(Baton Rouge – March 14, 2011) The $24.9 billion state budget proposed by Gov. Bobby Jindal places more of the responsibility for funding public services on middle-class tax payers and working families, while continuing to give big advantages to large corporations and the energy industry.
In addition, members of the Joint Budget Committee pointed out on Friday, the governor’s plan relies on one-time revenues and “imaginary dollars” to balance the budget.
What are imaginary dollars? That’s revenue that will not be available unless the legislature approves some of the administration’s plans in the upcoming session, and unless voters approve constitutional amendments that Jindal is counting on. That means it could be next October before we know for certain whether or not the money in the governor’s budget will even exist.
Here are the sources of the “imaginary dollars”:
- The sale and privatization of two state prisons, which requires legislative approval.
- An increase in employee contributions for most members of the State Employees Retirement System from eight percent to 11 percent, which requires legislative approval.
- The redirecting of dedicated funds to TOPS, a constitutional amendment which requires both legislative approval and approval by voters.
When considered in combination with a recent report from the state’s Revenue Estimating Conference, it’s clear what is happening in Louisiana.
Usually reliable sources of revenue are not producing adequate revenues to fund critical services.
According to the Revenue Estimating Conference, corporate tax receipts are abysmally low. Last year, corporations avoided paying more than three-quarters of the corporate taxes that are on the books. This fiscal year, which began last July, it’s even worse. Thus far, only $15 million in corporate franchise and income taxes has been collected. Last year’s total income from those sources was just $183 million.
Economists were unsure what might be causing the sharp decline in revenues. However, suspicion has been cast on the state’s enterprise zone tax credits and quality jobs tax credits. There are about 3,000 enterprise zones in the entire United States; 1,700 of them are in Louisiana.
If the state is giving up that much in the name of job creation and economic development the question must be asked: Where are the jobs? Where is the development?
Record high prices at the gas pump ought to mean more money for Louisiana, one of the country’s biggest oil producers. So should the bonanza that is the Haynesville natural gas find, the largest discovery in U.S. history. Yet our mineral revenues are stagnant, mainly because of overly generous tax exemptions granted for horizontal drilling, which has become an industry standard.
To understand how the cost is falling on middle-class families, look first at the governor’s plan for higher education.
Our colleges and universities have already lost more than $300 million over the past few years. Gov. Jindal’s budget holds higher education spending at the current level. But to meet that goal, he plans to raise tuition and fees by nearly $100 million.
As LFT President Steve Monaghan put it, “Tuition increases amount to a middle class tax hike, even as corporate taxes are down and continue to be undercollected. That’s a radical shift of the responsibility for funding public services.”
The governor’s budget freezes public education’s Minimum Foundation Program for the third year in a row, but shifts even more costs from the state to local school systems. For example, a $9.4 million alternative school program operated by the Office of Juvenile Justice will be handed off to local school boards without any funding.
Privatization of state services and the sale of prisons are a big part of Jindal’s plan. While that may provide a temporary budget boost, experience shows that privatized services almost always wind up costing the taxpayer more in the long run.
The damage that privatization causes to employees is immediate, however. Dozens of correctional officers were at the capitol Friday to protest the certain loss of salaries and benefits they face. That’s a loss that will ripple through communities as employees have less to spend.
To put today’s budget announcement in a nutshell: Big business and the energy industry win, the middle-class and working families lose.
"We continue to assert," stated Monaghan, "that there are better choices if we want a better Louisiana."