Lanny Keller: State Capitol politics threaten Baton Rouge’s growth, prosperity _lowres

Advocate staff photo by HILARY SCHEINUK -- Ominous clouds move over LSU's Tiger Stadium as severe weather moves through the Baton Rouge area Thursday evening, January 21, 2016.

Every fall, the staff of the Baton Rouge Area Chamber gathers to forecast the new year’s economy. It consults the national forecasting companies and the data generated by LSU economics professor-emeritus Loren Scott’s assessment of the state and metropolitan economies in Louisiana.

The result is a consensus estimate — and for the past few years, Baton Rouge’s metropolitan economy consistently has beaten those numbers.

Companies want to locate in this economy. Just last year, the nine-parish region saw economic development wins that BRAC said totaled 1,680 jobs and an estimated $128 million in new payroll. The overall increase in jobs was more than 3 percent, above the consensus forecast of 2.5 percent.

The 2016 forecast is a little more modest, between 1.4 percent and 2.2 percent — the latter from a reliable voice of optimism, Scott. With luck, those numbers might be exceeded, for after all, industrial construction is still booming with the low price of natural gas literally fueling big projects up and down the Mississippi River.

Why worry?

“There are dark clouds over Baton Rouge, and we have to be honest about that,” BRAC President Adam Knapp told the Press Club of Baton Rouge last month, and that gloomier forecast is being borne out by events more political than purely economic.

The threat of a state budget crisis to LSU, Southern University and Baton Rouge Community College is a real and tragic dimension to the mismanagement of Baton Rouge’s native son, former Gov. Bobby Jindal, and the Legislature since 2008. While every state institution is likely to suffer from some budget cuts in the coming few months, the effect on these large employers is probably going to be particularly pronounced; their output of polished minds for economically important professions is the certain path forward, but the lawmakers in the State Capitol whine about paying the bills.

BRAC has invested a large amount of time and political effort into traffic congestion and the resulting drag on the region’s economic performance, but that too is on hold as the state budget stumbles into vats of red ink. The notion of an increase in the gasoline tax is on hold, even as the price at the pump is low.

The idea of large investments, to the tune of $1 billion or more for a new Mississippi River bridge and associated access roads, seems very distant, despite the agitation of large regional employers in the CRISIS coalition for road and bridge solutions.

What is the way out? The large budget gap is not purely a consequence of the recent drop in the price of oil but of a something-for-nothing policy of tax cuts and tax breaks for favored businesses under Jindal and a compliant Legislature. Something-for-nothing right-wing populism is just as damaging to Louisiana’s budget and prospects as the old left-wing version.

Despite all the whining from the legislators, the consequences of closing institutions are not likely to be borne, so some taxes will have to go up this year. How will that be achieved?

Today, the business community faces a stark choice: Support broad tax reforms that include restoring the so-called Stelly income tax revenues unwisely ditched by Jindal, or see legislators resort to back-door increases in fees and drastic levels of new costs on business. Indirect taxes are usually a politically easier set of choices. Among those bad choices are inventory taxes that are bad economic policy or large bills for utilities — millions a month — at the big industrial employers in the region.

Raising taxes is never popular. But the prospect of a collapsing educational base is worse, and that’s a dark cloud that Knapp is right to be worried about.

Lanny Keller is an editorial writer for The Advocate. His email address is lkeller@the advocate.com.