It has been dubbed a “student fee,” but it’s unlikely college and university students will directly see increased costs from the Jindal administration’s latest plan to pump more money into higher education in the coming year.
The biggest result from that is that both sides now agree students won’t face out-of-pocket costs for the new fee — a dollar figure for which hasn’t been set and would likely vary by campus or program.
“We are all on the same page and working with higher education on this proposal,” Jindal assistant chief of staff Stafford Palmieri told The Advocate. “We’re committed to working with higher education and the Legislature to enact solutions in the budget, and it’s important that these are tax neutral.”
It will still be a “tax credit” — something needed for Jindal to maintain that tax, or revenue, “neutral” position — meaning no tax increases without a decrease to technically offset it.
As Palmieri explains the process, colleges and universities will apply for the credit against students’ or their parents’ tax liabilities, and everything will take place behind-the-scenes. For students, that means the transaction, under the administration’s proposal, would be entirely handled by the government and likely would never show up on their bills.
For those students who have no tax liability in Louisiana, a fund would be established for corporations and other donors to contribute to in exchange for the tax credit.
“We know that higher education leaders are looking at the possibility of using fee increases and that’s why we have presented them with options like tax credits to reduce those costs for families,” Palmieri said. “We will continue to work with higher ed leaders on these options so we can help mitigate reductions.”
Any such fee increase would require legislative approval, as would the tax credit.
The money for the tax credit is directly tied to a proposal to raise Louisiana’s cigarette tax to the Southern average, which is 83 cents. Louisiana’s cigarette tax is 36 cents. By the administration’s calculations, the proposed increase would generate about $100 million for the state budget. It also would require legislative approval.
The state budget is months from being finalized, so any or all of the ideas could evolve — including the revenue source. The legislative session begins April 13, and lawmakers have to finish their work in Baton Rouge by June 11
With the state facing a $1.6 billion funding shortfall in the coming year, Jindal’s budget recommendation calls for a $211 million hit to higher education funding in the coming year, but it relies heavily on the state scaling back refundable tax credits. If that plan falls through, the actual cut to higher education would balloon to over half a billion dollars across colleges and universities. The state’s facing a $1.6 billion funding shortfall.
During last week’s budget presentation, Commissioner of Administration Kristy Nichols explained the so-called “excellence fee” as an alternate source of funding for higher education that, if approved, the administration “would expect that there could be a tax credit” to offset. Several lawmakers raised concern over the initial out-of-pocket costs such a proposal would require and some questioned whether the plan was banking on people not filing for the credit.
Palmieri on Wednesday said the plan has been “refined” — still the same concept but a slightly altered process.
“Students and parents are technically applying for it,” Palmieri said. “It’s their liability.”
She added, “It’s been refined how the credit would actually get from the parent or student’s liability to the institutions.”