SADOW: There’s More To The ‘Deaf Tax’ Bill Than Meets The Ear

A controversy over funding to provide for more accessibility for the hearing-disabled illuminates an unrelated controversy over Louisiana’s fiscal structure and provides an object lesson promoting reform that no legislator yet seems intent on embracing.

HB 238 by state Rep. Patrick Williams would change the way the Telecommunications Fund for the Deaf gets funded. Instead of the current 5 cent tax per local line per month, a 2 cent charge would hit for all lines except those non-telephonic and prepaid. This would increase the amount of money coming in by about $1 million a year. Williams claims the change is needed because the number of landlines continues to fall.

But Gov. Bobby Jindal objects to the bill because it is a tax increase, and Jindal has said consistently he will not support any measure that does so or any set of them that raises taxes in aggregate. Williams, nor any of his many co-sponsors, which comprise a majority of the House members of the Legislative Black Caucus, several other white Democrats, and a few Republicans, have addressed why an increase is needed, as opposed to lowering the proposed rate to keep the alleged funds erosion at bay.

For his part, Jindal appears to agree for needing more funding by stating he would look to find elsewhere in the budget the extra $1 million, and a representative of his office has stated in public meetings that more money is needed. To this point this offer seems to have gotten a cool reception from Williams, seemingly set on picking up extra revenues and denying the obvious fact that it does increase taxes on many individuals.

Unfortunately, the evolving debate ignores a salient point: the fund in question is awash in money. For fiscal year 2012 completed last June the subsequent supplemental schedule from the state’s Comprehensive Annual Financial Report for FY 2012 indicates the fund held a balance of $3,110,000, down over $1 million from the previous year, but reporting that as committed. Whether that has gone entirely to finance assistive technology for individual Louisiana residents is another matter. For example, in FY 2012 over $2.7 million of the fund was budgeted towards financing activities of the office of the Secretary of Health and Hospitals; for this upcoming year, the figure is budgeted at over $1.9 million. The money in the fund may be “committed,” but the question is how much of that commitment actually goes to devices and how much to funding current operations. Past supplemental report numbers of fund inflows and outflows suggest a pattern where more goes to the latter than the former.

Yet there’s a larger question here, and that is whether a dedication of this sort is the optimal policy approach for this issue. If in fact it is generating more money each year than can be used for purchase of assistive devices to be loaned out to citizens, then the bill addresses a non-existent problem. Jindal’s response then constitutes only a half-measure; by untying the additional money from a dedication, this creates more flexibility to fund at an appropriate level, but it still does not address whether the original, current funding mechanism provides too much money for the intended use of that money.

For good policy-making purposes, Williams and/or Jindal’s offices need to use historical figures on the expenditures for the loaned units, and then build a proposal around that it. If they’re lower than the typical annual revenue from the tax, the bill still can spread the taxation around but at a necessarily lower rate than is being proposed. Alternatively, the tax could be abolished and money come out of the general fund annually to fund these, if the historical data show fairly predictable expenditure demands.

Meanwhile, beginning today the self-styled “fiscal hawks” of the Legislature witness some of their proposed legislation up for discussion in committee. Much, but not all of their package, is good, yet they do not address the fundamental problem as explained above: correcting a fiscal structure that misallocates money in a way not amenable to proper prioritization. Instead, they regularly have validated, and continue to do so with some of this legislation, the existing system by proposing it become more inviolate, by preventing corrective mechanisms designed to reallocate on the basis of priority – although there are some signs they finally are beginning to understand it is the disease, not symptoms, they need to address.

The dispute over the line tax represents a tiny portion of the larger debate that should be occurring. Whether that permeates and broadens the narrower debate over bookkeeping issues on which the “hawks” seem fixated is another matter.

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