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|Teachers unions take aim at business tax credits|
It should not have come as a surprise when the state's two largest teachers unions recently announced their opposition to the Jindal administration's desire to expand tax credits for businesses that pledge to create jobs in Louisiana.
When the regular legislative session gets underway in the spring the Jindal administration will ask the Legislature to extend certain business tax credits the state has employed to help create jobs in a state where many residents desperately need them. Lawmakers would be wise to grant the extensions.
The Jindal administration also will ask the Legislature to consider offering more tax credits for businesses in Louisiana, which, like businesses in every other state in the Union, are struggling to makes ends meet thanks to a lackluster economy. Again, lawmakers would be wise to go along with the administration's proposal to expand tax credit offerings for businesses.
Making available tax credits for the business community is an important tool the state often utilizes to encourage the creation of economic opportunities for its residents. Generally speaking, the state extends tax credits to new businesses that move into Louisiana. In exchange for receiving tax credits, new businesses must meet certain employment goals by a specific date. If those employment goals are not met, businesses are forced to forgo tax credits they received to set up shop here in the first place.
Tax credits often are extended to existing businesses that need a helping hand in expanding their operations in Louisiana. That's vitally important in convincing businesses to remain in Louisiana in light of today's economic environment in which states vigorously compete against one another to attract new businesses to their respective states.
Detractors of the state's practice of offering tax credits to the business community describe it as buying jobs. Those detractors wrong. Furthermore, that line of thinking tells us those detractors know very little about what it takes to operate a profitable business in today's rather difficult economic climate.
Last week, the Louisiana Federation of Teachers issued a news release criticizing the Jindal administration for what it described as the administration's support for expanding tax credits for businesses at the expense of the people. Yes, the administration favors expanding tax credits for the business community. In the upcoming regular legislative session, though, the administration says it will focus on ensuring that the Legislature does not put an end to any tax credit offerings the state has utilized in the past to encourage economic development on the home front.
That's a no-brainer.
For the record, the Louisiana Association of Educators (another teachers union) opposes any expansion of tax credits for businesses. Like the LFT, the LAE is out of touch with reality unless reality should entail extracting every available dollar from the business community to prop up one of the worst public education systems in the country.
While the teachers unions were throwing cold water on incentives for the business community, the Jindal administration announced it would support fully funding the state Minimum Foundation Program in the 2011-2012 fiscal year.
The MFP is a convoluted formula that's employed to divvy up state funding for school districts across the state. To surmise, the Legislature signs off on funding the MFP, but the Legislature has little say in how those monies are actually spent on education. That's left up to the Board of Elementary and Secondary Education. It uses a rather confusing set of rules in deciding how state funding is appropriated to each school district in a given fiscal year.
Last year alone, the MFP cost Louisiana some $3.3 billion. In other words, the Legislature handed BESE a $3.3 billion check, and BESE distributed the money void of literally any oversight by the Legislature. It's akin to allowing a fox to guard the hen house.
The state allocation for the MFP for the 2010-2011 fiscal year represented a no-growth appropriation. In other words, when the Legislature approved the MFP for the current fiscal year it did not grant a 2.75 percent cost-of-living increase for the MFP in light of the state's tight fiscal posture. In years past, the Legislature approved a 2.75 percent increase in the MFP to account for increased expenses incurred by school districts.
You guessed it, BESE and the LAE and the LFT weren't happy when the Legislature refused to pass along a cost-of-living increase in the MFP for the current fiscal year.
Though the Jindal administration agreed to support fully funding the MFP for the 2011-2012 fiscal year, it refused to sign off on a cost-of-living increase. In lieu of supporting fully funding the MFP in the new fiscal year, the Jindal administration withdrew any plans to ask the Legislature to cut the MFP in the new fiscal year. That was an option that was under consideration since the state must trim some $1.6 billion from its general fund budget in the 2011-2012 fiscal year, which begins July 1.
Obviously recognizing a fight it could not win, BESE and the LAE and the LFT accepted the administration's offer to fully fund the MFP to avoid a showdown in the Legislature over cuts in funding for public education. It was a fight BESE and the two teachers unions would lose. After all, government employee unions are not the most popular organizations on the block these days.
We would be remiss if we did not recall that since Gov. Bobby Jindal took office in January 2008, funding for the state MFP has increased by $192 million. You certainly wouldn't know it if you listened to BESE and the two teachers unions. Instead, they would have us believe the public education community was starved for cash.
That's simply not true.
And those tax credits for businesses simply represent a target for the LAE and the LFT to shoot at so their membership will believe they carry a big stick in Baton Rouge.
That's simply not true either.