Forcibly invited this week by Democrat Gov. John Bel Edwards to another special session, the Republican-led Legislature should decline his proposal to retain oversized state government and embrace budget and fiscal reform, instead.
Edwards, calling for the special session to start 30 minutes after the regular session adjourns Monday, charitably gave the Legislature a cigarette and bathroom break. While much of the session call addresses lingering minor sales tax issues created during the previous special session in the rush to pass anything to raise hundreds of millions of dollars through new taxes, the meat of the document involves new income tax increases to collect hundreds of millions of dollars more.
Legislators need to reject Edwards’ plans. Inefficiencies and poor priorities continue to inflate state expenditures, with the latest data showing Louisiana ranking 18th in per capita spending among the states and D.C., or about 15 percent above the averaged national figure. With per capita personal income ranking 30th, the third-highest in the South, Louisiana leaders can’t blame anti-poverty programs as the reason for state government to spend so much more than comparable states. Nor do the economic data show that most residents have the extra wealth to fund all this extra government spending.
The call indicates Edwards will try to raise money by further limiting some already-curtailed tax exceptions, reducing refundable credits, and including capital gains and excess federal deductions in taxable state individual income. The call also allows for changing marginal tax rates on income. This allows for tax simplification, endorsed by many, that promises to spur economic growth, thus increasing government revenues.
Edwards likely would diminish all or part of some breaks and return a portion of the boosted tax proceeds to taxpayers through lowering rates but in a way to keep as much as he can of the $450 million he claims he needs to run the state at a level comparable to this year. To leverage this, he will try in his newest spending plan to have as few dollars possible funding the Taylor Opportunity Program for Students and charity hospital partners, creating pressure to add money back to these popular items in the overtime session through increased overall taxes.
Although the Republican Senate has acted more amenably to Edwards’ funding requests than the Republican House, it left TOPS about half-funded and partner hospitals as much as $100 million short of the administration’s ideal. As a result, officials have said they may have to close three charity hospitals. Meanwhile, recently approved legislation that preserved TOPS’ low eligibility standards means the number of qualifiers remains unaffected, but all must now pay about half of their tuition next fiscal year.
The GOP majorities should accept this deal. House Republicans already have signaled comfort with a half-funded TOPS. A whopping 40 percent of those students who qualify for TOPS because of its low qualification standards eventually lose their TOPS funding. Unless it’s seriously reformed, giving less money to TOPS now makes sense. And because the administration has used funny numbers regarding Medicaid expansion to manipulate available revenue totals, here’s betting, if forced by GOP budgeters, it would find a way to finesse away any partner hospital reimbursement decline that would causing facility closures.
In the special session, Republicans should embrace real tax reform but do so in a revenue-neutral way that doesn’t create more resources for an already-bloated state government. With $2 billion in new tax revenues already in the pipeline for each of the next two years, there’s already a good revenue bridge to give such reforms time to work.
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 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 www.laleglog.com. Follow him on Twitter, @jsadowadvocate. Write to him at email@example.com. His views do not necessarily express those of his employer.