Louisiana governor's budget: Avoid tax hikes, but limit cuts
Feb. 27, 2015
BATON ROUGE, La. (AP) — As Louisiana Gov. Bobby Jindal offers a $24.6 billion state budget proposal, the potential presidential hopeful is seeking to protect his longstanding refusal to raise taxes while avoiding deep slashes to health care and colleges that might damage a national campaign.
The Republican governor's administration on Friday showed lawmakers his proposal to close a $1.6 billion shortfall for the budget year that begins July 1.
Commissioner of Administration Kristy Nichols, Jindal's chief budget adviser, said it contains "meaningful targeted reductions in every area of state government" while also offering a "path for protecting both higher education and health care."
The plan would avoid worst-case scenarios of widespread college program closures and health service shutdowns. But it puts Jindal at odds with the business community, because it seeks to scale back $526 million in tax credits, mostly to businesses.
Lawmakers also are being asked to consider fee hikes on college students, businesses and drivers to drum up new cash without violating Jindal's rigid rule against tax increases.
And that still wouldn't completely prevent budget cuts.
Seven state historic sites would be shuttered. Local districts that provide mental health and substance abuse treatment would take a hit. Spending on health clinics in New Orleans would drop. Public defender programs for people who can't afford lawyers would get less money, though many of those offices are already on the edge of bankruptcy.
But the beginning of negotiations with lawmakers, who will devise a final budget in the legislative session that begins April 13, was far less grim than many expected. Republicans and Democrats raised concerns, but criticism was muted.
"I think we're at a great starting point," said Rep. Katrina Jackson, D-Monroe, chair of the Louisiana Legislative Black Caucus.
Louisiana has faced continuing budget shortfalls during Jindal's seven years in office. Much of next year's gap is self-created.
Jindal and lawmakers have repeatedly used one-time revenues from property sales, insurance settlements and trust funds to patch together annual spending plans. More than $1.1 billion of such piecemeal financing props up this year's budget that won't be available next year.
Nose-diving oil prices and a spike in the cost of tax breaks have worsened the financial woes. Jindal has rejected attempts to raise taxes, and he and lawmakers have refused to match Louisiana's spending to its ongoing revenue.
National credit rating agencies have threatened the state with a downgrade unless it changes its budgeting.
"A Band-Aid approach simply will not work anymore," said Rep. John Bel Edwards, D-Amite, leader of the House Democratic Caucus.
The budget recommendations outlined Friday were designed to identify new, recurring sources of cash but maintain Jindal's ability to tell voters around the country that he hasn't raised taxes back home.
Jindal proposes to cut $526 million in refundable tax credits, in which the state often pays out more than the taxes a person or business owes. Jindal suggests this doesn't constitute a tax hike, but a reduction in spending.
Business leaders and some Republican lawmakers bristled, and instead want to curtail other tax credit programs. But they're trying to target tax changes Jindal would support.
Rep. Lance Harris, R-Alexandria, chairman of the Republican Legislative Delegation, asked Nichols to provide a "very clear and concise definition from you what you would consider a tax increase or what your boss is going to veto."
To help close a remaining $210 million gap in higher education, the Jindal administration offered a list of money-generating suggestions. One would add millions in new fees on college students and offer a tax break in exchange. The dollars to pay for that tax break would come from an increase in the state's cigarette tax.
Lawmakers asked why they couldn't just raise the cigarette tax and spend the money on colleges. Without the complicated work-around, it would be considered a net tax increase, Jindal administration officials replied.
"Our guardrails are very clear. We won't raise taxes without an offset," Nichols said.
Jackson said some families can't afford to pay increased fees upfront and wait for a refund months later: "There has to be a balance between presidential ambitions and something that works for our families."