How big is the fiscal cliff?

Louisiana is projected to collect $339 million less revenue than it needs to sustain current levels of programs and services in the 2025-26 fiscal year, according to the latest projections from state economists. The projection is lower than the $559 million shortfall economists had been anticipating. But as the Louisiana Illuminator’s Julie O’Donoghue explains, the improved forecast is based on the assumption that Gov. Jeff Landry and the Legislature will not renew stipends that teachers and support staff have received over the past two years in lieu of a permanent pay raise. 

It also doesn’t factor in money for differential pay bumps for teachers with hard-to-fill jobs in math, science and at schools serving predominantly low-income families. Funding for tutoring programs state Education Superintendent Cade Brumley supports has also been excluded. If those extra school expenses are added back, the budget deficit for the fiscal year that starts July 1, 2025, is much higher — $587 million — state budget director Ternisa Hutchinson said at a legislative budget hearing Friday.

Louisiana faces its fiscal cliff next year mostly because of the expiration of two temporary taxes – a .45% sales tax and a 2% tax on business utilities. O’Donoghue notes there doesn’t appear to be enough support in the Legislature to renew the sales tax and points to other ways lawmakers could fill the budget hole:

The legislators could divert $320 million in vehicle sales tax revenue currently dedicated to transportation projects back into the state general fund, which mostly pays for public higher education, health care and prisons. … Lawmakers could also continue a 2% tax on business utilities that is supposed to be eliminated in July 2025. If they kept the tax, it would generate $220 million that could be counted against the deficit, according to estimates provided by Louisiana Department of Revenue Secretary Richard Nelson.

Competing presidential tax plans

The looming expiration of former President Donald Trump’s tax cut law makes 2025 a pivotal year for tax reform on Capitol Hill. Trump’s preferred plan – to renew existing tax cuts and pile on additional cuts – would add close to $4 trillion to the national debt. Vice President Kamala Harris, meanwhile, has not revealed a plan, though campaign officials have indicated it will lean heavily on President Biden’s recent budget proposal that calls for taxing wealthy people and corporations more. The New York Times’ Jim Tankersley reports: 

Mr. Trump has proposed several additional tax cuts that would add to those projections, many of them intended to appeal to voters struggling with household expenses. They include eliminating federal income taxes on retirees’ Social Security benefits and on the money service workers, like waiters and ride-share drivers, earn from tips. He would further cut the corporate income tax rate to 15 percent, down from the 21 percent rate he approved as part of a tax overhaul package in 2017. Mr. Trump also wants to extend expiring tax cuts for people and businesses that were included in that 2017 tax law.

Foreclosure relief for Habitat homeowners

A recent move by the New Orleans City Council will allow $2 million in American Rescue Plan funds to blunt foreclosures for residents who purchased homes through Habitat for Humanity. The nonprofit has helped many low-income people realize the dream of home ownership through 0% interest loans with no down payments. But the skyrocketing cost of property insurance is proving an insurmountable financial burden that Habitat for Humanity cannot address alone. Verite’s John Gray reports:

New Orleans Area Habitat for Humanity Executive Director Marguerite Oestreicher said the organization wants to use the money to set up one-on-one counseling to support homeowners facing foreclosure and for direct assistance grants to homeowners through an application process. Oestreicher said she hopes the council grant could be a pilot program for a broader program to assist homeowners in the city who are strained by the insurance crisis. 

Academic leader promotes carbon capture talking points

Fossil-fuel spokespeople asked a high-ranking official at the University of Louisiana at Lafayette to help bring credibility to their expansion of controversial carbon capture projects. The Lens’ Sara Sneath reports: 

After reviewing the email chain between C100 and [Ramesh] Kolluru, Michael Mann, a climate scientist and distinguished professor at Pennsylvania State University, called the relationship between UL Lafayette and C100 “deeply problematic.”  “This is a way of purchasing moral license, by using academic institutions as a friendly-appearing facade behind which bad actors in the fossil fuel industry are able to hide as they promote greenwash and climate delay,” Mann said.

Petrochemical industry leaders tout carbon capture technology as an industry-friendly way to reduce greenhouse gas emission. But environmental advocates and state and local lawmakers have pushed back against the unproven and dangerous technology. 

Number of the Day

43rd – Louisiana’s national rank for cardiovascular diseases. On average, 11.5% of adults reported being told by a medical professional that they had angina or coronary heart disease, a heart attack or myocardial infarction, or a stroke. (Source: United Health Foundation’s America’s Health Rankings via The Times Picayune | Baton Rouge Advocate)