Louisiana celebrates it’s bicentennial this year and — though our state has a long and colorful history of shenanigans — one would be hard pressed to find a more reckless piece of legislation than HB-969 (PDF) by Rep. Kirk Talbot of Jefferson Parish.
The bill is part of the great Jindal public education funding raid that includes grabbing public tax dollars and diverting them into the coffers of private schools in the form of vouchers.
HB-969 is more brazen by an order of magnitude. According to the Legislature’s digest of the bill (PDF), Talbot’s bill clears the way for something called Tuition Scholarship Organizations (TSOs) to emerge in Louisiana. These are, according to the digest, “501(c)(3) tax exempt organization which donates no less than 95% of the monies from donations for scholarships to students for attendance at a qualified nonpublic school of their parent’s choice.”
It’s a pretty attractive set up on it’s face. Anyone interested in promoting private education in Louisiana will be able to make a fully tax deductible contribution to the TSO of its choice. It’s a two-fer — a feel-good, federally tax-exempt activity.
Doubling Their Money!
But, Talbot’s bill goes WAY beyond that. It makes the State of Louisiana a full partner in the enterprise. Yes, the federal tax deduction stands, but HB-969 requires the state to provide those donors a rebate in the full amount of their donation! Not a tax credit or anything like that. A rebate.
The bill requires the Department of Revenue to cut checks to those donors in the amount equal to that which they donated to the TSO or TSOs. There appears to be no limit on the number of TSOs to which an individual or company can contribute; nor is there any cap on the amount of money the State of Louisiana will have to match.
The bill allows contributors to TSOs to double their money in one fell swoop, courtesy of Louisiana taxpayers. First, since they are contributing to a 501(c)(3), TSO donors get to deduct the full amount of their donation from their federal tax return. Then, the Louisiana Department of Revenue will cut them a check for the full amount they donated to the TSO as a token of the state’s appreciation.
If there’s a sweeter deal than that to be found anywhere, it’s in some genetically modified sugar product.
The bill roared through the House in the early days of the current session in the wake of the Jindal voucher blitzkrieg.
Take Off Your Cap!
By the time it reached the Senate, a recognition of the potential impact of the bill raised eyebrows in that chamber. Senator Barrow Peacock of Bossier City introduced an amendment there that would have imposed a $300 million capped to total state obligation on the rebates in any fiscal year. That amendment passed the Senate by a single vote.
Peacock’s amendment forced the bill to go back to the House for approval. The Senate cap was rejected and the bill headed to a conference committee. The bill that emerged from the conference committee no longer had a cap.
On Tuesday, April 24, the Senate voted 32-7 to approve HB-969 without the cap on rebates. The House voted 65-36 (with four absent) to approve the bill on the same day. It now awaits Governor Jindal’s signature to become law.
The lunacy of opening what amounts to an unlimited draw on state finances to support private education (and feather the nests of the wealthy) was driven home by another event on the same day the bill won approval in both houses.
The Revenue Estimating Conference (REC) is charged with monitoring state revenue and expenditures to ensure that the constitutional mandate that state budgets finish each fiscal year in balance is observed. On the 24th, the REC concluded that state revenues are not meeting projections in the current fiscal year and it appears that there will be a new hole in the state budget in excess of $200 million.
So, on the day that this new budget shortfall is announced, large majorities in both houses of the Legislature voted to create an unlimited draw on state revenue in the form of HB-969. Representative Katrina Jackson of Monroe, who did not vote on final passage of HB-969, laid out the problem the bill (soon to be law) presents with out a cap. There is no wiggle room in the language of the bill. In the event of future mid-year budget shortfalls, the state will have to cut education and health care in order to meet its obligations to those contributing to TSOs. (See video below for more.)
Follow the LLCs
Anyone with a working knowledge of Louisiana campaign finance recognizes the immense danger HB-969 poses to the state’s finances. Consider the role of Limited Liability Corporations (LLCs) in Louisiana political campaigns. As is seen in every state election cycle, LLCs offer wealthy individuals multiple opportunities to contribute the maximum allowable contribution to candidates. An individual with, say, 20 LLCs could make 20 $5,000 contributions to a candidate for statewide office. That’s $100,000 from one person, all done within full compliance with Louisiana campaign finance law (you know, ‘The Gold Standard’).
Looking at the provisions of HB-969, there is nothing in the bill to prevent a person controlling multiple LLCs from making multiple contributions to TSOs. The ‘double your money’ incentive at the heart of the rebate plan will surely catch the eye of CPAs and financial advisors across the state (thankfully, the rebates are restricted to those who file a Louisiana income tax return).
Where will the money for the rebates come from? From the General Fund of the State of Louisiana. That means the rebates will compete with funding for essential government services, particularly in times of revenue shortfalls like we’ve had in just about every year of the Jindal tenure. Hospital funding will be cut, clinics closed, teachers let go, and higher education cut in order to meet the state’s obligation to these high rollers — er, uh, donors.
At the end of the day, HB-969 is not about education. It is about enabling raids on public resources by the wealthiest individuals in the state that will deprive the state’s people and its institutions of the funds needed to provide essential services.
All of this is being done in the broad light of day under the supervision and direction of an administration that has repeatedly proven itself incapable of managing the state’s finances.
If there has ever been a more cynical and/or reckless piece of legislation enacted here, I don’t think we’d be celebrating our bicentennial this year.