Budget debate begins with Jindal plan

The legislative session doesn’t begin until April, but the state’s annual budget debate kicks off this week as Gov. Bobby Jindal unveils his multibillion-dollar spending proposals for next year.

The presentation of the executive budget will show Jindal’s cards on what he recommends to cut, what facilities he wants to privatize or close and just how much patchwork financing he suggests to piece it all together.

Jindal’s top budget adviser, Commissioner of Administration Kristy Nichols, will outline the plans Friday to lawmakers, and from there, the legislative negotiating begins over how to close a $1.3 billion budget gap in the 2013-14 fiscal year that starts July 1.

While haggling over how and where to cut has become commonplace over the last five years, this budget deliberation comes with a new complication. State lawmakers also will be debating the governor’s proposal to rewrite much of Louisiana’s tax code.

Jindal’s seeking to get rid of state income taxes in favor of higher sales tax rates, possibly higher tobacco taxes and a widening list of services to be taxed by the state. The governor wants the whole exercise to be “revenue neutral,” meaning the state wouldn’t lose money or gain money from the tax code rewrite.

But there will be a lot of moving parts — and a budget dependent on the numbers panning out like the estimates suggest, adding further wrinkles to an already complex set of budget negotiations.

This year’s budget stands at $25 billion.

Jindal’s financial analysts have estimated the state’s projected income next year is nearly $1.3 billion less than the costs to continue all existing programs and services and account for inflationary growth.

The shortfall is on par with previous years since Jindal’s been in office. But that’s probably little consolation to lawmakers looking at what they can cut in a poverty-ridden state where large numbers of people rely on government programs for assistance.

The most vulnerable areas to slashing are health care services for the poor, uninsured and disabled and public colleges. Both sectors have taken deep hits to funding in previous rounds of cuts, leaving few easy choices left for making budget reduction decisions.

At least some of the budget gap can be closed if lawmakers and the governor refuse to pay for inflationary increases, merit raises and education funding boosts that they haven’t covered in recent years. Those are estimated to be about $164 million.

Few details have leaked about where Jindal might consider the latest budget slashing, but he’s made it clear he won’t seek to tap into federal funding available to expand Louisiana’s Medicaid program to help cover health care costs.

Jindal said last week that he won’t reconsider his refusal to widen the government-run health insurance program to cover as many as 400,000 additional low-income residents who would be eligible, even though the federal government would pick up most of the tab.

The Republican governor said Medicaid is an outdated, inefficient program and states should instead be free to design health programs that suit their individual needs.

He’s sure to face opposition from Democrats and advocacy groups who’ll seek to add the dollars into the budget and lessen some health care slashing.

Legislative budget hearings will begin shortly after the governor unveils his multi-billion dollar proposal. Wrangling over the plans likely will continue until the final days — or hours — of the legislative session, which must end June 6.

Melinda Deslatte covers the Louisiana Capitol for The Associated Press. Her email address is [e-mail].

Comments

1) Comment by RODEO CLOWN - 18/02/2013

It is utterly amazing how Jindal talks and acts as though he is the only individual that knows the best. In fact, Jindal's administration could easily be characterized as "Bobby Knows Best". Nothing, and I do mean nothing, in Bobby's world(hey, that could be spin off) is to his liking nor his satisfaction. Jindal has tried to change or reinvent almost every aspect of Louisiana's government, prisons, education, health care(or what was health care), universities, and now revenue generation. "Bobby-tye" reminds me of an old adage, "I'd like to buy him for what he's worth and sell him for what he thinks he's worth". Any administrator, public or private, exhibiting such dissatisfaction with the status quo is typical of an individual in a position they do not comprehend, do not appreciate and do not understand. A mature rule of thumb Bobby is this: before one "reinvents" the wheel, one should first, learn what makes the wheel work, and second, how the wheel works, and third, how will any changes made to the wheel effect other aspects of the wheel's operation. I define these as the consequences of dynamic alteration. Unfortunately, Bobby is not the least bit concerned with learning anything, because, after all, "Bobby Knows Best". You know, just because one goes to a Yankee college named after a color, and attends an English univeristy named for a shirt(Oxford-get it), doesn't mean the rest of the world is stupid. After achieving two college degrees, I will readily admit, some-not all-of the dumbest people I've ever met were on college campuses either as students or professors.

2) Comment by RODEO CLOWN - 18/02/2013

Jindal's ultimate “game plan” is that of transferring revenue generation from the state to the parish and local levels via increased property taxes. Jindal's proposal to replace state income taxes with sales tax revenue is at best ridiculous at worst totally unworkable. Louisiana Dept. of Revenue for 2011 reports revenue of $2.651 billion dollars generated by the state's income tax(corporate and individual). Replacing income tax with sales tax revenue would require the generation of an additional $2.651 billion dollars in increased sales taxes. According to Jindal, such revenue could be replaced by repeal of the bulk of some 191 sales tax exemptions(STE) currently in effect. However, LA. Dept of Revenue figures demonstrate Jindal's belief wrong, basically, "dead in the water". Total revenue exempted under these 191 STE'S amounted to roughly $2.50 billion dollars(pg 13, LA Dept of Rev, Economic Development Report, 2011). Assuming for assumption sake all 191 STE'S were repealed(and Jindal has already “promised” such want happen) only $2.50 billion of additional revenue would be generated. In other words, even if all 191 sales tax exemptions were repealed, revenue generated would be $150 million "short" of replacing 2011 income tax revenue collected. However, Jindal, through Tim Barfield, Sec. Of Revenue, has “promised”, indeed has insisted that some STE's will not be repealed. The four STE's exempted from repeal are sales tax exemption on food for home consumption ($334 million), residential utilities($146 million), prescription drugs($239 million), fuel($371 million) and amount roughly to $1.090 billion in exemptions “taken off the table”, therefore, not available to replace "lost" income tax revenues. With these exemptions “off the table”, revenue generated via sales tax repeals decreases by $1.24 billion dollars(the sum total of the four exemptions). There are two more STE's, state and local governmental purchasers,($203 million) and non-residential electrical consumption, ($257 million)-which Jindal and Barfield were silent on. However, I will include these two for the following reasons: I can't see the state or local governments paying sales taxes, such would be revenue redundancy(and) I can't envision a scenario where Jindal would approve increasing sales taxes on businesses. Including these two, along with the previous four “off the table” sales tax exemptions the total amount of STE's not available for replacement of income tax revenue could total as much as $1.70 billion. Revenue generated by repeal of all remaining STE's-all 185 STE's-would generate less than $800 million dollars producing a revenue “replacement shortfall” of $1.851 billion dollars. In other words, replacing revenue generated by state income tax with revenue generated via sales tax repeal is a political “donkey”. The proposal is a political enticement(a political carrot) by Jindal aimed at distracting people from the real revenue problem in state government—Jindal's complete lack of competence and his dedication to a revenue generating paradigm requiring parish and city governments to pick 100% of local expenses without any state support whatsoever.

3) Comment by Lannonmac - 18/02/2013

Very soon people will see just how unstable Gov. Jindal’s idea of a state revenue system based on sales tax is, because if Congress does not do something about the looming “sequester”, that will slash federal spending by almost $1 trillion, the USA will almost certainly fall back into a (self-inflicted) recession. Obviously if the USA falls back into recession consumer sales will drop off and revenue generated from sales tax will drop through the floor. Just keep your eyes open and observe what happens, then decide if Louisiana should go to a sales tax revenue system.

4) Comment by swinham - 18/02/2013

The Governor has admitted his tax reform plan consists solely of eliminating income and franchise taxes and nothing else. He has backed off committing to any of the things Ms. Deslatte suggests - he threw a veritable laundry list of ideas out to make it appear there is a way for the legislature to easily make up the difference. Since that is certainly not so, it is easy to see how the $1.3B gap will become a $1.6B gap once the legislature rolls over and passes the income and franchise elimination bills but nothing on the other side of the equation. It will be interesting to see which rabbit will emerge from the hat to "solve" the budget problem next year (but only for that year, of course).