CABL Issues Updated

After two weeks the 2017 legislative session is off to a lumbering start with more questions than answers on the table, especially with regard to the state’s fiscal affairs. Most of the activity has been in House committees where the two panels dealing with money matters have been meeting on a regular basis.
On the budget side, there are indications that the Republicans who control the House have come up with the framework of a plan for a more-or-less standstill budget that fully funds TOPS – something the governor’s budget proposal does not do. But doing that would require cuts that go deeper than what the administration has suggested and just what those cuts would be remains unclear.
Efforts to fully fund TOPS over the last year were unsuccessful, primarily because the requisite cuts to do so impacted areas that were sensitive to a lot of lawmakers and ultimately proved unacceptable.   Whether that will be any different this year remains an open question.
As for the prospects of comprehensive fiscal reform taking place in this session, the initial outlook isn’t encouraging. Last year, when legislators passed a series of temporary taxes that will roll off the books on July 1, 2018, the notion was that the permanent fix would come this session. Clearly, some action is needed to avoid the $1.3 billion “fiscal cliff” that will occur when those revenues go away.
But after the first two weeks, the sense of urgency that one might expect for dealing with the problem just doesn’t seem to be there. The governor’s plan, which has a new business tax as its centerpiece, appears to have no traction. His Commercial Activity Tax, or CAT, will be heard in committee next week and appears to be pretty much dead on arrival.
The question is whether lawmakers in the House will be able to come up with an alternative plan that at least has some semblance of tax policy reform or will they just renew the temporary taxes on yet another temporary basis and delay the day of reckoning once again. Or worse, will they choose to do nothing and wait for what many expect will be another special session sometime in the months ahead. Either of those last two things would be a disaster.
CABL believes there are good ideas on the table without resorting to the CAT tax that lawmakers can pick up if they choose.  Some are working to do that, and while that’s encouraging, the overriding question is whether the Legislature as a whole will have the political will follow suit.
The instability and uncertainty around Louisiana’s overall fiscal situation is hurting us. Other states recognize this and are using our inaction to compete more aggressively against us for major economic development projects. Tax policy is important. There’s no question our business tax climate has declined because of actions we have taken over the last couple of years. We can reverse that, if we want to, but at some point, we have to get started.
Education Update The first of several bills to change policies with regard to TOPS was heard in the Senate Education Committee this week. It would have required students who are TOPS recipients to remain in the state for a certain length of time or pay back a portion of their award. That concept has been floated before and, as has happened in the past, it went nowhere.
Still, lawmakers are clearly looking at TOPS in ways they haven’t before and that makes sense. Since its inception the entire landscape of postsecondary education has changed considerably. We now have a robust community college system, tuition has risen, state support has decreased, and the demand for need-based financial aid is up from where it was several years ago.
Perhaps instead of looking at policy changes to TOPS in a vacuum, it would be wise to look across the board at the gamut of financial aid that Louisiana offers and determine if it’s actually meeting our goals. Education attainment in Louisiana remains low and there’s no question we need more of our students pursuing some sort of postsecondary credential if they are to succeed and ultimately prosper.
In a poor state like Louisiana, broad access to financial aid is vital. Yes, we should continue our merit-based TOPS program, but we should also look at the bigger picture and determine if we can do a better job of ensuring that all of our students have access to education after high school and a job that leads to a meaningful career.
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