Senate President John Alario gave up Thursday morning on passing a final tax bill, which means that the special session that ends at midnight will raise less than half of the $600 million sought by Gov. John Bel Edwards.
Alario said that Edwards and his allies could not secure enough votes in the House for the measure, which would have ended the deduction that allows taxpayers to deduct their previous year’s state and local tax payments on the current year’s state tax return.
Trying to pass the bill “would be a futile exercise,” Alario told reporters at 9:30 a.m., just before he gaveled the Senate into session on its final day.
Passage of the tax bill would have added an estimated $88 million to tax collections for the fiscal year that begins on July 1.
Republicans in the House were unyielding in their opposition to the measure, which would have eliminated an income tax break that primarily benefits taxpayers who earn at least $100,000 per year.
The session did result in raising either $258 million or $284 million in taxes, depending on which house’s fiscal staff you believe. The House’s fiscal staff says they’ve raised $284 million, and the governor’s people agree, whereas the Senate staff thinks the number will be $258 million. The bulk of that number, whatever it actually is, comes from a tax on health insurance premiums which is terrible public policy and will lead to more uninsured people in Louisiana and therefore more state healthcare spending.
But Edwards wanted $600 million in new taxes and he tasked Alario to get those for him. An attack on taxpayers who itemize deductions was the chosen vehicle for getting above the $258 million or $284 million, and the House shot that down outright.
Ultimately, Alario had to tell the governor the gig was up.
The expectation at this point would be that a man capable enough to get elected as a state’s governor would be able to find some $300-350 million in a $26 billion budget in order to live within the state’s means. A three percent administrative cut in the $12 billion Department of Health and Hospitals budget would produce that number and then some. But Edwards is sticking by the fiction that no such economy is possible.
As such, the budget being discussed as this session comes to a close will either trash the TOPS program a lot, or it will trash TOPS a little and take money out of K-12 education.
The latest version of the state budget — approved by the Senate Finance Committee — leaves K-12 education $38 million short of the money requested.
The Louisiana House is upset about this reduction to public school funding. But their frustrations with the Senate version of the budget would be easier to resolve if the extra $26 million was available. If the money could be used, Alario said the Senate would likely use much it to help plug the hole in K-12 education.
The Edwards administration agrees with the House on this funding issue. If the $26 million isn’t available, the governor would spread more evenly between higher education and K-12 schools.
If the $26 million isn’t available, then budget negotiations could become more complicated. There may be efforts in the House to move money away from higher education or TOPS to help out K-12 education more. Higher education is currently being given all the money it requested, but TOPS has already taken a 30 percent cut. Any change to TOPS would mean the scholarship would be further reduced.
“Whatever money that is available has to be distributed in a more equitable balance between K-12 education and higher education,” Edwards budget chief Jay Dardenne told Senate Finance Committee Wednesday.
That $38 million is more or less a drop in the bucket when it comes to K-12 education, which by the way is not so much a state government function but a local government function, and the local government entities entrusted with K-12 education (outside of a few charter schools and the state Recovery School District, and the voucher program, which the state Department of Education oversees) all have the power to tax. Out of some $5 billion the state spends on K-12 education it’s not unreasonable to think a $38 million cut can be absorbed without a reduction in quality of services (such as they are, given that Louisiana is 49th in K-12 outcomes).
The irony, of course, is that Edwards will be overseeing the largest cut to K-12 education in Louisiana’s history after running as the willing stooge of the public teacher unions. We can call that failure.
As to the TOPS shortfall, it’s going to be interesting to see how it’s finally resolved. The House had sent up a perfectly reasonable proposal; namely, that if TOPS were to only be funded at 70 percent and the yearly TOPS awards were to see a 30 percent across-the-board cut, then TOPS should be funded at 100 percent for the fall semester which begins in two months and then the cut would be applied in the spring. That would give students and their parents seven months to secure alternate means of financing for their education in the event the cuts held – and that’s assuming the state doesn’t end up with a lot more revenue than is being projected, which lots of House members think is going to be the case. They think the state will end up with a sizable amount more than Edwards is advertising and there won’t be any reason to cut TOPS at all, so why hammer those parents on short notice unnecesarily?
Jeff Sadow explains what the reaction to that idea was…
He reacted as such when learning that the Louisiana House of Representatives’ budget plan included a provision that if the Taylor Opportunity Program for Scholars did not receive full funding that recipients would frontload tuition payments. The Republican leaders who backed the notion felt that a change in fiscal fortunes would produce more money than anticipated later in the fiscal year and if not then families would have more time to secure alternative funding. At present, TOPS appears to have only 70 percent funding.
However, neither of these rationales made a favorable impression on Edwards, who wanted to lard up at least another couple of hundred million dollars’ worth of tax increases on top of the $2.3 billion legislated over the past 13 months to close the gap. Keep in mind Edwards himself in his executive budget proposed cuts to TOPS, as a strategy to coerce the GOP majorities in the Legislature to hike taxes.
Some magnanimous politicians would accept defeat, work to make the best with what they have, and move on. Not Edwards: with his whole strategy built upon extracting what he wants by trying to inflict pain upon constituencies behind programs supported by his opponents to discourage them from thwarting his big government goal, he doubled down in this instance by expressing opposition to the idea. His mouthpiece on these matters in the Senate, Democrat state Sen. Eric LaFleur, chairman of its Finance Committee, demonstrated a singular inability to grasp the obvious when stated he didn’t understand the rationale for the budget instruction he said he will seek to remove in his chamber.
Officially, Edwards and his Senate allies don’t think forecasts came in too low and that the opposite could happen so the frontloading could deprive any TOPS funding for next year. But there’s no logic to that thinking: by fully funding now, families have seven months to prepare for next year including a scenario of no funding. By contrast, they have little time to make up even partial shortfalls for classes that begin in two months, potentially causing students to drop out and lose TOPS entirely. And if more money does flow in to state coffers that would have allowed full funding all academic year, the state misses a chance to have students’ tuitions paid in full.
So let’s recognize this reaction for what it is: a mean-spirited last-ditch attempt to pressure the GOP majority to assent to carving more taxes out of the public’s hide. And even if it fails, as is likely, because Edwards’ punishment strategy to work must employ credible threats, it’s likely the final supplemental appropriations bill will have the Senate successfully negotiate out the frontloading instruction to allow Edwards from now on to allege Republicans deserve blame for TOPS cuts, when in fact not only did he champion that from the start but also at the last minute ended up preventing implementation of a maneuver to ease potentially the impact.
We’ll see how that debate turns out. You would think Edwards, now that his tax-raising effort is over, would play ball with the House and seek to minimize the effects of budget cuts on the people the government serves. The obvious way to go with TOPS would be to take the House up on that idea and encourage the universities to help those parents come up with tuition solutions this fall – student loans, Pell grant applications, whatever. But if he demands a 30 percent cut, or more, be applied this fall he’s going to maximize the pain not just to the students but to the state’s colleges who collect that tuition and also the fees, room and board and so forth the students would have brought with them but are now not attending college, and Sadow is going to be correct in calling him mean-spirited.
That’s the question facing the governor. He’s had his special session and he’s gotten schlonged, to borrow a term from Donald Trump. How sore a loser is he going to be?