Perhaps the kindest thing that can be said about the 2013 Regular Session of the Legislature is that it didn’t result in the need for a follow-up Special Session. After confrontation, consternation, confusion, and odd-couple coalitions festered for 60 days, the session (mercifully for many) came to an end on June 6.
Much of the potential energy of the session evaporated on the opening day when Governor Jindal announced he was “parking” his controversial “tax swap” proposal. Originally, the shape-shifting plan would have swapped removal of the personal and corporate income taxes for a large increase in sales taxes. When that proved unpopular, the proposal shifted to removing the personal income tax via a huge increase in business taxes. That trial balloon floated for about 10 days until the governor waived a white flag in his opening address to the Legislature.
With the tax swap dead, the focus shifted to the budget. A coalition of Democrats and Republican “fiscal hawks” in the House fashioned a budget plan that originally relied on over $300 million in tax increases—placed primarily on businesses—to replace some of the one-time revenues in the governor’s budget. The tax increase proposal went nowhere and was replaced primarily by a $200 million tax amnesty proposal and $100 million in cuts. The Senate removed most of the cuts and added over $100 million in new revenue certified by the Revenue Estimating Conference. A House/Senate conference committee massaged the two proposals into a final budget that passed both chambers almost unanimously. Included in the final bills were budget reform proposals championed by the fiscal hawks. While those proposals will bring more transparency to the budgeting process, they won’t stave off the likelihood of another round of mid-year budget cuts later in the next fiscal year.
Whether the budget will pass the ultimate test of preventing another round of mid-year budget cuts is still very much in doubt due to the tax amnesty proposal. How it will work out is still very much up in the air. It covers a two-year period, but the biggest incentives for payment of delinquent taxes come in the first year. The only requirement to receive penalty and interest forgiveness is that the payments must be made before the deadline in the tax year. Most taxpayers who owe money to the government wait until the last minute to pay. If that practice holds true with the tax amnesty program, there could be significant budget implications.
The other major issue area of the session was a continuation of the war between education reformers and the education establishment. Many bills to undo the major education reforms enacted last year were filed, but by the end of the session all of the major reforms—including those challenged in the courts—remained intact. The Supreme Court ruled that the funding source for school vouchers contained in the 2012 legislation last year was unconstitutional. In the recently completed session, state general fund money was appropriated in the budget to overcome the court ruling and the program was expanded as well. Assaults on the other major reform bills from last year were mounted daily during the session, but all were defeated.
The 2013 session did not put an end to the fiscal problems the state has been encountering since the economic downturn of 2008. Those difficulties will continue going forward. While the session did show that Governor Jindal has reduced clout with the Legislature (particularly with the House), Jindal still was able to keep his education reforms basically intact and ward off attempts to force the state to sign on to the Medicaid expansion portion of the federal Affordable Care Act. While the actors have left the stage temporarily, expect the confrontation, consternation, confusion, and odd-couple coalitions to continue going forward.