A month before Louisiana voters choose their next governor, each of the four major candidates is long on touting his leadership qualities but short on detailing how he would address the most pressing issue: how to confront the state’s massive budget problems.
Each candidate has pledged to hold a special legislative session after taking office in January. And each has said he will put wasteful spending programs and unproductive tax expenditures under the microscope.
But which spending programs? Which tax expenditures?
U.S. Sen. David Vitter, Lt. Gov. Jay Dardenne, Public Service Commissioner Scott Angelle and state Rep. John Bel Edwards aren’t saying.
That’s a concern to many people, including Steve Winham, who knows more about the intricacies of the state budget than just about anyone. Now retired, he served as the state’s budget director under three different governors, Republicans and Democrats alike.
“I’d like to believe they have plans,” Winham said. “But we have no way of knowing whether they do. They’re not even coming close to becoming specific about what they would do.
“We have only two options. One is to cut the budget, which is problematic on a number of levels. If it’s so easy, (Gov.) Bobby Jindal would have done it already. The other budget option is to raise revenue, which is unpopular.”
None of the candidates is saying he would raise tax rates, which would be a death knell in conservative Louisiana.
In saying they want to eliminate tax expenditures, they will have a lot to choose from, as The Advocate outlined in a series last year called “Giving Away Louisiana.” In all, the state awards about $7.5 billion of these tax breaks each year, thanks to dozens of laws approved by the Legislature over the years.
Each tax break has a constituency that will fight to keep it, as legislators were reminded during the 2015 session, when they had to overcome opposition from business interests to trim a series of tax breaks by about 25 percent apiece to balance the budget.
Randy Ewing, a former state Senate president from north Louisiana who ran for governor in 2003, said he understands why the candidates have not spelled out their plans. “When they come clean with what they want to do, some people’s bread will be buttered and some will be burned,” he said. As a result, he added, they’re holding their bread close to the vest now.
Ewing is a board member of the Committee of 100, which hired the Washington, D.C.-based Tax Foundation to craft a menu of options with Louisiana budget experts that they have laid out to each candidate privately over the past month. “I think they’ll have to be more specific as they go along,” he said.
The new governor is likely to inherit three separate but interrelated budget problems from Jindal and the outgoing Legislature, said Jan Moller, director of the Louisiana Budget Project.
One will be the immediate need to eliminate the deficit in the $25 billion budget for the current fiscal year, which began July 1. The Jindal administration has admitted a $19 million shortfall in TOPS, the popular program that pays college tuition for qualified students. Possibly far worse, the Legislative Fiscal Office has reported that Louisiana’s Medicaid program is potentially facing a $335 million gap.
Meanwhile, oil prices were budgeted at $61.70 per barrel, but oil has sold at less than $50 per barrel over the past two months. For every $1 drop in oil prices below the projected amount, Louisiana loses $12 million in tax revenue.
Cleaning up the mess left over from 2015 might occupy the entire special session called after the governor takes office.
Once the current-year budget deficit is eliminated, the Legislature will meet in a regular session beginning on March 14 to pass the budget that will take effect on July 1. To balance that budget, the governor and Legislature will have to eliminate a projected deficit of $700 million to $1 billion.
Finally, the governor and Legislature will have to make structural changes to the budget to eliminate projected deficits of more than $1 billion in the succeeding years. The effort to do that could require its own special session, meaning the Legislature might hold at least two special sessions next year.
“All of this will be a heavy lift,” Moller said. “We’ve run out of easy answers.”
Besides having to eliminate the budget deficits, the candidates want to spend more money to fix Louisiana’s highways, raise teachers’ salaries, expand early childhood education and reverse the cuts to LSU, UNO and the other public colleges and universities. The candidates have not explained how they would pay for their wish lists.
Vitter served in the state House for seven years and the U.S. House for six years and has been in the U.S. Senate for the past decade. In campaign stops, he touts a 60-page campaign platform titled “Together, Louisiana Strong.”
Under the chapter “Stabilizing the Budget,” Vitter provides some clues to his thinking. He says he will change laws that protect items in the budget that are automatically approved every year without a review. In campaign forums, he has said those so-called statutory dedications cost the treasury about $2 billion per year. (As with the tax expenditures, a political constituency will fight to keep each of these spending programs as well.)
Vitter also wants to put all tax breaks through a cost-benefit analysis to see which ones are productive and to sunset those that remain to require the Legislature to make an affirmative decision periodically to keep them.
Vitter also would make it difficult to approve more tax breaks by raising the bar to a two-thirds vote of the Legislature, up from the bare majority required now.
In a gubernatorial forum two weeks ago in New Orleans, Vitter identified only one tax break that he would eliminate, the solar tax credit, and doing that wouldn’t save much. It will cost the state about $20 million this year and already is due to expire in two years.
Vitter lists seven state consulting contracts and local spending projects that he questions; they add up to $10 million per year. He also calls for a reduction in the state fleet of 10,000 vehicles, which also is a prime topic of his television ad campaign.
Winham is unimpressed: “How many decades have we been talking about selling state cars and how much would we save? Not much.”
Questioned about his lack of specifics on the day he qualified for governor earlier this month, Vitter called his plans “a work in progress” but added, “I’ve been far more detailed, far more specific than anyone else in this race.”
Dardenne rivals Vitter in his deep experience in government, having served as an East Baton Rouge Parish Metro Council member, a state senator, secretary of state and lieutenant governor. “I’m the only person sitting on this stage who has balanced the budget as chairman of the Senate Finance Committee for four years,” he said at the Sept. 4 candidate forum in New Orleans.
But in several recent appearances, Dardenne has yet to identify a single spending program or tax break he would ax.
He, too, however, has offered clues to his thinking.
Dardenne has said he would like to lower personal and corporate income tax rates and offset that revenue loss by ending tax breaks, noting that this matches the recommendation offered in a study earlier this year by LSU professor Jim Richardson and two Tulane economists.
Speaking cautiously, Dardenne said he wants a “discussion” about the tax break that allows Louisiana taxpayers to deduct what they pay in federal taxes from their state taxes. This tax break, which especially benefits wealthier taxpayers, is enshrined in the state constitution, so eliminating it would require a two-thirds vote of the Legislature and a majority vote in a statewide election. The economists’ study said the tax break costs the state $735 million per year. Louisiana is one of three states to offer the full deduction.
Edwards also wants to lower rates and end tax breaks. Asked which ones, he said he would like to make permanent some of the one- to three-year suspensions of tax breaks passed by the Legislature in 2015. That would only partially solve the budget deficit that the Legislature must grapple with next year, however.
Edwards also said he would like to cap the dollar amount of tax breaks and sunset them, as Vitter has proposed. He has not given specifics beyond that.
Like the others, Angelle has said he wants to examine statutory spending programs and tax breaks. He would create what he calls the Exemption Review Conference to tackle the tax breaks. Like Edwards, Angelle has steered clear of specifics.
Reporters will get a chance to press Dardenne, Edwards and Angelle for details on Monday, when they appear for a one-hour debate before the Press Club of Baton Rouge at the Belle of Baton Rouge Hotel. The noontime event is open to the public.
Vitter will skip the forum, in perhaps an unprecedented move for a major candidate at the quadrennial event. He will be traveling to Washington for Senate business, campaign spokesman Luke Bolar said.