Scott said, “It won’t be because they just made some bad guesses. It’ll be because a lot of stuff was swept under the rug.”

Mark Ballard is editor of The Advocate Capitol news bureau. His email address is mballard@theadvocate.com, and he is on Twitter, @MarkBallardCNB. For more coverage of government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politicsblog.