DALLAS — Louisiana Gov. Bobby Jindal urged lawmakers Tuesday to reject a compromise budget proposal that would cut spending and curtail 24 business tax credits and incentives to balance a $24.7 billion state spending plan for fiscal 2014.
Elimination of tax breaks is an attempt to disguise a tax increase, Jindal said at a news conference after the legislative alternative was unveiled. He reiterated his vow to veto any bill that would increase state taxes.
“If you’re sending more money to the government than you were before, because they changed the law, that’s a tax increase,” Jindal said.
The budget agreement between a group of conservative House Republicans known as fiscal hawks and the Democratic minority eliminates the spending of $525 million of one-time revenue as proposed in Jindal’s executive budget.
The plan offsets the loss of the non-recurring revenue with $329 million of collections from reducing or eliminating some tax breaks and $133 million in spending cuts. The compromise also expects the Revenue Estimating Conference will increase its estimate of fiscal 2014 revenues by $45 million.
The $527 million legislative revenue plan includes $20 million from the $60 million of upfront savings expected from a planned refunding of the state’s tobacco settlement revenue bonds.
Jindal wants to use all $60 million to fund a popular college scholarship program in fiscal 2014. The legislative compromise would allocate $20 million a year to the program over the next three fiscal years.
The lawmakers are pushing a secret plan to increase taxes with a phony claim that their goal to raise revenue for state government is not a tax increase, Jindal said.
“They can hide behind whatever they want. This is a tax increase,” Jindal said at a news conference in Baton Rouge.
“They can use whatever obfuscation, they can use whatever labels, use whatever terms they want,” Jindal said. “The people of Louisiana are smart enough to know that’s a tax increase.”
The compromise proposal would reduce tax incentives for economic development by 15%, lower the state tax credits for horizontal oil wells, and recoup $10 million by reducing the amount of sales taxes that retailers can retain for collecting the revenue.
Economic Development Secretary Stephen Moret said cuts to incentive credits would cripple the state’s ability to attract industries to Louisiana.
“I am gravely concerned about the impact this would have on our economic development reputation,” Moret said.
The legislative coalition called its plan “the most fiscally responsible solution” to avoid unplanned mid-year budget cuts due to lower-than-expected revenues.
“The governor, in a desperate attempt to balance the budget, has proposed the use of nonrecurring revenues for recurring expenditures and other financial gimmicks to plug the remaining portion of a $1.3 billion budget shortfall that is projected for this year and into the foreseeable future,” the lawmakers said.
The $270 million of non-recurring revenue available for spending in fiscal 2014 in the coalition’s budget would provide a $67 million deposit into the rainy day fund, and $40.5 million for debt defeasance. Other allocations include $40 million to highway projects and $40.5 million for coastal restoration.
The House is scheduled to begin debate Thursday on House Bill 1, the spending plan for fiscal 2014.