Gov. John Bel Edwards presented his budget recommendations to the Legislature earlier this month at a time when Louisiana’s financial coffers are strong. A strong post-pandemic recovery, combined with federal relief dollars, has produced better-than-expected tax collections and about $1.6 billion in surplus and “excess” revenue that can be spent on one-time needs. But an Advocate editorial previews the very-near future when legislators will have to address a looming fiscal cliff.
The overall budget presentation represents a sensible plan for the state’s future, even though there are legitimate reasons to be cautious. Lawmakers don’t want to choose among budget items to cut, but they may well have to if and when revenues slump. The longer-term concerns are not that far away: A temporary 0.45% state sales tax enacted in 2018 to balance the state’s budget falls off the books in mid-2025 and will reduce tax collections by an estimated $418 million each year, the Legislative Fiscal Office has said.
As LBP previously stated, the Legislature should pick a responsible path by acting now to replace the revenue that is being lost, so the state can continue making the kind of investments that will move Louisiana’s economy forward.
Families still struggling as pandemic aid ends
The most recent data from the U.S. Census Bureau’s Household Pulse survey shows that a large number of Americans are struggling as the cost of food and other necessities continues to rise. Experts warn that the struggles may become even worse as pandemic relief disappears. Families who rely on federal food assistance will receive less benefits per month beginning in March because emergency allotments under the Supplemental Nutrition Assistance Program (SNAP) will return to pre-Covid amounts. States Newsroom’s Casey Quinlan reports:
The current Pulse data shows that since expanded COVID-19 unemployment benefits ended in the fall of 2021, fewer people are relying on unemployment insurance to buy food. When asked how they had paid for food in the past seven days, 13 million said they used SNAP benefits compared to 1.8 million who said they used unemployment insurance benefits. That’s up from 12.7 million who relied on SNAP in January and 12.1 million in December. In the survey from Feb. 17 to March 1, 2021 — before expanded unemployment benefits ended — 11.9 million people used unemployment benefits to buy food and 10.8 million used SNAP benefits.
Louisiana families who rely on federal food assistance will receive an average of $164 less per month beginning in March.
Education proposals face scrutiny from Republicans
Gov. John Bel Edwards’ 2023-24 executive budget includes a $2,000 pay raise for public school teachers, and $1,000 more for support workers – and possibly more if the state’s revenue projections continue to improve. Louisiana’s teachers will continue to be paid below their Southern and national peers despite the increases called for in this budget. But these proposals are facing scrutiny from Republican legislators as the state faces a massive fiscal cliff in 2025 because of the expiration of a temporary $0.45 cent state sales tax and the legislature’s previous decision to divert vehicle sales taxes from the state general fund. The Advocate’s James Finn reports:
“We don’t know exactly what the economy is going to do — it’s kind of iffy nationally,” he said. “If the collections are that high, then it probably wouldn’t be a big deal to give a $2,000 raise over the next four, five, six years. But my experts have been telling me for a couple years that we have a recession coming.” Edwards’ chief budget architect, Commissioner of Administration Jay Dardenne, said caution over recurring expenses is warranted. But if the economic rebound keeps driving near-billion dollar amounts in excess tax collections, Louisiana may avoid a true fiscal cliff, he said. “We really do believe based on the current forecast and the surpluses we’ve had over the past several years, there’s a good possibility we will generate enough revenue to offset that and the vehicle sales tax,” Dardenne said.
Cassidy talks Social Security fix
Social Security is an incredibly effective poverty-fighting tool that annually lifts over 26 million people above the poverty line according to the U.S. Census. It is also predicted to face insolvency in a little more than a decade unless tax increases or cuts are used to address its shortfall. But current efforts to address the program’s future are falling along partisan lines. The Advocate’s Mark Ballard reports on Sen. Bill Cassidy plans to address the issue:
Even as Congressional leadership proclaim hands off Social Security until debt ceiling negotiations are complete, Cassidy and Sen. Angus King, No Party-Maine, are working on legislation that would change some of the framework to increase revenues. “We face a choice when Social Security goes insolvent: massive benefit cuts, drastic tax increases or doubling our national debt. There should be a better option,” Cassidy said. The Cassidy-King effort, which has not been finalized, could lead to an investment fund specifically to help stabilize Social Security. The problem is mathematical.
Didja Know? Podcast
In the latest edition of the Didja Know? Podcast, LBP executive director Jan Moller and the organization’s newest policy analyst, Paul Braun, break down Gov. John Bel Edwards’ 2023-24 executive budget and the looming fiscal cliff the state faces in 2025. Click here to listen.
Number of the Day
800,000 – Number of single-parent households in Louisaian that are struggling to make ends meet. Experts warn that struggles may become worse as the cost of food and other necessities continues to rise and pandemic relief disappears. (Source: United Way of Southeast Louisiana via BR Proud)
