It looks as if the SAVE plan will save Louisiana’s stressed fiscal year 2016 budget, thanks to the typical force alignment process seen in the state’s budgetary politics.
At present, the House of Representatives remains balky on SB 284 by state Sen. Jack Donahue, which would create a complex mechanism that allows higher education institutions to charge a fee, presumed to be $1,500 annually, per student; allows that to exist as a tax credit accessible for the families involved regardless of whether they have that much tax liability; and draws from the created SAVE Fund that gets filled from tax increases in other areas such as on cigarettes, meaning the families never pay the bill nor receive the credit rebate while the funds flow directly to higher education. The law promulgates such gyrations because Republican Gov. Bobby Jindal has declared that any bills that increase taxes without offsets elsewhere and any budget with a net tax increase he will veto.
Without the Student Assessment for a Valuable Education plan made into law, a budget with a net tax hike that no accounting gimmickry can hide (taxes definitely are going up) seems inevitable, bringing the state as previously mentioned to the brink of a clash between an irresistible force and an unmovable object, with resolution attained only when one side politically can overpower the other. While that conflict would play out, after the Jul. 1 start of the new fiscal year fiscal chaos will reign.
Except that it may not get to that point. Not long after the House Ways and Means Committee narrowly turned back SB 284, on the decisive basis perhaps of its artificial nature, the Senate leadership made its clearest statement of alliance with Jindal by having attached the substance of the bill to other House bills involving taxes in the Senate Finance Committee, putting the House in an untenable position of continued refusal to pass the SAVE fund into law.
Its attachment to HB 829, a bill dealing with film tax credits authored by state Rep. Joel Robideaux who is the committee chairman of Ways and Means and provided a decisive vote against SB 284 – by the committee Donahue heads – illustrates the House’s collapsing position. When the Senate presumably passes the new version of HB 829 (it approved SB 284 by a large margin) and sends it back to the House, that chamber can do one of three things.
First, it could strip that Senate language – which then opens its members to charges that they would rather give $180 million to making movies (a side benefit of Finance’s action was to lower the almost-useless original $200 million cap on the Motion Picture Investors Tax Credit to a slightly less useless $180 million) than dedicate $350 million to higher education; not a good talking point during campaign season this fall. Second, they could scrap the whole thing and start an even more embarrassing conversation about how they preferred to give filmmakers an unlimited number of checks to draw from taxpayers while refusing to shift funds to higher education. Third, it could knuckle under, which seems the politically least costly to the vast majority of its members, even as some of them hung themselves out to dry on this like state Rep. John Bel Edwards, running for governor as a Democrat, who crowed about defeating the bill and predicting a House override of any Jindal veto yet who now either must submit passively to eating his words and voting for it or voting against it and opening himself up to those charges of putting corporate welfare ahead of students as he runs for the state’s top office.
Not that the SAVE language is desirable public policy, precisely because it essentially creates a dedication of state dollars to higher education, the last thing the state needs when it already locks in 81 percent of its state revenues that creates severe budget inflexibility that partially has caused the troubled budget situation that precipitated all of this maneuvering. Its likely large dependence on the cigarette tax, signaled even more definitively by the Senate’s desire to boost that hike, also violates good fiscal policy norms by detaching the object of an excise tax – cigarette purchases – from an expenditure related to that activity – taxpayer dollars going to pay for health costs associated with smoking. But given the political dynamics involved, it is the best option in the short run.
But only in the short run. The House should put a sunset date of a year on the SAVE fund and toss that into the mix of a special session at the beginning of next year designed to induce rationality in the state’s fiscal structure (calling this earlier than that would have been desirable, but political dynamics of an election year prevents that from happening). If the body politic has to suffer this malady to fight off a chronic but curable disease, best to suck it up and get it over with.
As has become the recurring pattern in budgetary politics, two parts of the triad of governor, Senate, and House wins, although the governor clearly operates as first among equals with the supermajority requirement needed to override his veto (if the numerically superior side knows what it’s doing). That coalescing appears complete for the FY 2016 budget, and with making the SAVE language temporary would produce a jerry-rigged budget barely tolerable for a year.