It seems Democrat Gov. John Bel Edwards has the power to move markets — to the detriment of Louisianans.
Moody’s, one of the three major credit rating agencies, recently downgraded Louisiana’s debt after having reaffirmed its status only months ago. It cited low oil prices, escalating Medicaid costs and uncertainty over the prospect of balanced budgets for causing its reversal from the several upgrades granted during former Republican Gov. Bobby Jindal’s terms.
Chalk up the exploding Medicaid expenses and reduced chances for a balanced budget to Edwards. His expansion of Medicaid grew the budget by 6 percent — or $1.5 billion. During the course of his term, it will cost the state an estimated $666 million extra. And his love affair with higher taxes to sustain outsized government has proven so far the main obstacle to resolving the current fiscal year deficit — and to tackling next year’s projected shortfall.
In the special session called to resolve present and future budget shortfalls, the Republican-led House of Representatives went along with the only revenue-raising means that will generate substantial funding to adequately address this fiscal year’s red ink: an increase on the sales tax by 1 cent. Those lawmakers included its sunset at the end of October 2017. While this allows for further state and local government overspending (an estimated 18th highest per capita among the states in 2015), it also buys no more time than necessary to pass legislation and constitutional amendments to remedy that budgetary bloat.
But Edwards tipped his hand by complaining about the addition not lasting five years. A distant date buys him more time to acclimatize Louisiana to inflated spending habits and avoid the inconvenience of reconsidering tax increases during a re-election campaign. More disturbingly, stringing out the date further would create less urgency to undertake the structural reforms that will shrink government. It also lengthens the period of economic damage caused by higher taxes.
The end result mirrors the self-destructive economic strategy used by Edwards’ partisan White House counterpart, President Barack Obama, to justify the growth of government: Do more of what created the problem.
Edwards also criticized representatives for shrinking current-year expenditures beyond the modest level he proposed and not raising more in taxes. Then, further echoing the governing style of Obama, he lambasted his predecessor’s budgeting practices. In doing so, he delivered a blend of hypocrisy and evasion of responsibility because when he sat in the House, he voted for five of eight Jindal budgets and against several Jindal initiatives that would have or did act to mitigate the current deficit.
Emphasizing long-term tax hikes, showing reluctance to curb excessive spending and shifting responsibility to others doesn’t exactly endear financial analysts. They base ratings on future prospects. Observation of Edwards’ affinity for taxing and spending, of his unwillingness to address structural overspending and of his combative obstinacy to right-sizing government make their dimmer view of Louisiana’s prospects unsurprising.
To correct for Edwards’ big-government lust and to restore market confidence in Louisiana, the Legislature must minimize the duration of increased taxation. Besides moving markets positively, having a short period for increased taxation will help Louisiana return to its above-average growth in nongovernment jobs and in the economy enjoyed during Jindal’s first seven years.
Jeff Sadow is an associate professor of political science at Louisiana State University Shreveport, where he teaches Louisiana government. He is author of a blog about Louisiana politics at http://www.between-lines.com, where links to information in this column may be found. When the Louisiana Legislature is in session, he writes about legislation in it at http://www.laleglog.com. Follow him on Twitter, @jsadowadvocate. Write to him at firstname.lastname@example.org. His views do not necessarily express those of his employer.