Black Caucus sees last-minute revival of tax credit for the working poor

By Paul Braun and Devon Sanders, LSU Manship School News Service

BATON ROUGE — The Legislative Black Caucus succeeded in a last-minute bid to revive an expansion of the state’s earned income tax credit in a bill passed by the Senate Sunday.

The change would cost the state $21 million. But caucus members argued that it was needed to offset some of the impact on the working poor of a possible extension of half of the penny of sales tax set to expire this summer.

Sen. J.P. Morrell, D-New Orleans, said the link between the earned income tax credit and the sales tax renewal could determine the fate of the special session.

“I think the House has to make a decision as to whether they want to risk the sales tax by not allowing for the increase in EITC,” Morrell said. “That’s not just a Senate problem. There are a tremendous amount of House members, in particular in the Black Caucus, that struggle with the idea of continuing a half-penny of sales tax.”

Morrell has estimated that 42 percent of Louisiana’s taxpayers would have lower tax bills with the expanded credit.

The Caucus also won Senate approval for $4.7 million for the Southern University system and for Grambling State University and an extra $1.1 million for Go Grants, the state’s need-based aid program for college students.

The Black Caucus is a pivotal voting bloc, especially in the House, which will consider the Senate’s bill Monday as the final hours tick down on the special session.

The session, which was called to deal with a projected $648 million shortfall in the state budget, has to end Monday night. The House could balk at the additional revenue and spending measures that the Senate added to the bill.

An earlier special session collapsed after several Black Caucus members joined Republicans in voting against extending one-quarter of the sales tax. Studies show that sales taxes disproportionately affect lower-income people, and at at the time, the Caucus sought unsuccessfully to limit deductions for wealthier taxpayers to ensure they shared the burden.

Morrell had sponsored a separate bill to expand the state earned income tax credit that passed the Senate 30-5 on Wednesday. Morrell said then that only people who are working can take advantage of it.

Morrell’s bill was voted down by the House Ways and Means Committee 10-5 on Thursday.

Morrell offered the proposal again on Sunday as an amendment to a House bill that originally raised $33.6 million by scaling back tax credits for income taxes paid in other states. Morrell’s amendment reduced the revenue of the combined legislation to $12.6 million. The Senate passed the bill 26-13.

The Senate also voted Sunday evening to provide the Southern University system with an additional $3.2 million to meet requirements for accreditation and $1.5 million for building repairs at Grambling.

Sen. Eric LaFleur, D-Ville Platte, explained that the additional funding for the universities and the Go Grants would come from cutting the budget for early childhood education.

With its current budget, Louisiana’s early childhood education system can only serve 30 percent of economically disadvantaged children eligible for the program.

LaFleur said early childhood programs could utilize as much as $41 million in federal funding to accommodate two-thirds of its waiting list.

An effort late in a session to increase funding for Southern and Grambling is not new. The Senate has sought to add revenue for them in recent years.

The Senate bill also would provide full funding for the popular TOPS scholarship program and for other aspects of higher education. The last House version of the bill would cut TOPS by 10 percent.

TOPS funding has increased dramatically over the last 20 years, reaching over $287 million in 2017. At the same time, general funding for higher education, which goes directly to the institutions have decreased, creating an environment in which universities rely more heavily on TOPS funding than ever before.

However, TOPS funding is unequally distributed throughout universities, and Southern and Grambling receive far less than most other schools.

For example, the Southern System, comprised of Southern Baton Rouge, Southern New Orleans, and Southern Shreveport, received less than one percent of TOPS funding last year, though the three schools make up five percent of the undergraduate population in Louisiana.