It seems that almost every month or so officials make some kind of mad scramble to come up with money to pay the bills of state government.
Most recently, a squabble broke out over when money that hasn’t been spent yet becomes “surplus” — which has legal and political implications about what the cash can be spent for.
Underlying this mess is the failure of the state’s leadership to pay the bills in an orderly fashion.
The reason for that is politics: Everyone likes tax breaks or other benefits, and Gov. Bobby Jindal and the two most recent crops of legislators excel at reducing state income. Then they argue among themselves, often bitterly, over what scraps of dollars can be thrown at the state’s obligations.
The latest confusion over what a cash-strapped state government can call a “surplus” underlines the vital importance of a new commission that is charged with figuring out how to stop the bleeding.
The state has more than 400 tax credits and other exemptions on the books, diverting more than $4 billion from state coffers. Some of the exemptions date back to the 1930s, legislators learned this year.
At the behest of reform groups, the commission will try to figure out what exemptions are out of date, and which ones should be either suspended or done away with.
This is a welcome study, but its implications for rationalizing the state’s revenue situation is already being undercut by politics. Business interests — and every tax break or exemption has an interest that asked for it — are wary.
Dan Juneau, president of the Louisiana Association of Business and Industry, called the discussion an attempt at “raising more tax revenue from the private sector to continue unsustainable levels of state government appropriations. Their attempts to raise taxes will be strongly opposed.”
Jindal, presiding over the budgetary messes of the past five years, also is against raising money to pay the bills that his administration is constantly shuffling around in ever-more desperate financial expedients. “We’re opposed to raising taxes, but we’re open to any review of the tax code that would make it fairer, flatter and lower for Louisiana businesses and families,” Jindal said.
The governor has not been drawn out more than that, although one of his critics in the Legislature says that this statement does not bode well for the tax break study. State Sen. Karen Carter Peterson, D-New Orleans, said the governor’s definition of what would be a “revenue neutral” tax change varies depending on the politics of the moment. But, she said, “revenue neutral would not be helpful, because we have a revenue problem as well as a spending problem.”
By any standard, the commission has its work cut out for it, but we would suggest at least some minimum level of recommendations about this mess.
First, no tax break should be forever. Instead, let it “sunset” under the law, forcing the Legislature and the administration of the day to justify its continuance.
Second, the Department of Economic Development and other agencies ladling the gravy should justify in a public cost-benefit analysis every dollar that the state spends on tax breaks.
Third, the commission should put a spotlight on those exemptions that transfer dollars from residents and existing businesses to international mega-corporations. The latters’ loyalty to Louisiana can be measured precisely: only as much as we pay them.
And fourth, the commission should tell us what exemptions are really “discretionary.”
Few of the experts will say that there really is $4 billion in savings available in the exemptions budgets. If the state needed revenue, where is the list of exemptions that can realistically be suspended or eliminated? Each break that is unique to Louisiana, or nearly so, should get particular scrutiny on this list.
If nothing else, we hope the commission members are as sick as we are of these endless fights over scraps on the table. Their study of the tax breaks ought to be rooted in a value judgment: Is this exemption a good way of doing business?