Regardless of whatever his day job happened to be at any given time, Jay Dardenne always had an entertaining sideline, giving talks to various groups about Louisiana history.
So it wasn’t surprising to hear him, now the Edwards administration’s chief budget architect, sprinkle Huey Long in an otherwise depressing lecture about the need to renovate the creaky state fiscal foundation that results in billion-dollar deficits year after year.
Not to diminish other causes — including gimmicky accounting practices, unaffordable tax breaks and the rollback of the 2002 Stelly tax hike without touching the plan’s tax cuts — but one of the biggest triggers is state government’s paternalistic practice of paying for services that in other states are routinely in the purview of local government. At the same, the state restricts the abilities of locals to raise the money themselves.
“Everybody had to come to the state to get money as far back as Huey. It’s been perpetuated over the years. The locals have become dependent on the state to take care of them in some respects, and the state legislatures over the years have been willing to do that,” Dardenne said.
The Public Affairs Research Council of Louisiana — the independent, 70-year-old government policy analysis group — calls the practice “Mother Pelican” in a recent white paper. “The give-and-take relationship between state and local governments is one of the strongest characteristics of the state financial situation, and yet much of what is spent is almost invisible to the budget process,” PAR writes.
The state pours billions of dollars into a bunch of local pots. Sometimes the money is funding completely local services, but mostly it is propping up services — law enforcement supplemental pay ($127 million) and road maintenance ($46.4 million) — routinely handled locally in other states. PAR adds that while such funding is essential in many of the parishes with high rates of unemployment, poverty and weak tax bases, the system over time “awards influence to legislators and state level officials.”
House Speaker Pro Tem Walt Leger III, a New Orleans Democrat, said, “The more conservative approach and the better approach would be to empower local government to do more and for the state to focus on state priorities like higher education and health care; the big-picture items.”
House Appropriations Committee Chairman Cameron Henry, R-Metairie, agreed, saying that about 25 percent of the state’s construction dollars, referred to as “Capital Outlay,” goes to pay for local projects.
“I would rather the locals be able do what they need to do back home and let them take care of it themselves,” Henry said, adding that parishes and municipalities should be more free to raise property tax rates. Levied in rates that are called millages, taxes on residential and business properties are the most common source of revenue for local governments around the country.
“Want to build a playground? Raise the millages and build the playground. When the playground is built, remove them (the millages). And if you can’t raise the millages, you don’t get a playground,” Henry said.
State government long ago decided that homeowners and manufacturers could be exempted from most of the property taxes on which locals would otherwise rely. PAR counts nearly 1.2 million Louisiana homes that don’t have to pay $761 million in local taxes because of the homestead exemption, while 21,000 industrial exemptions have an even higher overall value.
The upshot is that Louisiana is one of the least taxed states for residential property, according to PAR. Local property taxes account for only 17 percent of the money used to pay for public schools. Nationally that percentage is 36 percent.
“I believe we ought to give the parishes the authority to compete against each other, and let the businesses decide which parish it wants to be in, and the state should get out of the way,” Leger said.
Another consequence of the low property taxes is that the state has among the highest sales and use tax rates in the country. Local governments have tacked on pennies to the 4 percent state sales tax. The average tax on purchases in the state is 9 cents on the dollar, which is getting close to as high as voters seem willing to go, said Ronnie Harris, the former Gretna mayor now leading the Louisiana Municipal Association.
“It is very, very hard to pass a tax in this day and age,” Harris said. “But taxes equal services.”
“Do we want more authority? I’d be crazy to say not to,” said Roland Dartez, executive director of the Police Jury Association of Louisiana. “But you play with the hand that’s dealt you.”
Mark Ballard is editor of The Advocate Capitol news bureau. His email address is firstname.lastname@example.org and is on Twitter, @MarkBallardCNB. For more coverage of government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politicsblog/.