Fiscal Year 2012-13 is just half over but more deep budget cuts will be announced on Friday and, in the words of one state official, “It ain’t gonna be pretty.”
And the latest fiscal problems haven’t even encountered a looming tax rebate program being offered to encourage financial viability of state charter schools, a centerpiece of the Jindal administration.
With health care and higher education already devastated by previous cuts, it’s anyone’s guess who will suffer in the new round of belt tightening.
Higher education has already been hit with more than $426 million in cuts since 2009—$25 million since June—and Gov. Piyush Jindal has been conducting a fire sale to unload state hospitals and prisons, so it’s difficult to pinpoint where other cuts can be implemented.
The Revenue Estimating Conference will meet on Thursday and the Joint Committee on the Budget will meet on Friday to officially hear the bad news.
Without specifics (because they weren’t available when this was written), that bad news is:
• Personal income tax revenue is below projections;
• Corporate income tax revenue is below projections;
• Severance tax revenue is below projections (because of an unexpected drop in the price of natural gas);
• Sales tax revenue is below projections.
With the bulk of state revenue coming from income taxes and sales taxes, the news, it seems, couldn’t be much worse.
But it might.
Remember the alternative fuel tax credit?
That’s the bill authored by former Rep. Jane Smith (R-Bossier City) that promised a tax credit of up to $3,000 for vehicles that burn “alternative fuel. It was estimated at the time that the tax credit would cost the state $907,000 over five years.
After losing her bid to move up to the Senate in 2011, Jindal rewarded her loyalty (read: dedication to tax breaks) by appointing her as deputy secretary of the Department of Revenue.
The intent of the bill was to encourage the conversion of vehicles to propane but between the passage of Smith’s tax rebate bill and its implementation, flex-fuel vehicles that run on a blend of up to 85 percent ethanol hit the market.
These vehicles immediately qualified for the rebate and the real cost turned out to be more like $200 million, an increase of almost 1,900 percent after then-Revenue Secretary Cynthia Bridges got around to creating rules for the program.
Caught in a potential fiscal crisis over the tax credits, Jindal promptly fired Bridges, promoted Smith (who authored the bill in the first place) to interim secretary and rescinded the tax credits.
Now, a similar scenario may have arisen in the form of last session’s House Bill 969.
HB 969, by Rep. Kirk Talbot (R-Baton Rouge), which was subsequently signed into law by Piyush as Act 25, offers tax rebates to those making contributions to charter schools.
Piyush vetoed a similar bill by Rep. Katrina Jackson (D-Monroe) that would have given tax rebates of up to $10 million to those making contributions to public schools because, he said, there was no provision in the state budget for the rebates.
The only problem is, the provisions of Act 25 contain no dollar cap which, like the alternative fuel tax, could blow a gaping hole in the state’s budget should a sufficient number of people make contributions to the private scholarship program.
It’ll be interesting to see how the Boy Blunder handles the latest financial crisis since the state is running out of one-time money with which to plug budget holes, thousands of state jobs have already been eliminated, there are few remaining assets that can be sold off, and health care and higher education have already been cut just about as much as they can stand and still function.
Perhaps Piyush might actually see the need to jettison a few six-figure appointive positions handed out to former legislators like Smith, Noble Ellington, Troy Hebert, Lane Carson and numerous others.
That would be a start—a show of good faith, at least.