26 May 2015

Committee action, May 26: HB 70, HB 30

HB 70 by state Rep. Walt Leger would increase the earned income tax credit. He told the House Ways and Means Committee it would help poorer individuals with bills and small business, as the money is spent by recipients. Roughly 30 percent of returns claimed it. Witnesses said many recipient families have children, some are in the military, and claimed it actually was an incentive to work and asserted it provided a net positive contribution to economic development.

Rep. Lenar Whitney pointed out that the EITC could be applied to illegal aliens courtesy of the Pres. Barack Obama executive order that would deemphasize enforcement. Leger said he didn’t really know how that might apply. Whitney also asked whether this was the right time to pursue this when the state faced budget difficulties; Leger said it could be used as an offset to any tax increases that may occur as a result. Rep. Julie Stokes also expressed concern with the bill for that reason, and that it should be viewed in terms of overall tax reform that might be better dealt with comprehensively in the future.

The committee voted 8-6 in favor, with a number of Republicans absent, all Democrats voting in favor, and Republican Reps. Chris Broadwater, Frank Hoffman, and Tom Willmott also in favor.

HB 30 by Rep. Dee Richard would require Joint Legislative Committee on the Budget approval of contracts above $40,000 from general fund money for the next three fiscal years. For those contracts not improved, these would be put into a fund that would be used to fund higher education, after obligatory unfunded accrued liability payments. Certain contracts such as mandatory spending would be exempt. He said to the House Appropriations Committee that it would increase transparency.

Treasurer John Kennedy pointed out that this bill could intercept contracting to out-of-state entities like universities and divert it to in-state institutions. It would work in tandem with HB 376 by Rep. Lance Harris.

Rep. John Schroder said he thought this a good idea, except that it made the fiscal process even less flexible. Kennedy said a bill like this would not be needed if executive orders were issued that do the same. Schroder said he would be more comfortable with it if the dedication part were removed.

Gov. Bobby Jindal Administration officials said it would have affected $29 million in current contracts, and perhaps 10 percent might get rejected. It concerned them that this would add time to the process, removed the ability of agencies to budget by forcing them to forfeit money, would push the money a year into the future for use, and created budgetary unpredictability through lack of coordination. They said the Legislature can mandate these things through the appropriations process, rather than by micromanagement. Depending upon the frequency of rejection, the expenses of following it might actually exceed savings. And, transparency of these contracts already was possible, given the state’s tracking system.

Rep. Brett Geymann said he didn’t see a problem with this. He said the Legislature ought to have such review power, it would force better contracting knowing this step was part of the process, and that it really didn’t interfere with executive powers nor constituted micromanagement.

On closing, Kennedy claimed the number of contracts and money involved was much higher. He also put forth alleged episodes of violation of separation of powers, presumably to show that the point was moot.

Without objection, the bill was reported favorably.

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