“I am very concerned about this special session,” says Jan Moller, the executive director of the Louisiana Budget Project (LBP), a non-profit organization that analyzes the impact of public policies on the state’s low and moderate-income families.
Despite Gov. John Bel Edwards’ repeated insistence that he would not call a special session this month unless an “agreement in principle” was first achieved with House leadership, that call was issued last Friday. The special session is scheduled to run from 4 p.m., Monday, Feb. 19th through March 7th. Yet there is no definitive deal in place.
“The governor’s stated parameters have not been met.” Moller says. “This call for a special session doesn’t do anything to reform Louisiana’s tax system, nor does it raise adequate revenue. And the GOP House leadership seems to only be willing to discuss items that don’t meet anybody’s definition of tax reform.” Moller has been at the helm of the LBP since 2011. Prior to that, he spent nearly nine years as a state Capitol reporter for The Times-Picayune. There are few others who have followed the Louisiana government as closely as Moller has during the past fifteen years.
Senate President John Alario may have summed it up best when he told NOLA.com’s Julia O’Donaghue, “I don’t think there is an agreement in concrete. I think there is an agreement to proceed.”
In his call, the governor is asking for legislation to alter parts of the tax system affecting state income tax brackets and excess itemized deductions, even though those proposed reforms have failed to pass out of the House during sessions over the past two years. House Republicans have indicated they still don’t support those concepts, nor will they agree to imposing sales taxes on services – another call item that has previously been tried and died.
Moller says it’s clear. “Reform is off the table. Over the past several years, we’ve had the Richardson Report, the Tax Foundation Report, the Tax Reform Task Force Report, and our report – the Louisiana Budget Project report – all basically agreeing on what tax reforms we ought to implement. All of that has been shunted to the side.
“The easiest reform – eliminating the state deductibility of federal income taxes paid, which alone would raise state revenue by almost a billion dollars – isn’t even in the call,” Moller remarks.
Last year, in order to stave off a $1 billion budget shortfall, the governor and the legislature agreed to temporarily add another cent- a “fifth penny”- to the state’s sales tax, and as a result, Louisiana’s combined state and local sales taxes are the highest in the country.
And while the governor has said he does not want to see a renewal of the fifth penny of sales tax – a collection which ends June 30, 2018 and is the biggest single component in creating the fiscal cliff – it is also a part of the call. House leadership has signaled Republican members are leaning toward making a portion of that tax permanent. Some House Democrats are adamantly opposed. Higher sales taxes disproportionally affect low-income families.
Moller comments, “Renewal of a half-cent or a quarter-cent of the fifth sales tax penny is not a plan. It’s a portion of a plan.”
But Moller reserves his greatest concerns for what he calls “the conditions the House has put on this whole problem.”
He’s particularly alarmed by the call’s inclusion of the House Speaker’s demand for an “expenditure limit.”
“This spending cap is modeled after Colorado’s TABOR – Taxpayer Bill of Rights, which was passed in 1992 and limits Colorado’s revenue growth to a percentage of the annual inflation rate and its population growth,” Moller explains.
“Here the House leaders want to put an arbitrary limit on state spending. It’s a gimmick that doesn’t clean up the tax code and has no economic justification,” Moller continues. “And because it’s an across-the-board limit on state spending growth, this could have a generational impact on Louisiana’s ability to provide services for all the things we agree we want and need to invest in: roads, healthcare, higher education, K-12 education, and pre-school programs. In the future we might have the revenue available to invest in those things, but (if the spending cap passes) we wouldn’t be able to spend it because we put this stupid thing in the constitution.”
Politically, this special session has all the markers of a no-win scenario for the governor.
Even though House leadership failed to meet deadlines – repeatedly extended – for submitting their plan, Edwards did not stick to his own oft-repeated insistence on not calling a special session without such a plan in place, opening the door further to critics who disparage his West Point credentials by referring to him as “Governor Honor Code.”
Edwards’ call does not include the ability to address comprehensive tax reform legislation, and therefore, it may close the door on the opportunity to achieve a long-term halt to the state’s fiscal rollercoaster ride. It does include the demands by House leadership for legislation addressing a state transparency website, a top priority for the Louisiana Association of Business and Industry, as well as Medicaid restrictions, even though those items could be addressed in the regular session which begins March 12. (Bills for both the Louisiana Checkbook concept and Medicaid work requirements were pre-filed for that session prior to the special session call issued Feb. 9th).
“The Louisiana Checkbook (website) idea is fine,” Moller says, though he views the campaign for it as a “distraction” from the real fiscal issues.
Similarly, the current proposal to tether a work requirement to Medicaid eligibility, which is being championed by House Republican Caucus Leader Lance Harris, has nothing to do with the immediate budget crisis and is likely to face significant opposition from Democrats.
And then there’s that fifth penny of sales tax.
The governor doesn’t want it renewed, yet House Republicans are looking at extending a part of it. The part of it they don’t renew could then be portrayed as their “tax cut,” when the 2019 statewide elections roll around.
But there is a way out of the no-win scenario: Kobayashi Maru.
For the uninitiated, Kobayashi Maru comes from the 1982 movie Star Trek II: The Wrath of Khan. It is a training exercise for Starfleet Academy cadets described as “the no-win scenario.” A civilian freighter (the Kobayashi Maru) becomes disabled, drifting into the Neutral (no-fly) Zone between United Federation space and Klingon Empire space. They put out a distress call, yet a rescue attempt by the Federation ship would violate treaty, and invite Klingon attack. Without rescue, civilians aboard the freighter will certainly die.
In the movie, it is stated that Admiral James T. Kirk is the only person to have beaten the no-win scenario. He says, “I reprogrammed the simulation so it was possible to rescue the ship. I changed the conditions of the test.”
There are already distress calls from those who will be severely impacted should lawmakers choose not to replace the expiring revenue.
“We are asking our legislators, please, to firm up the bottom line for higher education, no matter what that looks like, as quickly as they can,” LSU System President F. King Alexander wrote recently in a letter to The Advocate.
Katie Corkern, director of Northshore Families Helping Families, which assists those with medical and developmental disabilities, tweeted this past week, “The cost could be the loss of lives. Children’s Choice waivers keep hundreds of kids ALIVE in their own homes every day.”
Yet the Neutral Zone – legislative autonomy under the separation of powers doctrine – is something Gov. John Bel Edwards is deeply committed not to cross, even though House Republicans seem to have fewer compunctions about crossing that line themselves.
And while we never learn in Star Trek II exactly what changes Kirk made to the scenario to make it winnable, it seems one tactic could be fomenting mutiny among the Klingon ship captains.
Based on House budget votes at the end of last year’s regular and second special sessions, a change in House leadership could be a viable option. The votes are there. A different Speaker could also tweak committee chairmanships and compositions to facilitate the rescue of civilians aboard this Kobayashi Maru.
That way, Louisiana might finally have a real chance to “Live long and prosper.”
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