Gov. Jeff Landry is renewing his bid to overhaul Louisiana’s tax structure, with his administration’s latest goal being a special legislative session before Thanksgiving. The move comes as the state faces a half-billion dollar budget shortfall next year due to expiring taxes. Revenue Secretary Richard Nelson is calling for across-the-board income tax cuts for people and corporations and eliminating the corporate franchise tax. Nelson has offered few details about how Louisiana would make up the resulting loss of tax revenue that currently supports schools, hospitals, public safety and other critical services. The Times-Picayune | Baton Rouge Advocate’s Tyler Bridges reports:
“They’ve definitely improved their message and have narrowed down on what they’re trying to do,” [Sen. Cameron] Henry said. “Whether we hold the special session will depend on how well he (Nelson) and the administration articulate that plan and how well members buy into that plan.” Nelson has yet to make public who would pay more and would pay less under the various ideas under consideration. He said the administration is not seeking to have its plan raise as much as the current tax system does, given that legislators favor less spending by state government.
Reality check: Louisiana is a high-poverty state that already struggles to support families through investments in early childhood education, public schools and workforce training. An across-the-board tax cut like Nelson is proposing would dig Louisiana’s fiscal hole even deeper.
The benefits of state child tax credits
Louisiana leaders should look at tax reform efforts through the lens of raising enough revenue to reverse the state’s endemic poverty and put people on the path to a brighter future, not making a budget hole worse through costly tax cuts for wealthy people and corporations. The Institute on Taxation and Economic Policy’s Neva Butkus explains why state child tax credits are one of the most effective ways to boost financial security for families:
Refundable Child Tax Credits boost the after-tax incomes of qualifying families and offset some of the costs of raising children. These policies are especially important for the economic security and stability of lower-income families, helping them avert unexpected hardship that can threaten basics like housing, food, and utilities. Child Tax Credits are associated with reduced poverty, higher financial and household stability, improved child and maternal health, better educational achievement, stronger future economic outcomes, and more. These benefits are stronger with well-designed credits.
Federal infrastructure investments benefit Louisiana
The 2021 bipartisan infrastructure law provided Louisiana with billions of dollars to invest in roads and bridges, expand access to high-speed internet and better prepare for storms like Hurricane Francine. State Sen. Patrick Connick, writing in a letter to the Times-Picayune | Baton Rouge Advocate, explains how these crucial federal investments have benefited Louisiana communities:
These federal infrastructure investments will help us continue our work to grow a stronger, more robust economy that benefits all Louisianans while also ensuring our state’s core transportation infrastructure is up to date and ready to address our most pressing economic and environmental concerns. I urge our entire congressional delegation to continue supporting and passing common sense, pro-growth infrastructure policies that will help secure a stronger, safer future for all Louisianans.
Federal share of state budgets
The percentage of states’ revenue that came from federal funds in fiscal year 2022 stood at 36.4%, slightly down from record-highs in the previous year. The amount of federal dollars that made up Louisiana’s revenue in 2022 was 50.5%, the highest in the nation. Pew’s Rebecca Thiess, Kate Watkins and Justin Theal take a deeper look at how historic federal aid has impacted state budgets:
Historically, the federal share of state revenue has ranged from about a quarter to a third. Before the pandemic, the highest share occurred just after the 2007-09 recession, when a temporary influx of federal dollars and falling state tax revenue pushed the federal share to 35.5% in fiscal 2010 and 34.7% in fiscal 2011. The fiscal 2022 share was 4.4 percentage points higher than the 20-year average of 32% for fiscal 2003-22 and 11.4 percentage points higher than the fiscal 1981-2000 average of 25%.
Number of the Day
7.9% – Percentage of Americans who did not have health coverage in 2023, an historic low. Unfortunately, the child uninsured rate increased from 5.1% to 5.4% from the previous year. (Source: U.S. Census Bureau via the Center on Budget and Policy Priorities)