Affordable, high-quality early care and education programs help put children on the path to a brighter future and allow parents to stay in the workforce. But rising operating costs could force many child care providers in Louisiana to shutter, according to new survey data collected by the Louisiana Policy Institute for Children. The Times-Picayune | Baton Rouge Advocate’s Elyse Carmosino reports:
Nearly 8 in 10 of 728 respondents said they worry about being able to operate their business over the next six months. The providers cited rising costs of food, cleaning and classroom supplies and insurance, with premiums increasing by an average of more than $7,000 last year, the survey found. At the same time, the Louisiana Legislature has cut early childhood funding, resulting in the loss of 720 state-funded seats in 2024.
The report lays out ways the state can address the child-care shortage, as the Legislature goes in the opposite direction:
State lawmakers cut $9 million for early education in 2024. The Legislature is also seeking to use three education trust funds to raise public school teachers’ pay, which would further reduce early education funding by about $10 million annually. If that happens, the Louisiana Policy Institute for Children previously warned it could result in an additional 1,600 children losing their early education seats.
State fiscal challenges loom
State budgets have been propped up over the past few years by federal dollars and a supercharged post-pandemic economy that generated a surge of tax revenue. But as a new report from the Urban Institute explains, revenue growth has become more volatile and could weaken in the coming years:
Looking ahead, the fiscal outlook for states is increasingly uncertain, shaped by a mix of state-level tax changes and major federal policy actions. In particular, the OBBBA introduced a broad range of individual and corporate income tax changes and major spending cuts. It also comes against the backdrop of other expected federal spending cuts, which could further strain state budgets. … Many states are already under budget pressures due to softening revenues after years of tax cuts and the expiration of federal pandemic-era aid. The new tax and spending provisions in OBBBA are likely to add further strain to state budgets, complicating state fiscal planning in the near term.
Last November, the Louisiana Legislature approved permanent income tax cuts for individuals and corporations, and eliminated the corporate franchise tax. These changes will help contribute to a more than $600 million budget shortfall in the 2027-28 fiscal year.
How states can lower the cost of living
More than 65% of Americans are very concerned about the price of food and consumer goods, but relief could be far away. Inflation continues to rise and could increase further as the effects of new tariffs ripple throughout the economy. The Urban Institute’s Sarah Wartell, writing in Governing, explains ways that states can lower the cost of living, including helping families bring in more money:
Maryland recently announced a new initiative to encourage more residents to claim the state’s earned income tax credit (EITC) and child tax credit. Nearly 100,000 eligible tax filers in Maryland did not claim the state EITC during the 2023 tax season, leaving money on the table that could have helped them afford groceries, rent and child care. By identifying the barriers that prevent residents from accessing these tax benefits and providing tax filing supports, state leaders hope to increase uptake.
Some rural areas left out of broadband expansion
The Trump administration recently rewrote the rules for a $42 billion Biden-era initiative aimed at expanding high-speed broadband access to rural areas. The Broadband Equity Access and Deployment (BEAD) program will now use satellites from Starlink, which is operated by Elon Musk’s SpaceX, in some areas instead of underground fiber-optic cables. As The Times-Picayune | Baton Rouge Advocate’s Jenna Ross explains, this move is causing some rural areas in Louisiana, such as Lake Providence, to feel left out:
We’re back to square one,” said Wanda Manning, a retired teacher who, with the nonprofit Delta Interfaith, has been pushing for faster, cheaper internet. “I think it’s worse than square one.” Manning was “blessed” to have Starlink a few years back, thanks to a grant aimed at students and educators, and it worked well. But when that grant ended, she balked at the service’s $120-a-month price tag. “It’s not the internet we need in this town,” she said.
Fiber cables tend to have faster download speeds than Starlink satellites:
Fiber cables, installed underground, consistently meet the Federal Communications Commission’s broadband requirements of 100 megabits per second for downloads and 20 Mbps for uploads. This summer, a national speed analysis found that just 17.4% of Starlink users got speeds consistent with those minimum requirements. That study, by Ookla, a private research company, showed that Louisiana users fared even worse: Just 9% of the state’s Starlink users got those speeds.
Number of the Day
$1.3 billion – Amount of revenue that sales tax holidays will cost states and localities in 2025. Louisiana is exempting firearms, ammunition and specified hunting supplies from sales taxes from Friday through Sunday. (Source: Institute on Taxation and Economic Policy)