PAR calls for less budget magic tricks, more long-term solutions
BATON ROUGE - The Public Affairs Research Council issued a report Friday which compared Governor Bobby Jindal's plans to close a $1.6 billion budget hole to magic tricks, and warned that the reality could be much worse for hospitals and higher education than previously predicted.
"Just about everyone knew the budget situation was bad," the report said. "PAR's deeper look at the budget holes and tenuous patchwork unfortunately show it to be even worse than many thought."
PAR said their research identified more than $300 million worth of unfilled budget holes in the proposed executive budget, as well as more than $700 million in state resources which they feel should be on the negotiating table.
The non-profit think tank believes Jindal's executive budget over-estimates the amount of money which could be saved through various maneuvers, such as increased government efficiencies and tax amnesties. The biggest chunk of savings in the budget comes from refunds paid out as part of the inventory tax credit, which will cause the state to pay out $376.7 million to businesses according to the Department of Revenue. PAR thinks that if the law cancelling those refunds is passed, it'll create new burdens on refineries, chemical plants, car dealers and grocers, and those businesses will react in ways that will prevent the state from saving as much as Jindal says it would.
"While the numbers above are used as an estimate, the real budget impact could be substantially different and probably less than projected," PAR said in their report.
The report also said in the best-case budget scenario, higher education funding would still lose $246 million in overall budget support through the governor's budget plans. The budget assumes colleges will get an additional $70 million from higher tuition as part of the LaGrad Act, but PAR said the Board of Regents predicted $35 million is a more realistic target.
"Higher education is about to endure its worst-ever single-year cut in overall financing," the report said.
The bottom line, according to PAR, is that even if all the governor's plans are put into effect they will "very likely" leave the state coming up short hundreds of million dollars and force more mid-year budget cuts.
"The governor will be in office only until January 2016, and so the real impact of these shortcomings will fall upon the next governor and legislators elected this fall," PAR said.
In order to achieve a balanced budget and solve long-term financing problems, PAR recommended a series of tax program or credit cuts, such as tax reductions for private school tuition and the state's sales tax holidays. They also recommended cutting the budgets of the judicial and legislative branches of government, which PAR noted have had increased budgets for the past several years, unlike nearly every other sector of state government.
PAR also backed a one-cent increase to the state's vehicle fuel tax, an "Amazon Tax" which could bring in more money from online purchases, eliminating several obscure tax exemptions targeted by a revenue study, and flex the legislature's ability to suspend laws which create spending mandates without the threat of a governor's veto.
PAR's report also said there was a possible fiscal "wild card" in the 2010 BP oil spill settlement. They said if a settlement were reached soon, the state could use such a windfall to help cover shortfalls, replenish the rainy day fund, or fill other trust funds which have been swept for money during the recent budget crises.
"The strong temptation in the Legislature will be to find ways to borrow money or postpone some forms of payments in the hope of weathering the fiscal shortfall until a new governor arrives," PAR said. "The expectations for the next chief executive are sky high."