With the June 30 end of the fiscal year, Louisiana closes the books on a much more sedate note than in the previous few years.
One simple reason: money.
State government had more of it, after legislators and Gov. John Bel Edwards compromised on a 0.45 cent increase in the state sales tax. That was the principal result of four years of debate over taxes and the budget that arose after eight years of financial crises during former Gov. Bobby Jindal’s two terms.
While a half-cent sales tax on consumers was part of the reason for new money in the budget, there were also some cuts in business tax breaks and other legislation that raised revenues in the chaotic 2016 political environment.
A House Republican caucus led by its most hardline members — many of them willing accomplices in Jindal’s policies before — entered the tax and budget debate in opposition to Edwards, a Democrat. But all hasn’t gone the House’s way; the GOP-led Senate has worked with Edwards more closely.
That the exhausted parties settled on the sales tax increase for most of the money is unfortunate. We would have preferred almost any alternative, and there were much better ideas proposed by outside experts, but almost all were voted down, almost always in the House, and almost always without much in the way of ideas for significant reforms in Louisiana’s way of doing business.
So where are we now?
The relative peace at the State Capitol results from a combination of new taxes and economic growth. Louisiana is hardly a rich state, but its economy is doing better despite the lingering impact of the oil price crash of late 2014.
The new money funded teacher pay raises and some aid to local school systems this year as well as improvements in colleges and universities’ financial positions. The state is not flush: Analysts figure that the state general fund, the centerpiece of government funding, is still less than it would have been but for Jindal’s tax cuts and business tax breaks.
How long will the era of good feelings last? Depends on how long the money does.
If more teacher raises or other new expenditures are to be funded in 2020, the economy will have to continue to improve.
And finally, can we avoid the mistakes of 2008, when a doctrine of cutting taxes without regard to the consequences in state institutions was all the rage? This year, a repeal of the 0.45 sales tax was proposed, and fortunately not adopted. A real and comprehensive tax reform plan would be a good idea, but whether it will gain traction in the State Capitol is problematic.
Happy New Fiscal Year. With luck, we can keep some of our new-won stability.