After almost a decade of financial irresponsibility, the Lenten price tag is going to be painful.
“When we see schools crumbling, college costs going up, safety-net services getting cut and our communities struggling, all while a few at the top benefit from tax breaks, then we know our state’s priorities are all off course,” reports the liberal-leaning Louisiana Budget Project. “Now is the time to act.”
As with all hangovers, though, the temptation for another hair of the dog is going to be there, and it is hardly clear if the medicine is going to be an attractive alternative.
Given the recurring nature of the state’s financial crises since former Gov. Bobby Jindal’s ill-advised tax cuts of 2008 — not the only problem, but as the new Budget Project report makes obvious, the main problem — conservative and liberal economists and others in between have found similar prescriptions needed. But the Lenten report by Budget Project analyst Nick Albares lays out the issues with a clarity that ought to move even scaredy-cat legislators off the neutral ground.
“The income-tax cuts and unchecked growth of tax exemptions (since 2007 and 2008 sessions of the Legislature) combined to create a period of instability for the state budget that continues to the present day,” the new report says. “Tax revenues are consistently less than the state’s financial obligations to schools, the Taylor Opportunity Program for Students (TOPS) scholarship program, hospitals and public safety.” That’s the structural budget deficit, around $1 billion.
As with hangovers during Carnival, the damage is largely self-inflicted. The Budget Project report quotes LSU economist Greg Upton: “In the most recent fiscal year, fiscal year 2015, Louisiana’s revenues accounted for less than 4.5 percent of the gross state product (GSP) and less than 5.5 percent of the state’s personal income; these are lower levels than at any point in recent history. … Simply put, changes to the state’s tax code, not oil and gas prices, are the culprit for these yearly budgetary crises.”
For the state to get off the sauce of using one-time money and other gimmicks to patch up crises, the Budget Project makes a convincing case that a great deal of reform is necessary, and soon.
Gov. John Bel Edwards, Commissioner of Administration Jay Dardenne and other officials have stressed the disaster of the “fiscal cliff,” the short-term tax increases that expire in 2018 and leave the state facing a billion or more in the hole. That requires major surgery, and so far the governor’s office has yet to adopt a specific plan for the operation. Clearly, the losers in raising income taxes would be higher-income taxpayers, so there is certain to be pushback by legislators from more affluent districts.
While the Albares report focuses on policy, not politics, there’s more than a little pushback in it against the notion that tax reform is unpopular. By lowering the “emergency” one-penny of new sales tax passed last year, most Louisiana taxpayers would pay less at the checkout counter — the Budget Project estimated that 6 out of 10 would see a lower tax burden and the compensating rise in income tax would increase only modestly the cost to families making less than $204,000 a year.
In theory, even a drooling idiot who got elected to the Legislature ought to be able to sell that kind of deal back home. But that may reckon without the Trump effect.
Not only are legislators of both parties excessively guided by lobbyists representing the well-heeled — industries that can afford representation at the State Capitol — but lawmakers might well worry that the victory of Donald Trump in the November presidential election in the state is an anti-tax rebellion. True? Maybe, maybe not.
Are there pitchfork-wielding mobs ready to march on the capitol against a tax break for themselves? Doubtful. Legislators agonized over TOPS cuts, but tax reform after all would fund the tuition waivers and put them, like everything else, on firmer financial ground. A majority of legislators probably understand that we simply can’t go on like this.
Still, tax reform requires a major political effort. That inevitably must involve the governor’s leadership and an effective campaign to push tax reform to voters. The Stelly tax reform plan in 2002 went to the people as a more complicated proposition, was demonized by ultraconservatives and only narrowly passed.
It was largely undone in 2007 and 2008. But with the unpopular budget cuts of recent years, and a business community sick of uncertainty and ready for a tax code that looks more like that of a normal state, there may be larger constituencies for reform than the smart money thinks.
Email Lanny Keller at email@example.com.
In a nine-day special session, the Louisiana Legislature and Gov. John Bel Edwards reached a…