Action by the Louisiana Senate Senate on Wednesday set off fireworks-- Louisiana political style--over the funding of higher education.  The result is a dispute that has been simmering for weeks and could set the various sides on a collision course contaminating the legislative session. 

The Louisiana Senate passed Senate Bill 335 on Wednesday which would postpone for three years the allowance of certain itemized deductions on personal income tax.  The purpose of the Senate action is to collect more funds for higher education.  The measure passed 29-9, however, the bill has an uphill battle in the House and Governor Jindal has indicated he would veto any postponement.  . 

However, the action has again exposed the deep philosophical difference over the issue and has set off verbal fireworks and disputes over the facts.

After the legislation passed, Senate President Joel Chaisson sent out a press release that said,

            “An overwhelming majority of the Louisiana State Senate gave the green light to a measure focused on protecting the future of higher education in Louisiana. A bipartisan coalition of Senators, including 19 Democrats and 10 Republicans, voted in support of Senate Bill 335. The measure retains $118 million over the next three budget years to ease the impact of proposed cuts in higher education by freezing the current excess itemized deduction allowed on personal income taxes at the current 65% of the deduction taken on federal income taxes.

            "I am proud that a overwhelming majority of the Senate put aside partisan differences and came together in support of limiting budget cuts to higher education, the key to our state's future economic development and the improvement of our children, our families and our communities," Senate President Chaisson said. "It is important to remember that Senate Bill 335 is not a new tax nor a tax increase. It in no way impacts the rollback of Stelly approved last year. The one-fourth of our taxpayers who claim excess itemized deductions will continue to enjoy the same tax benefit next year as this year. And, all citizens will still get the $345 million tax break granted as a result of the Stelly rollback."

            Sen. Chaisson notes that even with Senate Bill 335, higher education institutions will face at least $100 million in budget cuts next fiscal year. By restoring some funds to the state's higher education budget, the Senate hopes to avoid the start of a downward spiral in the quality of higher education in Louisiana that could take decades to reverse. The partial restoration of funding will also provide higher education officials time to responsibly address needed efficiencies and reorganization in the higher education system.”

The Louisiana Republican Party had a different take.  In an email press release, “Republican Party of Louisiana Chairman Roger F. Villere, Jr. released the following statement on Senate Bill 335:

“Today’s vote in the Louisiana Senate for higher taxes on Louisiana families is disappointing and I sincerely hope the House of Representatives will reject this tax hike.

Louisiana has a budget that must be balanced. That is a fact. Not surprisingly, some are arguing that we shouldn’t try to balance the budget by cutting costs; instead, we should just tax our people and our businesses more and leave government spending alone.

By increasing taxes on our people to solve our deficit, we are basically telling them that we understand that they have to cut costs in their own households and make tough choices in their businesses during these leaner times…but government doesn’t want to do the same. Instead, we are just going to keep spending and send the bill on to them.

This is absurd. The reality is that in times of deficit, government, like our Louisiana households, must prioritize. This includes higher education. The fact is that higher education spending is dramatically higher today than it was before the storms of 2005, even while the students they serve are significantly less. Indeed, more than 2,000 higher education officials today are paid more than $100,000, and spending on higher education has nearly doubled in the past ten years, surpassing the increases of other Southern states. Surely higher education, like every other area of government at this time, can find savings in their system. We would like to see their plan. Sending the bill onto the people of Louisiana is not a viable option to help our families and our businesses during these tough economic times.”

Senate President Chaisson responded with the following release: 

Senate Bill 335 is NOT a tax hike. Taxpayers who claim excess itemized deductions on their state income taxes, less than one-fourth of the taxpayers in the state, WILL NOT pay any more state income taxes next year than they did this year because of this measure. In fact ALL taxpayers will benefit from the $345 million tax break as a result of the rollback of the Stelly Plan approved by the legislature last year. Senate Bill 335 DOES NOT impact that tax break. To suggest otherwise is not only misleading, but wrong!

            Without this action, the quality of higher education in Louisiana will be irreparably harmed, setting the state back for decades and denying those same taxpayers, which Mr. Villere purports to protect, access to the quality higher education system they deserve.  Even with the restoration of some state funding for higher education through Senate Bill 335, higher education still is taking its share of needed budget cuts - over $100 million worth of cuts! The bridge funding provided in this bill will also give high education officials time to responsibly implement needed reforms and efficiencies in the state's higher education system. In fact reform plans are already underway.  

            Finally it is disconcerting that Chairman Villere continues to issue misleading and incorrect statements about Senate Bill 335, especially when he clearly has no plan of his own, other than ‘No’. “

In addition, the President’s Office released this “Fact Sheet” related to the legislation:

The Truth About Senate Bill 335

What the bill does -

C         Freezes for three years the current excess itemized deduction allowed on state personal income tax returns at the current 65% level of the deduction taken on federal personal income tax, rather than moving to 100% this tax year.

C         Continues the deduction at a level 15% higher than before the state income tax changes commonly known as the "Stelly Plan".

C         Continues to provide the 24% of Louisiana taxpayers who claim excess itemized deductions an average tax benefit of $459 a year.

C         Retains $118 million over the next three budget years to ease the impact of proposed cuts in state support for higher education. *The bill was amended on the Senate Floor to insure that the funds will be used for higher education. 

C         Allows higher education officials a transition period during which long term efficiencies and reorganization can be responsibly addressed.

What the bill does NOT do -

C         Does not levy a new tax.

C         Does not increase a tax. The less than one-fourth of the taxpayers who claim excess itemized deductions will not pay any more state income taxes as a result of this bill.

C         Does not violate any State Constitutional provisions requiring measures relating to tax increases or new taxes to originate in the House since it is not a new tax nor a tax increase.

C         Does not delay the rollback of the Stelly Plan income tax changes approved by the legislature in 2008. The $354 million tax break granted ALL individual income tax filers in Louisiana is not affected in any way by this bill.

Why the bill is needed -

C         Louisiana is truly facing a crisis in higher education funding as a result of the global economic crisis impacting state revenue collections. It is not one manufactured for political purposes.

C         If we fail to restore at least a portion of the proposed $219 million in budget cuts to higher education, we can expect layoffs of tenured faculty, reductions in student services, tuition increases and the start of a downward spiral in the quality of our higher education institutions which could take decades to reverse.

C         The demise of our higher education system is not an option as our institutions of higher learning are key to our state's future economic development and the improvement of our children, our families and our communities.

Major state publications including the Times Picayune in New Orleans, the Monroe News Star, the Shreveport Times and Baton Rouge's Advocate have all endorsed this proposal. Senate Bill 335 has also been endorsed by the Council for a Better Louisiana, Blueprint Louisiana and the CEO's of three Fortune 500 companies headquartered in Louisiana. 

Later Wednesday, Commissioner Angele Davis sent out a statement that referred to the status of the education budget differential from her perspective.  One Senate legislative aide disputed the financial projections of Commissioner Davis’s numbers and its relevance to the budget.  Bayoubuzz has attempted to obtain a response from Commissioner Davis, but, has been unable to do so.  Nonetheless, here is the statement from Angele Davis:

“As the state budget exists today, the House’s actions restored more than $100 million in originally proposed reductions to higher education, and this means the $219 million reduction number is now outdated.

“The total recommended budget for higher education in the FY 10 Executive Budget was initially $2.63 billion, a reduction of $219 million, or 7.7 percent, from the $2.85 billion existing operating budget for FY 09. Through amendments, the House added $24.1 million total means of financing, $50 million in contingency funding from the tax amnesty program, and $2.3 million in contingency funding from the Insure Louisiana Incentive Program Fund. Another $33.6 million is expected to help higher education through tuition increases. All together, these funds total $110 million for the higher education budget, which decreased their total funding reduction to $109 million, or 3.8 percent from the FY 09 existing operating budget.

“It is very important to make clear that where higher education stands in the budget today, their proposed reduction is down to 3.8 percent – a reduction from the originally proposed 7.7 percent. Additionally, it is important to note that higher education also has $1.63 billion in restricted funding available.

“To provide further perspective on the savings target higher education officials would need to find under their funding in the budget as it currently exists, we must remember that the entire state budget this year is facing a reduction of 9.8 percent, while higher education’s possible reduction now stands at 3.8 percent - less than half of the overall budget reduction target.

“We have also already announced our support to work with the Senate to ensure the House’s actions will aid higher education in FY 10. When Senators expressed concerns over the use of $50 million in tax amnesty funds because the money may not be available in time to help with the FY 10 budget, we supported the use of $50 million from the rainy day fund instead, to ensure this funding was readily available at the beginning of the fiscal year.

“As the debate on higher education funding continues, it is very important to recognize that this debate is centered around a 3.8 percent spending reduction for higher education, which is down from the initial 7.7 percent reduction (down from the $219 million original target). That is where higher education funding stands today – as the budget is currently drafted.”

The dispute over the facts, the philosophies and the characterizations of the legislation emphasizes the significant disagreements over this legislation that is taking center stage as the Louisiana House, the Senate, the Jindal Administration and the political parties struggle over money, priorities, philosophies and politics.   

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