State tax amnesty program collects $435 million

Legislators got a little holiday cheer Thursday ahead of the annual Christmas party at the State Capitol.

A tax amnesty program went far beyond producing the $200 million needed for health care expenses in the state operating budget. Once the state Department of Revenue figures out operating and other costs, legislators should have an unexpected $157 million to spend.

The revenue department’s secretary, Tim Barfield, said the numbers should hold even though applications still are being processed. “Taxpayers responded enthusiastically to the opportunity to fulfill their obligations and settle their accounts with the state,” he said.

The state waived half the interest and all penalties for taxpayers who agreed to settle tax disputes or clear back taxes between Sept. 23 and Nov. 22. Most of the money collected, $369 million, came from taxes that were the subject of audits or litigation. Those disputes usually involve businesses.

Another $66 million came from people or businesses who were late on their taxes. The final piece, $67 million, materialized through motion picture and insurance tax credits that were given as payment. Over all, 52,000 businesses and individuals participated.

The $435 million collected is not a record breaker for state government. A tax amnesty program in 2009 generated $480 million.

The proceeds mean that health care bills can be met, relieving legislators of cutting the budget because they balanced it with expected amnesty dollars. They also got a little extra to spend.

Gov. Bobby Jindal said earlier this week that he wants the extra dollars to go toward health care and education.

“We’ll obviously want to consult with legislative leaders and work with the Legislature. I’d like to see those dollars ultimately invested in education, health care. I think those are two critical areas for the state,” Jindal said.

State Rep. Joel Robideaux, who sponsored the legislation creating the amnesty program, recently outlined for legislators what happens next with the dollars. Robideaux, R-Lafayette, wrote in a letter to other members that questions were surfacing even before the Jindal administration finished totaling the numbers.

The first stop for the dollars will be the Revenue Estimating Conference — a panel of state officials and an LSU economics professor, who sort money into two categories. Money considered recurring can be plugged into the state budget to pay for ongoing services. Money considered “nonrecurring,” or only likely to materialize this one time, has limited uses.

This one-time money can be deposited into a state savings account or spent on expenditures such as reducing debt, tackling college campus maintenance, building roads and restoring the coast.

Robideaux said the Revenue Estimating Conference deemed half of the amnesty money generated in 2009 as “nonrecurring.”

The $242 million found its way into the state operating budget anyway. Legislators ran it through the coastal protection and restoration fund, transferred it and spent it on health care.

Jindal declined earlier this week to speculate on any tactics that might be used to ensure this year’s amnesty money is available for the state budget. He said he wants to talk to legislators first.

Senate Finance Chairman Jack Donahue, R-Mandeville, said he would like to see some of the dollars make their way into a “rainy day” fund that serves as the state’s savings account. “We owe quite a bit to that fund,” he said, referring to past withdrawals during financially bad times.

Several legislators worry that regular tax collections will dip as businesses and individuals wait for the next amnesty program before paying what they owe. Before the latest amnesty program started, delinquent tax billings totaled $1.4 billion, and $1.1 billion was tied up in litigation or disputed audits.

House Appropriations Committee Jim Fannin, D-Jonesboro, said the argument can be made to spend the extra money on one-time needs such as projects on public college campuses. “There’s a lot of needs,” he said.