In a pivotal moment in the 2015 legislative session, the House Ways and Means Committee narrowly rejected today a tax credit scheme for universities that was a key piece of Gov. Bobby Jindal’s budget plan. Lawmakers say without the legislation it may be close to impossible to send Jindal a revenue-neutral budget, which in turn would lead to a potential veto of the session’s centerpiece spending plan.
And it all came down to a single vote. The 10-9 tally against SB 284 by Senate Finance Chairman Jack Donahue, R-Mandeville, increases the likelihood that Jindal will veto all or some of the tax hikes recently passed to stave off cuts to higher education. The situation even could lead to a veto of the budget bill.
Donahue’s legislation would have created the Student Assessment for Valuable Education, or SAVE Act, designed to offset $350 million to $400 million in tax increases on businesses that the House has passed. The Senate now is hearing those bills.
Under the failed plan, students upon enrollment would receive an assessment, possibly as much as $1,500 per student, but they never would actually pay it. Instead, they immediately would be granted a tax credit for the cost of the fee, which then would be transferred automatically to the Board of Regents. The Board of Regents then would distribute the estimated $350 million to the state’s colleges and universities.
Donahue said the tax credit plan was a way to help prevent harsh cuts to the higher education system while also avoiding a Jindal veto.
“I think higher ed is in a critical situation,” Donahue said.
Critics said the bill was merely a ploy to placate the anti-tax advocacy group Americans for Tax Reform, to which Jindal has pledged not to raise taxes without corresponding offsets. Rep. Eddie Lambert, R-Gonzales, called it a “fictitious fee” to put money back into higher ed that lawmakers already have raised.
“This to me just seems like it’s a gimmick,” Lambert said.
The vote sends lawmakers without a budget solution that can pass muster with the Jindal administration.
In remarks to reporters after the committee meeting, Revenue Secretary Tim Barfield said today’s vote makes it “more likely” that Jindal will veto the budget.
“We said we were working toward a tax-neutral budget and this bill failing makes it less likely that there will be a tax-neutral budget,” Barfield said.
Jindal spokesperson Kyle Plotkin said following the vote, “The budget deal is still baking. There’s still time to get a budget done that is balanced, protects higher education and health care, and doesn’t raise taxes.”
—Meanwhile, a measure to give Louisiana colleges and universities the power to raise their tuition is moving to the House floor after approval from a key committee today.
Universities currently need a two-thirds vote from the Legislature to raise tuition. Senate Bill 155 by Sen. Jack Donahue, R-Mandeville, instead would allow university management boards to set their tuitions without approval from lawmakers.
Louisiana is the only state that requires a two-thirds vote to raise tuition. Donahue said several universities have had their bond ratings degraded because they didn’t have tuition autonomy. He said his legislation would allow higher ed officials to try more “innovative” tuition structures, such as charging engineering students more for school than education majors.
“It would allow them some freedoms to be able to set tuition that they don’t have now,” Donahue said.
The House Ways and Means Committee approved the legislation today, sending it to the House floor for final approval.
The legislation is tied to another Donahue measure, SB 48, which would lock the TOPS tuition payment rate at the 2015-16 level and require any future increases to win legislative approval. The scholarship currently increases automatically when tuition rises. That measure already has passed the House and Senate.
If either bill fails to pass or is vetoed, the other would not become state law.
Jeremy Alford and Jeremy Harper will publish a daily update throughout the legislative session on Daily Report PM. Alford reports on Louisiana politics at LaPolitics.com. Follow him on Twitter or on Facebook. He can be reached at JJA@LaPolitics.com.
