Will the Louisiana Legislature vote to impose a fee that nobody is expected to pay?
If that sounds like a silly question, well, perhaps that’s because it is.
Yet the question is also disturbingly serious, because the answer could well determine whether lawmakers can pass a budget for next year that Gov. Bobby Jindal will sign, or whether they force a showdown that could lead to an unprecedented veto override.
That’s right. All that worrying over how to fill to the state’s $1.6 billion budget hole, all that maneuvering, all that creative accounting, it all could come down to the fate of the so-called SAVE fund. And after the House Ways and Means Committee canceled a hearing that had been set for Monday, less than two weeks before the legislative session must end and a balanced budget — on paper, anyway — be adopted, the measure’s prospects are not at all clear.
Senate Bill 284 by Senate Finance Chairman Jack Donahue, would impose a $1,500 fee on students enrolled in Louisiana’s public colleges. But rather than pay it, they would receive an equivalent tax credit.
Then what’s the point, you might ask?
To stay on the right side of Jindal’s no-new-taxes line in the sand, the product of his exacting interpretation of Washington group Americans for Tax Reform’s no-new-taxes pledge. Because the roughly $350 million the measure would generate — if anyone were to pay it — would come from a fee, it wouldn’t count as a tax increase. But the money refunded via the tax credit — again, on paper — could be counted as an offset to new revenue raised elsewhere, something Jindal has demanded.
Outside Jindal’s dwindling camp, the reviews have been understandably scathing. The scheme has been called a “shell game” and “phantom fee.” State Rep. and Democratic gubernatorial candidate John Bel Edwards described it as “the worst piece of legislation I’ve seen as it relates to fiscal policy.” Republican State Treasurer John Kennedy dismissed it as “nonsense on a stick.”
It is all of those things, and one more. It’s an example of how much of the conversation over how to close the budget hole has hinged on definitions rather than dollars. If we’re witnessing some spectacularly creative accounting, we’re also watching an extraordinary game of semantics.
On top of the daunting challenge of paying for state services, particularly higher ed and health care, lawmakers and stakeholders have been stuck haggling over definitions of such seemingly straightforward terms as “tax increase.” The debate hasn’t just centered on taxes vs. fees, but also on how to classify the rollback of tax exemptions.
The upshot is that Jindal’s positioning himself to claim that he hasn’t raised taxes, even as his former allies in the business community are bracing to open their checkbooks.
Also subject to interpretation: Just how does one determine what’s “revenue neutral,” Jindal’s key demand? Word now from Revenue Department Secretary Tim Barfield is that the administration doesn’t expect tax increases and corresponding decreases to come in the same year. Instead, Jindal is willing to spread the calculation over five years.
“It’s OK to have some things front-loaded,” Barfield added, with more revenue coming in during the first year and more tax cuts projected for the future. Well, of course, it is. Jindal only has to worry about the coming year’s budget. Everything beyond that will be the next governor’s problem.
Jindal’s plan, of course, is to be off and running for president by the time lawmakers gather next spring, which is why he’s making everyone else jump through so many unnecessary hoops even as they grapple with a very serious problem.
Things promise to be just as tough, or even tougher, next year. But at least the governor, whoever that might be, should be focused on the numbers themselves. The words have proven to be way too much of a distraction.