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28.2.15

Tepid restructuring in budget can induce more reform



If readers, like myself, missed at the annual meeting of the Louisiana Political Science Association today the discussion of Louisiana’s fiscal year 2016 budget submitted yesterday by the Gov. Bobby Jindal Administration, this space will try to substitute in part for that.



This budget was in rickety shape from the moment the FY 2015 budget went into effect, courtesy of the bizarre fiscal structure of the state where four-fifths of revenues are dedicated to some purpose (state- or federal-determined) and the remainder of these responsible for health care, higher education, and constitutional offices. As problematic as that is, it was manageable, but the legs got kicked out from under it when extraction royalty and severance tax revenues took a nosedive due to sharply falling oil prices.



Thus spurred ideas to balance, leading to three interrelated aspects of the FY 2016 budget, which drops total state spending from enacted levels for FY 2015 over a billion dollars – although notably that amount still is higher than actual spending of two years ago by about $800 million, which is an increase about at the rate of inflation. In order to accomplish this, higher education was reduced from FY 2015 enacted to FY 2016 budgeted almost as much in that year as the entire $228 million (not adjusted for medical education) decline from FY 2009-15. Only because of an assumption built in that the Legislature would excise the refundable portion of a dozen tax credits did it not amount to an additional $526 million cut. And the budget turned in also suggested that the Legislature and higher education combine forces to infuse perhaps $100 million or so more in revenues into that system through various operational means and fees.

26.2.15

Any LA EITC retention unwise in upcoming budgeting



When Gov. Bobby Jindal reveals his fiscal year 2016 budget tomorrow, it looks as if he will continue the trend of advocating tepid solutions to Louisiana’s pressing budgetary difficulties and bypassing substantial reform of an inefficient and ineffective fiscal system.



As a consensus builds that the state must rein in overgenerous tax exceptions, Jindal offered that the state should cap tax credits that paid out beyond tax liability incurred at that liability. This week his administration estimated this amount at around $590 million. Retaining some portion in that neighborhood would go a long way to closing a budget gap between forecast revenues apportioned to dedicated purposes plus those going into the general fund and current expenditures plus an inflation factor that equals $1.6 billion.



But the Jindal Administration also indicated that some of this “excess” amount would end up off limits to retention, citing approximately $3 million in the form of the School Readiness Tax Credits and $21 million in the Earned Income Tax Credit that would continue to go to eligible recipients beyond their tax liabilities. The former, actually several related items with the one in question the only of five payable to families, kicks back money for a child under the age of six that attends a decently-rated or better child care facility, which essentially could be 150 percent of its federal version (unreduced by federal income tax liability, if any) for a family making $25,000 or fewer, with a $2,100 maximum credit. The latter allows for as much as 3.5 percent of its federal version, graduated by filing status and number of children; for example, a married couple with no qualifying children would have to earn less than $20,330 of which less than $3,400 could be investment income, and some of it would have to be earned through at least part-time work. A family with three or more children could be credited for $218.

25.2.15

Proposed film tax credit reform needs more robustness



The film industry has scrambled successfully to keep from drying up its mother milk from Louisiana taxpayers, if the suggested “fixes” to the Motion Picture Investor Tax Credit contained in proposed bills by a pair of timid legislators serves as an indicator.



In separate bill drafts, state Sen. JP Morrell and state Rep. Julie Stokes propose reforms of the state’s film subsidy, which through the life of the program to 2012 had cost the state $800 million more in taxpayer dollars than it brought in and which at the current rate of project approval will have topped $1 billion by the end of last year. Neither adequately address the hemorrhaging of taxpayer dollars.



Morrell’s bill closely tracks the industry’s preferences, which don’t align well with taxpayers’, with an increased emphasis on preventing improper or fraudulent subsidization, limitations of expenditures that qualify, and (the one major item not acceded to by the industry) a $300 million annual cap that, if not entirely used, could roll over. Stokes’ would allow transferability of credits just once (in effect, eliminating brokerage and leaving it all in the hands of the state) but raise the state’s buyback from 85 percent to 90 percent, institute better procedures to capture tax revenue that could be generated from the industry (an industry request), and make administrative changes that clarify the process and place more of that cost in the hands of that industry.

24.2.15

Democrats continue fool's errand for magic candidate

If it isn’t official, it should be: it’s John Bel or bust for Louisiana’s Democrats, as the filing of New Orleans Mayor Mitch Landrieu’s campaign finance report subsequent to his last year’s reelection shows – also indicating the dire straits in which the party finds itself largely through its own self-deception.



As recently noted, state Rep. John Bel Edwards’ non-trivial fundraising totals for the governor’s race this year revealed both that a consensus was forming that he was an adequate draw from the poor options out there to bear the party’s standard in 2015 and that Landrieu could not feel as if he was the natural selection by party activists to lead this charge. As late as last week, others still made noise about Landrieu possibly running, such as an official of the Democratic Governors Association thinking that Landrieu was “carefully considering” running and would be quite competitive.



Which tells us he doesn’t really know Landrieu or is whistling into a gale. Landrieu’s succinct report showed all he did was transfer the meager remains of his mayoral campaign account to a “future office” account. No funds were raised nor spent outside of that account aside from that election in 2014. Nobody not deluded about chances of victory runs for governor with $33,000 or so in the bank with just under a year to go.

23.2.15

Filings point to Nungesser-Young winner next lt. gov.

Having reviewed the implications of financial reporting for Louisiana statewide candidates’ chances for the governor’s and attorney general’s contests, it’s time to review the last of the hotly contested races to date, lieutenant governor. (It’s unlikely strong challengers will emerge to battle incumbents for the jobs of Secretary of State, Commissioner of Insurance, and Commissioner of Agriculture and Forestry, and add to this list of competitive races  Treasurer if incumbent John Kennedy chooses not to run for governor.)



State Sen. Elbert Guillory, a Republican, clearly rests on the back foot, reporting a less than zero balance. While adept at social media campaigning and able to rely upon the historical ability of black candidates to operate with a high voter per dollar rate, two factors will crimp his chances going forward, both having to do with his opponents.



One is that Baton Rouge Mayor-President Kip Holden not only is black as well, and therefore Guillory has no advantage over him with that considerable segment of the statewide vote, but also and unlike Guillory is a Democrat. That alone makes Guillory’s job tough because he could be competitive with those voters with resources to back his message, but he obviously doesn’t have the money at this point. Holden doesn’t have much either, cribbing off his local office account to have around only $30,000, but black Democrat candidates have the highest voter per dollar potential and he won’t need to raise a large amount to make a runoff – if he were the only black in the race. As long as Guillory continues in it, he’ll need to do somewhat better to get there.

22.2.15

LA inspection tax by another name needs abolishing



Louisiana may be grubbing for revenues at this time, but it acts best to emulate its neighbor by eliminating the almost totally useless vehicle general inspections and fees that are close to being a joke.



A number of states do not require vehicle inspections, and Mississippi look set to join the bunch as a bill to wipe out its inspection that carries a $5 fee makes its way through that Legislature. The activity might have been a good idea 50 years ago, but that time has come and gone.



Vehicles since then have become much more durable and safer, complete with required computer diagnostics to point out any serious problem instantly. As a result, data from about a decade ago when cars were significantly less safe than now show only a little over one percent of all accidents occur because of something wrong with the vehicle that would be part of an inspection – and involved items that easily could fail in between annual, or now in Louisiana biannual, inspections with little warning, meaning it would be blind luck if an inspection happened to pick up on it right before failure.

19.2.15

UNO-SUNO merger even better idea 4 years later

Better late than never, never let a crisis go to waste, or whatever saying fits to describe an attempt to do what made far too much sense years ago, which for that reason didn’t get done, in the merging of the University of New Orleans and Southern University in New Orleans.



State Rep. Patrick Connick announced his intention to file a bill that would perform precisely that, four years after legislative majorities probably could have accomplished, but legislative supermajorities almost certainly would failed to engineer, the same. Back then, both institutions still were reeling from the aftereffects of the hurricane disasters of 2005, and SUNO had the additional distinction of having the lowest degree completion rate in the country – but given that its student body averaged a fog-a-mirror score of 15.5 on the American College Test (the national average is around 21, with a minimum of 8), it’s a wonder any student graduated from there.



Since then, matters have only gotten worse. UNO changed systems after the merger attempt, which also would have given Delgado Community College a formal link to the merged institution, but it continued to lose enrollment, which now is almost half of what it was a decade ago. SUNO got some brand spanking new infrastructure out of disaster recovery dollars but the state’s move to get baccalaureate-and-above schools out of the associates degree/certificate/remedial education businesses with a strengthening of admission requirements flushed around a sixth of its enrollment away, mostly full-time, first-time students.

18.2.15

LA budget resolution hangs on politics of definitions

As policy-makers scramble to find ways to make sure Louisiana can find enough money to spare itself, principally in higher education and health care, from drastic budget cuts comparing fiscal year 2015 to 2016, confusion reigns over what options politics will present -- which may play out over definitions.



Gov. Bobby Jindal’s strict interpretation of holding the line on taxes – they don’t go up, even if that means keeping unproductive tax breaks, unless there’s some relief elsewhere – has had to his point the very salutary effect of putting right-sizing government ahead of tax increases, but includes the less fortunate impact of treating tax breaks that do not demonstrably impact economic growth in a positive or efficient way as the same as those that do. This attitude seems to have changed as last week his administration announced that portions of these breaks should be eliminated.



In other words, if a credit or deduction means, after payment of state taxes, that a filer would get some kind of rebate beyond its liability as a result of these, the Jindal Administration has proposed that the state hold onto this excess. The meets the no-tax-increase criterion in that taxes would not go up, but only that a bonus which technically is an expenditure that the state hands out would disappear.

17.2.15

Case unmade for retaining Caddo schools footprint

Last month, the Caddo Parish School Board unanimously put on the ballot in May a plan to use $108 million in borrowing capacity for its schools, keeping a tax authorized until 2033 at 6 mills worth to back it. Whether a shrinking school system needs that much is debatable.



The board and Superintendent Lamar Goree have argued that, despite the slow trickle of students out of the system, that conceivably this much in capital expenditures is needed because of decrepit older schools and population shifts. The district plans as a result to close six schools but to build three more. The six older ones, many several decades old that would cost substantially if renovated or reopened, sit in parts of the parish towards north Shreveport and its  center that have seen steady population declines; new ones consolidate in those areas and one in an area of population growth in the southeast. In essence, the thinking is if a lot of money must be spent, it should go to new schools and closer to populations being served than in rehabilitating older structures dispersed in geography.



The bond measure also would include expansion at other schools for classrooms, auxiliary buildings, new buses, and equipment replacement. On these items, a good case can be made for spending, and to a degree so can the idea that swapping out fewer new and better-situated buildings for greater old and worse-situated structures.

16.2.15

Edwards standard-bearer role more likely after reports


With all Louisiana gubernatorial candidates having publicized, if not filed, their fundraising totals up until the end of last year, the results narrow state Democrats’ options considerably in this contest.



All four who have announced their intentions to run for this – Sen. David Vitter, Lt. Gov. Jay Dardenne, Public Service Commissioner Scott Angelle, and state Rep. John Bel Edwardsclaimor demonstrate they had raised over a million bucks, but with Vitter lapping the field in cash on hand. The only Democrat, Edwards, was the only one not to make an assertion or to file that he has $1 million or more hand.



That Edwards apparently collected the least and has relatively less on hand than the others reveals that there isn’t a great deal of confidence about his bid among Democrats. As the only declared Democrat in the race – for over a year now – a bid thought more seriously should have attracted more money. Then again, that he did suck in at least a million smackers shows neither is a trivial candidate and could be competitive enough at least to make the inevitable runoff.

And this, along with the more impressive fundraising totals of the Republicans – all appear to have outraised him, despite their splitting the field three ways and Angelle getting in only towards the end of the year – creates a dilemma for Democrats. While potential runoff material. Edwards shows no signs he can defeat any of the three heads-up, yet who could they offer that could do any better?



One oft-discussed nominee for that role, New Orleans Mayor Mitch Landrieu, seems unlikely. He carried a large amount of holdings into last year’s mayoral reelection campaign, and promptly spent most of it on a contest that was not that close. Later, his sister herself lost a race not very close for reelection as senator, indicating how at the statewide level electoral dynamics have moved decisively against a candidate of his ideology (and name). With relatively little money available, Landrieu now seems content to complete his final term and then ponder where to go in 2018.



Another Democrat hope of the past seems no better than Edwards at this time. Public Service Commissioner Foster Campbell turned in brutal results in 2007, capturing just a sixth of the vote while Gov. Bobby Jindal swept more than half. His signature issue, a punitive tax on oil processing, has lost its allure with more emphasis now on natural gas production and a plunge in prices. And while with his wealth he could finance his own campaign to a degree (and with his roughly $300,000 in his campaign account), he also would be the oldest governor ever inaugurated, which runs counter to the image that vigorous leadership must tackle Louisiana’s increasingly unsound fiscal structure. If his time ever seemed to be here, at present it now appears gone.



The great Cajun hope for Democrats presently seems to be Lt. Gen. (ret.) Russel Honore, who first made a name for himself in the aftermath of the hurricane disasters of 2005 with his no-nonsense approach to stabilization of the affected area. He has become more controversial since by providing voluntary leadership to an environmentalalist group called the Green Army that sometimes can present itself as a legitimate guardian of environmental interests but at other times veers off into extremism courtesy of a common tactic of the left that fronts environmentalism to cloak a redistributionist agenda, such as championing the money grab made by the South Louisiana Flood Protection Authority-East’s lawsuit against oil companies recently laughed out of federal district court.



Further eroding any appeal that he may have (he is assumed if he runs for office to run as a Democrat) is that he’s never held a policy-making position before. Running a brigade does take administrative skill, but the only policy experience he appears to have, besides pronouncements on the environment, is in disaster management, which is useful but rarely needed, and in defense policy, which is wholly unneeded as a governor. Being black, he might stimulate marginally black turnout and would require fewer dollars to mount a campaign, but he has none for that purpose at all available and little crossover attraction to the state’s conservative majority.



Add to this that Edwards, despite these funds numbers, probably is less likely as a result of their reporting to take another option at the statewide level, such as (being he is a lawyer) Attorney General. That’s because former Rep. Jeff Landry turned in some big numbers in his quest for that race, the incumbent Atty. Gen. Buddy Caldwell still is there, and maybe Treasurer John Kennedy will get in it. He has about as much chance winning that contest as governor, and as Democrats really need a credible candidate at the top of the ticket (and to send Edwards into the AG race may diminish the chances of the party’s fallback option, former Democrat Caldwell keeping Landry out, might torpedo that tactic), pressure will be on him to stay in. They simply can’t afford to offer up a cipher as they did in 2011.



So the Democrats’ bench really is thin at the moment, leaving Edwards probably their best option. Which isn’t much option at all, but when the state party has moved so far to the left that it has discredited its formula of social conservatism to mask liberalism on other issues as a path to victory, you take what you can get.