A relatively obscure panel of economic experts that some are eyeing as a potential catalyst for getting the state out of its economic funk has begun meeting in earnest — poring over the state’s budget history, tax policies and structural issues in the financial framework to find a long-term solution.
Louisiana has found itself stuck in a “Groundhog Day”-like loop — only, rather than repeating the same day over and over, the state’s been doomed to an unending cycle of massive shortfalls every year since 2008.
And, like Bill Murray’s character in the popular 1993 movie, the state can’t seem to figure out how to break free from the curse.
Without action, the problem only grows worse over time. State economists recently predicted that in just five years, the state will face a more than $2.5 billion shortfall.
After state lawmakers approved a series of short-term patches during a recent 25-day special session on the budget, some leaders now say they are hopeful that the climate is right for real change that could dig the state out of its budget mess.
The Task Force on Structural Changes in Budget and Tax Policy is being eyed as the body that could eventually steer that conversation — a sort of independent panel of policy experts who can offer up ideas and perform research and offer deeper insight into what will best help the state in the long run.
“Never have I ever heard or read as much talk about reforming the budget as I’ve heard now,” Covington Republican Rep. John Schroder said during the group’s most recent meeting. Schroder sponsored a bill during the special session that formed the group, but it includes no legislators. “There’s never been that conversation before.”
The group meets again Friday to continue digging into the state’s budget history and ways to chart out a more prosperous — or at least realistic — future. Its meeting Thursday was an hourslong deep-dive into how the budget is formed and how it ended up operating in the red.
Members include economists, tax experts, representatives from better government groups and members of Gov. John Bel Edwards’ administration, though it’s seen as an independent body.
Under its mandate, the panel has until Sept. 1 to present a plan to the Legislature.
“We have no predictability and we have no priorities,” Schroder said. “The problem is catastrophic.”
Louisiana faces a $750 million budget shortfall in the financial year that begins July 1. Lawmakers approved several tax hikes during a recent special session, but couldn’t agree on how to bridge the remaining gap. The Legislature can’t consider tax measures during regular sessions that fall on even-number years, so they will have to wait until the 2017 session or hold another special session to take up any additional items that could be used to make the budget whole.
The overarching issue is two-pronged: how the state approaches taxes, as well as its approach to budgeting.
For years, the state’s deficits have been patched up with trimmed budgets and infusions of one-time money to plug holes.
Robert Travis Scott, president of the Public Affairs Research Council, said that approach has bred frustration and skepticism in the government — particularly as it finds itself in the same budget predicament yea after year.
“There’s a sense of frustration and many feel like things are not re-evaluated,” he said. “They are wondering, ‘Why aren’t we going back and looking more?’ ”
He said the state hasn’t gotten a grasp on prioritizing services and letting things fall to the wayside that aren’t needed.
“I think that’s part of why we have this mandate,” he said.
Counsel for a Better Louisiana President Barry Erwin agreed that it’s time to seriously consider what functions should cease.
“We just never stopped doing anything,” he said. “Everything (cuts) has always been across the board for the most part.”
That outlook could be critical to the success of a long-term plan, as lawmakers feel taxed-out following the actions of the special session.
“We’re going to have to make this work with the money we have in the state right now because I don’t think you’re getting any more,” Schroder said.
The new task force’s official charge is “to make recommendations of changes to the state’s tax laws in an effort to modernize and enhance the efficiency and fairness of the state’s tax policies for individuals and businesses, to examine the structure and design of the state budget and make recommendations for long-term budgeting changes.”
Schroder said he sees the group’s mandate as “come up with a plan” — a more comprehensive approach, rather than a bunch of individual bills that could serve as model legislation.
“The plan should be about what’s the best thing for the state of Louisiana,” he said. “It’s to fix the structural problems we have.”
It likely will be next year before any significant changes can be made based on the recommendations because of the state Legislature’s work schedule timeline.
Schroder, who voted for tax-hike measures during the special session, said he thinks the state has to learn to better use its resources. He said he talks to constituents and others who believe the state has plenty of money but is being wasteful.
“We’re not going to fix this raising revenue,” he said. “I don’t believe there’s a temperament in the state of Louisiana, from the majority, to raise taxes.”
But still some see the taxing side as an important element to consider. Louisiana gives away billions in tax credits and exemptions every year — money that gets skimmed off the top of the budget before a dime is spent on government services.
Several have called for a deeper evaluation of those, though many agree that it’s a tough sell.
“We talk about tax breaks all the time, but once you get one on the books, it stays there forever — or it seems that way,” LSU economist Jim Richardson said.
Scott said he would like to see the creation of a body similar to the Louisiana Law Institute, which advises the Legislature on legal issues and helps draft related legislation, but for tax policy.
Some have suggested eliminating all tax breaks and then adding them back individually if they can be justified. Others feel the best plan is to strip them away one by one upon evaluation.
Added to the mix is the army of lobbyists ready to wage battle for their clients’ interests.
Schroder said he’s personally been inundated with calls from lobbyists in recent weeks.
Richardson, who chairs the new group and serves as a member of the Revenue Estimating Conference, said it’s ultimately going to be up to state legislators to make the tough decisions that could change the state’s path.
“It is a political issue. At the end of the day, these decisions are made by people we elected to represent us,” he said. “They got the job and now they have to do it.
“Ideally, if we can provide something — a more permanent structure — we won’t have to come back in five years to do over and over again.”
Follow Elizabeth Crisp on Twitter, @elizabethcrisp.
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