Government & Politics

House members craft alternative budget that trims tax breaks to raise $329 million

Defying Gov. Bobby Jindal, a bipartisan group of Louisiana House members has crafted a plan that would trim more than $300 million of tax exemptions and cut state spending by more than $100 million in order to eliminate one-time spending from Jindal’s proposed budget.

The plan, which a legislator provided to The Lens on Monday night on condition of anonymity, would raise $527 million per year in all. Most of that money would offset the elimination of one-time and contingency spending from Jindal’s budget.

The plan would bring in an additional $329 million a year in revenue by eliminating tax breaks. It would cut $106 million in spending from Jindal’s budget. And it relies on $45 million in additional tax revenue from an improved economy.

The plan would leave $100 million in the hands of the Ernest N. Morial Convention Center. That was part of the one-time money that Jindal had relied on to balance his budget.

The plan was devised by a coalition of House Democrats and conservative Republicans known as the “Fiscal Hawks.” They passed out the plan to their members Monday night following adjournment of the House.

Jindal, the Louisiana Republican Party and powerful business groups – including the Louisiana Association of Business & Industry – oppose the bipartisan group’s efforts.

The plan would:

  • Trim some 24 corporate tax exemptions by 15 percent apiece, including the Motion Picture Investor Tax Credit, the investment tax credit, one for rehabilitation of historic structures, and another for wind or solar energy programs. So for every $1 of tax exemption, the breaks would provide only 85 cents under the plan. This would save $91.7 million.

  • Temporarily reduce the sales tax exemption for nonresidential utilities and manufacturing, machinery and equipment from four cents to two cents. This would save $143 million.

  • Trim the “net operating loss deduction” and the “net capital gains deduction” by 15 percent to save $53 million.

  • Modify several other programs to save another $12.1 million.

  • Reduce the School Readiness Tax Credits, a package of credits for families, business and child-care facilities. Savings: $1.9 million.

  • Trim a deduction on net income taxes paid to other states by 15 percent to save $12.2 million.

  • Reduce two tax breaks for oil and gas companies by 15 percent to save $15 million.

The plan would cut spending by state agencies by $106 million, including:

  • $9.4 million for out-of-state conferences

  • $18.6 million by not funding vacant positions

  • $25.3 million by reducing state contracts by 10 percent

  • $52.4 million in spending proposed by the governor, with most of the savings coming from spending more on the state’s Medicaid program

The plan also makes $27 million in cuts in other programs, uses $20 million from the refinancing of the state’s tobacco bonds, and projects an additional $45 million from an improved state economy.

By eliminating one-time funds from the annual budget, the plan frees up that money to be used for other projects. The Convention Center, for example, could use the $100 million to fund an expansion desired by the City of New Orleans and tourism leaders.

Other projects that would be funded:

  • $120 million for the TOPS scholarship program

  • $67 million for the Budget Stabilization Fund

  • $28 million for the Transportation Trust Fund

  • $40 million for highway construction

  • $40 million to pay state debt

  • $40 million to pay for coastal restoration

  • $40 million for higher education construction projects

  • $40 million to pay retirement unfunded accrued liabilities

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