Like those Nextdoor social media sites where your neighbors whine about the way things used to be, the Louisiana Legislature’s largely negative reaction has overshadowed news of an actual surplus after 15 mid-year deficits over a span of nine years.
Some have even called for a “What did he know/When did he know it?” investigation.
Democratic Gov. John Bel Edwards and his rivals among the House’s Republican majority have bickered over just how steep the fiscal cliff would be once one penny of the state’s five-cent sales tax expired on June 30. The administration pegged the shortfall in revenue collections somewhere north of $1 billion, at least at first. House Republicans saw a far smaller number.
Edwards feared that absent more revenues colleges would have to be cut, law enforcement’s pay reduced and health care for half the state’s population endangered. Republicans claimed taxpayers already paid too much in taxes and state government needed some measure of belt-tightening.
After months of name-calling, both sides agreed to fill a deficit of around $500 million. When all was said and done, they passed a 4.45 percent sales tax rate, rather than 4 cents per dollar, for the next seven years.
News of a surplus, while not exactly on point, supports House Republican contentions that the Democratic governor exaggerated the deficit to get a bigger tax passed than Republicans otherwise would have accepted.
Gov. John Bel Edwards' administration plans to work with legislative leaders to develop a plan for the $300 million-plus surplus that the stat…
House Appropriations Committee Chair Cameron Henry, R-Metairie, wants to know if Edwards knew of the surplus prior to the Legislature approving a higher sales tax rate because that probably would have changed the outcome. "We will have to make sure the numbers weren't being artificially skewed to raise taxes," he told nola.com.
Republican state Sen. Conrad Appel of Metairie credits either ineptness or nefariousness for “this sudden revelation.” “Perhaps to support his well-articulated plan to grow government spending, he chose to ignore the facts and to not tell us that there was no fiscal cliff. That would not just be bad, that to me would be disingenuous and possibly even a violation of his oath of office,” Appel wrote in a column for The Hayride, a conservative blog site.
Commissioner of Administration Jay Dardenne dismissed the critics with what he calls the three “I’s”. “It is ignorance, irresponsibility or intent and I don’t think they’re ignorant,” Dardenne said.
To be fair, the budget must be crafted to meet a number the Revenue Estimating Conference has fixed as official. In this year’s case, the numbers called for either draconian cuts or a tax increase to balance spending with expected revenues.
The exact amount of the surplus won’t be known until next month, but it was about $300 million when the books were closed on the budget year that ended June 30. The new 4.45 percent sales tax went into effect on July 1.
The governor said the surplus came from better-than-expected personal income tax collections and is a sign that Louisiana’s economy is improving.
State law requires that 10 percent of the surplus goes to pay down debt for future pensions for current state employees, which are now about $20 billion. The next 25 percent goes into the “rainy day” fund that the state can use to cover bills when the economy is slow. That leaves about $195 million, and state law restricts how it can be spent. Once upon a time, that money could be used to pay this year’s bills, like insurance and salaries, that will recur next year. Now, the money can only make one-time payments.
Regardless of how they feel about the money’s origins, everybody has ideas on how it ought to be spent.
Gov. John Bel Edwards says it's good that the state ended its most recent budget cycle with a surplus, despite some pushback from Republican c…
Both Edwards and House Speaker Taylor Barras want to see the money used to tackle big problems, rather than splintered to address small ones. But after that, they head off in different directions.
Tailored and soft-spoken Barras gives off the responsible aura of small-town banker, which he is. The New Iberia Republican says the money should be used to pay down existing debts.
The governor would like to see the money flowing into construction projects that address some of the $14 billion highway and bridge backlog or to help colleges chip away at $4 billion in deferred maintenance. A one-time infusion could keep the state from having to take out loans to accomplish the project.
Both are laudable uses of found dollars. But 2019 is an election year, so don’t be surprised if a lot of the extra money goes into projects in legislators' districts.