The problem with Gov. John Bel Edwards’ tax increases in the new special session is not only that they cost taxpayers more, but they also don’t fix the long-term problems of Louisiana.
Unfortunately, there doesn’t seem to be a good alternative out there, even with many legislators reluctant to take the heat for raising taxes that will balance the budget. It is about $600 million short by the governor’s count.
Also unfortunately, the reality is that if the Legislature gives the governor what he wants in the special session beginning Monday evening, he and they will still be fighting next year about how to reform permanently Louisiana’s horribly unstable tax system.
A temporary sales tax to balance the budget is already enacted, but that tax and others will expire in two years. It’s a financial cliff that is coming, no matter what happens in the special session opening Monday.
But if the Legislature votes for key elements in the Edwards package in the special session, we’ll have at least a year of relief from crises that have dogged the state during the terms of Gov. Bobby Jindal.
One crisis every year or two is better than one crisis every three months.
Edwards’ plan includes two bills that will raise income taxes, in part rolling back some of the big tax cuts under Jindal in 2008 — now seen as going too far, by just about everybody except Jindal.
The most anti-tax members on the Appropriations Committee tried to cut the budget instead of raising more taxes. They failed, as even the GOP-majority House rejected the idea that state should close public hospitals or make other dramatic cuts that close more institutions and put more people out of work.
The Senate rightly rejected another dose of Jindalnomics: The House proposed a shell game to tap some dedicated fees and divert them, we think unconstitutionally, into the operating budget. This is neither conservative nor prudent financially.
The governor concedes that he doesn’t like the cuts he’s already made in state spending, or raising the sales tax to cover the immediate crisis left by Jindal in January.
The main budget measure is House Bill 1. “We have an HB1 that I don’t think anyone is happy with,” Edwards said ironically.
But he’s also aware that Wall Street is downgrading the state’s credit rating because expenses exceed revenues, and Louisiana’s colleges are facing their 16th budget cut in a decade.
If lawmakers put aside politics and pass the key parts of Edwards’ package — maybe not all of it, but enough to patch the budget hole — it won’t be the end of debates at the State Capitol. A long-term tax reform plan is being worked out by a panel of experts set up by the Legislature.
There will be a lot of tough votes ahead for legislators, and there will be tougher tax days ahead for individuals and businesses. There will be increases for businesses, because many business owners do not pay corporate income taxes but pay through their personal income tax returns.
But we believe what business wants more than anything else is some level of predictability. Everyone who can operate a calculator knows that our taxes have to go up, because Jindal left the budget in a catastrophic situation. Services have been cut, often severely, in areas from mental health beds to college classrooms.
For what it is worth, the governor said that the income tax increases are consistent with the broad plan for tax reform that has been pushed by LSU and Tulane economists working on the reform proposals. So those are a down payment on permanent tax reform, in the governor’s words.
We promise we won’t be thrilled with paying up next May 15, the state’s tax day. But prolonging this agony is not good for state institutions, nor good for businesses trying to plan ahead.