Main issue: Does La. give away too much money?
BY MICHELLE MILLHOLLON
Capitol news bureau
July 24, 2012
Beginning Monday, a group of legislators will start studying the billions of dollars the state gives away in tax breaks.
The meeting falls on the same day legislators will continue questioning the Jindal administration about Medicaid cuts, making for a busy day at the State Capitol.
The revenue study commission’s agenda includes electing officers, and listening to presentations by the state Department of Revenue and the Legislative Fiscal Office.
“We don’t have an aggressive agenda,” said state Sen. Jack Donahue, who sponsored the resolution creating the commission.
Donahue, R-Mandeville, said Monday largely will be an organizational day.
More than 400 tax credits and other exemptions are on the books, diverting more than $4 billion a year. At the same time, state government is struggling to maintain services at their current levels.
The Jindal administration recently lopped $523 million from the Medicaid program that provides health care to the poor. More cuts could be needed if a surplus fails to materialize.
Even before the Medicaid reductions, talk surfaced at the State Capitol about whether state government in Louisiana gives away too much of its money.
The revenue study commission is slated to examine the state’s tax exclusions, exemptions, suspensions, deductions, credits, refunds, rebates and preferential tax calculation methods.
The commission’s members include: state Senate President John Alario, R-Westwego; Donahue; state Sens. Neil Riser, R-Columbia, and Dan Claitor, R-Baton Rouge; Senate President Pro-Tempore Sharon Broome, D-Baton Rouge; House Speaker Chuck Kleckley, R-Lake Charles; and state Reps. Jim Fannin, D-Jonesboro, and Joe Robideaux, R-Lafayette.
Donahue said the commission will meet at least monthly, depending on the volume of work.
He said he wants to identify tax breaks that are not producing enough of a revenue return for state government or that have been on the books for so long that the purpose has been lost.
The Public Affairs Research Council of Louisiana released a letter Friday warning that the commission faces a monumental task.
PAR researches public policy issues.
“There is a serious lack of available information on some of these programs. There is also evidence that some of these programs are not receiving adequate follow-up and implementation after they are passed into law,” PAR’s president, Robert Travis Scott, wrote in the letter.
Specifically, Scott mentioned an alternative fuel tax credit.
State Department of Revenue Secretary Cynthia Bridges resigned earlier this summer after deciding that the tax credit applied to more vehicles than previously thought. The expansion threatened to blow a hole in the state operating budget and allegedly caught the governor by surprise.
Scott said it took Bridges three years to develop rules to govern the tax credit. He said those rules resulted in the tax credit’s cost greatly exceeding the impact originally predicted by the Legislative Fiscal Office.
“How many more of these misjudgments are out there to be discovered for other tax breaks?” he asked.
Donahue said Scott raised valid concerns.
“I thought it was a pretty good letter. Lots of exemptions like the alternative fuel tax credit fly below the radar,” he said.