Tuesday, April 01, 2014

Tax amnesty

Louisiana's revenue estimating process is a less than reliable endeavor as it is.  During a forum for three Louisiana ex-governors on the campus of Loyola last week, Edwin Edwards talked about how oil price volatility makes it difficult for any Governor and Legislature to get a handle on what the coming year's budget is going to be.

Last year lawmakers introduced a controversial three year "tax amnesty" program as a stop-gap measure to fill holes in the badly blown-apart budget.
The new plan projects raising $200 million a year – of the $526 million it would bring in overall per year – by launching a tax amnesty program that would last for nearly three years.

Budget experts question the plan.

“It’s a very risky way of balancing the budget,” said Jim Richardson, a Louisiana State University economist who sits on the four-member Revenue Estimating Conference that is about to meet to determine how much of the higher-than-projected revenue collected by the state Treasury can be spent. “I don’t see any way our conference can buy into that figure without more information.”

“Any way you cut it, it’s one-time money,” said C.B. Forgotston, an attorney and longtime budget expert whom the Fiscal Hawks have regularly consulted. “It goes against what the Hawks have been preaching. It’s also highly speculative. It’s a best guess of who will choose to pay.”

Under the amnesty program, people with outstanding tax bills could pay without incurring penalties or interest they’d normally face, at least for the first year.
And, as it turns out, they've already mis-speculated
Shifting the dynamics of the budget debate, lawmakers will soon learn that Gov. Bobby Jindal’s spending plan for 2014-2015 is short by $47 million due to an error in calculating last year’s tax amnesty program.

Administration officials are already working with lawmakers to address the unexpected shortfall, but there are expectations already that budget reductions will represent the only solution.

“We can’t count on any new revenues materializing, unless it comes out the Revenue Estimating Conference (REC) in May,” said a source.

Right now, an estimated $260 million from the amnesty program, a figure that includes the miscalculation, is dedicated to the Department of Health and Hospitals.

1 comment:

mominem said...

That oil tax volitility was actually enacted by EWE as a way to raise more money . It replaced a fixed excise tax on oil.