La. tax issues to dominate

04 08, 2013 by The Advocate

Though Gov. Bobby Jindal’s proposed tax swap is on hold for a few weeks, legislators say it looms over the 2013 Regular Legislative Session that opens at noon Monday.

“Obviously the tax proposals will take the air out everything else,” said state Rep. Jeff Arnold, D-New Orleans and the longest serving member of the Louisiana House. “I don’t see 30 votes in the House … But the governor is still the governor. If he comes with a different plan he could still get some successes and tax reform out of the session.”

Jindal is scheduled to address legislators an hour after the session officially begins at noon. The session must adjourn by 6 p.m. June 6.

Other issues are on the agenda for debate, in particular, balancing the state’s 2014 spending plan with revenues expected to be less by about $1 billion. Other legislation likely to raise controversy include proposals to limit or expand the use of guns; ideas for funding a higher education system; how to handle the Bayou Corne sinkhole; plus government employee pensions, public schools, and health care for the poor and uninsured.

Legislators say most attention will be focused on Jindal’s proposal to eliminate personal and corporate income taxes and corporate franchise tax. His plan would replace lost revenues with a 6.25 percent state sales tax plus expanding taxation to a variety of goods and services not currently taxed; and removing many tax exemptions and credits.

The session is already “known for the governor’s tax package. What happens with that or what doesn’t happen with that is going to be the major headlines at the end of the day,” said state Rep. Chris Broadwater, R-Hammond, echoing the comments of nearly three dozen representatives and senators interviewed last week.

Particulars of Jindal’s complex plan are outlined in 11 bills. His proposals would create rebate systems to help offset the cost of higher sales taxes on retirees and taxpayers with low incomes. He also wants to raise the tax on cigarettes from 36-cents per pack to $1.41. Additionally, Jindal wants to centralize collections in line with federal efforts to tax Internet purchases.

Jindal’s proposals have been criticized, particularly by groups like Louisiana Association of Business and Industry, the Public Affairs Research Council of Louisiana and the Louisiana Budget Project, each of which have raised questions about the completeness and assumptions of the numbers the administration has been using.

Last week, House Speaker Chuck Kleckley, R-Lake Charles, announced that Ways and Means would not begin hearings until the Legislative Fiscal Office analyzes the proposals and provides “accurate” numbers.

“There’s a lot of support for doing away with the income tax,” Kleckley said. “The question is: How do you replace the personal income tax when you get rid of it?”

“I’m not getting a sense of need from people concerning tax reform,” said state Rep. Regina Barrow, D-Baton Rouge and member of the House Ways and Means panel. “What I’m hearing from people is that the education reform from last year needs to be looked at again.”

Two court rulings struck down key tenets of the laws passed during the 2012 session — taxpayer dollars, or vouchers, used to pay private school tuitions for some students, and changes to the “tenure” or job protections for teachers.

Rep. Arnold once again introduced legislation to limit the use of traffic light cameras to document violations and issue tickets by mail to the offenders.

In House Bill 217, Arnold changed his annual effort by requiring municipal elections in which voters would have the ability to decide whether to keep the traffic cameras. The measure would allow cities and parishes currently using traffic cameras to impose fines until July 1, 2014.

“I think this is the fairest way of handling it for both the citizens and the municipalities who have come to depend on the bankroll coming in. I think it has very little to do with safety,” Arnold said. “I’ve had variations of this bill for the last four or five sessions.”

Those efforts were sidetracked by the opposition of local government officials, particularly former East Baton Rouge Parish Mayor-President Tom Ed McHugh and current East Baton Rouge Parish Mayor-President Kip Holden.

Last year McHugh, executive director of the Louisiana Municipal Association, said the issue clearly should remain with municipalities, not state lawmakers.

In Baton Rouge, the cameras are only placed at 20 intersections. Between 2008 — the first year the cameras were put in place — and 2012, drivers paid $13,355,811 in fines for running red lights, an average of about $2.7 million per year, according to city-parish budget documents.

Jindal’s $24.7 billion state budget proposal reduces higher education funding 21 percent to $774 million, down from $983 million in the current year, according to the Board of Regents, the state’s top higher education board. About 63 percent — $489 million — are made up of nonrecurring, or one-time funds that might not be available in future years, and contingency money from property sales and lawsuit settlements that may or may not materialize.

State Rep. John Schroder, R-Covington, questioned why the governor structured his budget in such a way that all of the one-time and contingency funds are directed at higher education and not spread out across all state agencies.

The presidents of Louisiana’s four public post-secondary systems have all come out in support of House Bill 194, which would grant the management boards overseeing the institutions the authority to raise tuition

State Rep. Steve Carter, R-Baton Rouge, and state Sen. Conrad Appel, R-Metairie, both chairmen of their respective chamber’s education committee, are promoting legislation that would make state funding for colleges dependent on how their graduation and retention rates stack up compared to other Southern universities. If this “outcomes-based funding” bill passes, Carter said he would then push forward House Bill 401 to give colleges more freedom to control their tuition rates, which are currently set by the Legislature.

“We have to turn over some of those decisions to the universities, because that is why they can have stability and predictability in their budgets,” said Republican state Rep. Frank Foil, whose south Baton Rouge district is home to many LSU staff and faculty.

Broadwater, who has Southeastern Louisiana University in his Hammond-based district, is proposing a statewide vote that would assess a property tax, the proceeds of which would be split among the colleges and universities.

“I look at my university, which has done a remarkable job getting as lean as they can and still provide a quality product to the students. I frankly don’t know how much more they can take in terms of reductions,” Broadwater said of his House Bill 576.

Legislators also will consider a variety of “gun rights” proposals.

The Connecticut school shooting, in which 20 children and six adults died, sparked a spate of bills. Louisiana lawmakers filed about two dozen bills addressing firearms.

“A lot of people are concerned about the federal government and what it is going to do with gun control in the future,” said state Rep. Stuart J. Bishop, R-Lafayette.

Only two bills on file would restrict use of guns. House Bill 4 would require firearms to be locked while being stored in a home and House Bill 141, by state Rep. Austin Badon Jr., D-New Orleans, would require prospective buyers to take a gun safety course.

The other measures range from House Bill 265, by recently elected Barry Ivey, R-Central, which would allow concealed carry permits to last a lifetime, to bills that would stop enforcement of federal restrictions on ownership or possession of semi-automatic weapons, to reporting of mental health information in regard to sale of firearms to a ban on release of names of those with concealed handgun permits.

Jindal’s rejection of the Medicaid expansion called for in the federal Affordable Care Act, known as Obamacare, prompted some legislative backlash and the filing of bills aimed at reversing the governor’s decision.

Jindal contends the expansion that would cover many of Louisiana’s working uninsured adults will eventually be too costly for the state and that the state should have flexibility to develop its own plan. Proponents contend about 400,000 uninsured would end up with health coverage.

The state employees and teachers’ retirement systems will be closely watching “clean up” legislation to fix administrative problems with the Jindal administration-pushed 401(k)-type pension plan for those hired after July 1. The “cash balance” plan is under court challenge for failing to receive the constitutionally required votes for passage.

Both the Louisiana State Employees Retirement System and Teachers Retirement System of Louisiana favor passage of a resolution that would delay for a year implementation of the new pension plan.

Running simultaneously with legislative debate on these other issues is House Bill 1, Jindal’s $24.7 billion budget and the specter of Jindal’s tax overhaul.

“The one thing I know for sure is that we’re about $1.3 billion short before we even start,” said state Sen. Danny Martiny, R-Metairie. “I’m hoping for the next 30 or so days that we will have some very pointed discussions on how to deal with our fiscal situation.”

Koran Addo and Marsha Shuler of the Capitol news bureau contributed to this report.