Jindal's Tax Rules Limit Budget Options For State Lawmakers

BATON ROUGE (AP) — Lawmakers struggling to balance next year's budget and avoid deep cuts to colleges and health services are trying to follow a complicated set of rules set by Gov. Bobby Jindal.

         Jindal won't support any tax changes he — or national anti-tax activist Grover Norquist — considers a net tax increase. The Republican governor has closely guarded his record on taxes as he builds a likely presidential campaign.

         "We have been consistent since I've been here about not raising taxes, and our economy's the beneficiary of that, and our families and businesses are the beneficiaries of that," Jindal said. "I think it's important to continue that track record of not raising taxes."

         But with a $1.6 billion budget hole next year, lawmakers and the governor have acknowledged they must find ways to drum up new dollars for the budget to keep from devastating higher education and public health care programs.

         The House didn't bother meeting Jindal's criteria with its budget-balancing plan. But senators are seeking to meet the parameters and avoid the threat of a veto of the financing plans for the fiscal year that begins July 1.

         Senate President John Alario, R-Westwego, has acknowledged the task is difficult. Meeting Jindal's guidelines, he said recently, is "the toughest part, and we're working diligently to try to do that. I think if we could make (the budget deal) veto-proof, that would help us all."

         Lawmakers are looking for loopholes and creative financing methods to help Jindal claim Louisiana hasn't raised taxes, while still raising new revenue. Two weeks remain in the legislative session to craft a deal, and Jindal said he's confident one can be reached.

         Democrats say trying to appease Jindal is ridiculous, an unnecessary exercise to try to help his political career.

         "I'm not going to vote in fear of a veto, because I wasn't sent here to do that," said Rep. Ted James, D-Baton Rouge.

         The House raised $615 million through tax changes to fill gaps in next year's budget. Not all the measures need offsets to meet Jindal's criteria.

         Jindal considers scaling back tax breaks a tax increase — but only in certain cases.

         The governor describes refundable tax credits, in which the state hands over a check above a business' tax liability, as "corporate welfare," so Jindal doesn't consider proposals to shrink that tax break spending as a tax hike.

         Plus, the Jindal administration is willing to negotiate what's considered "revenue neutral" over a five-year period, so lawmakers can raise a bunch of money upfront and cut taxes on the back end, which they could later rework when another governor takes office in January.

         Two proposals are the linchpins of trying to meet the Jindal guidelines.

         The first is a back-loaded, five-year phase-out of the corporate franchise tax that won House approval this week and awaits Senate consideration.

         The second is a higher education tax credit called the Student Assessment for a Valuable Education, or SAVE, credit. It would involve raising a new "fee" on students. The students wouldn't actually pay the fee because it would be covered by the state through the tax credit, paid directly to colleges and offset with tax increases elsewhere, like a cigarette tax increase.

         The tax credit has received Senate backing and awaits debate in the House.

         – by AP Reporter Melinda Deslatte