Details fill 400-page document
Legislators began taking a crack Monday at reviewing a myriad of tax exemptions responsible for reducing state income during tough economic times.
For members of the Revenue Study Commission, the maiden meeting was similar to the first day of school. They got a fat stack of reading material, an overview of the objectives and a warning that a lot of work lies ahead.
“We will try to decide the best method to attack this,” state Rep. Joel Robideaux, R-Lafayette, told fellow commission members. Robideaux is the commission’s newly elected chairman.
The Legislature just completed a session marred by disagreements on the best way to balance the state operating budget without adequate money to keep services at their current level. At the same time, the state grants several billion dollars a year in tax exclusions, suspensions, deductions, credits, refunds, rebates and preferential tax calculation methods.
The commission’s task is to decide which tax credits and other exemptions are worth keeping.
Preceding the meeting was a question-and-answer session on recent deep cuts to the Medicaid program that provides health care insurance to the poor.
The Jindal administration warned that the governor favors a fair, flatter and lower tax base.
Jason El Koubi, assistant secretary at the state Department of Economic Development, said any changes should be offset so that they are budget neutral and not an attempt to raise taxes.
Recently, Gov. Bobby Jindal declared an effort to renew an existing cigarette tax as a move to raise taxes. The Legislature temporarily can suspend tax breaks without the governor’s approval.
The commission’s main reading material will be a 402-page book. Issued by the state Department of Revenue, the book details more than 400 tax credits and other exemptions that divert at least $4 billion that could be used to fund hospitals, colleges and other state services.
El Koubi said the state’s tax exemptions actually totaled $6.8 billion in the fiscal year that ended June 30, 2011.
Of those, he said those managed by his agency represent five percent.
El Koubi said the $6.8 billion in exemptions is comprised of:
- 37 percent in sales tax exemptions.
- 27 percent in personal income tax exemptions.
- 24 percent in corporate income and franchise tax exemptions.
- Seven percent in other tax exemptions.
- Five percent in economic development tax exemptions.
El Koubi said the entire tax system determines a state’s tax burdens and economic development competitiveness.
Like El Koubi, Greg Albrecht, chief economist for the Legislative Fiscal Office, came to the commission meeting armed with charts.
Albrecht guided commission members through the process of determining state revenue levels before diving into the number of corporation income and franchise and individual income tax credits processed during a recent fiscal year.
Part of Albrecht’s daily job includes estimating state revenue levels and predicting the fiscal impact of legislation.
“State tax collections are rarely well behaved,” he said.
Albrecht said there are always distortions and aberrations. He said credit programs can exhibit rapid growth and erratic surges and drop-offs.
State Sen. Neil Riser, R-Columbia, suggested that the commission should try to separate the high-performing exemptions from the sub-performing exemptions. “We have a short period of time,” Riser said.
The commission must make recommendations to House Speaker Chuck Kleckley, R-Lake Charles, and Senate President John Alario, R-Westwego, by Feb. 1