Details of Gov. Jeff Landry’s tax overhaul plan continued to trickle out at a House Ways and Means Committee on Tuesday. It was the first time the tax-writing committee had met since the governor sent lawmakers a package of 10 bills outlining his goals. The Times-Picayune | Baton Rouge Advocate’s Alyse Pfeil reports that the plan calls for giving teachers a “permanent” pay raise through a constitutional change where the state would pay off debt in the teachers’ retirement system and require local school districts to use the resulting savings to finance salary increases.
[Revenue Secretary Richard] Nelson said about $2 billion currently saved in constitutionally protected educational trust funds would go toward paying down the high-interest debt — known as unfunded accrued liability or UAL — that is owed to the Teacher’s Retirement System of Louisiana. This $2 billion debt payment would create savings of about $300 million annually, he said.
The governor’s plan also calls for steep cuts to taxes paid by large corporations, the elimination of some tax giveaway programs and the merging of two state savings accounts:
About $2 billion would be moved from the Revenue Stabilization Fund to the Budget Stabilization Fund — the latter is often referred to as the state’s “rainy day fund” — and the Revenue Stabilization Fund would eventually be eliminated. The authority for the Budget Stabilization Fund would remain protected in the Constitution, and about $3 billion would be set aside there in case of budget shortfalls. Leftover funds in the Revenue Stabilization Fund would be used to pay local governments opting out of business inventory tax collection and to make good on corporate tax breaks that could be phased out over time.
Landry is seeking wholesale changes to Louisiana’s constitution and tax structure during a two-week special session. But his administration’s lack of clarity means state fiscal analysts can’t yet determine how much his plan will actually cost.
While state lawmakers have been given the draft tax legislation from the governor’s office, the tax committee chair Emerson said that they do not yet have official legislation that legislative staff can use to perform a formal fiscal analysis of the tax code rewrite. “We’re starting to do some preliminary analysis. But until we have legislation, we can’t produce a fiscal note,” [Legislative Fiscal Officer Alan] Boxberger said.
Programming note: Invest in Louisiana is hosting a webinar on Wednesday, Oct. 16 at 12 p.m where we’ll unpack the governor’s plan, discuss how it would affect Louisiana citizens and the state budget, and take questions. Click here to register.
Harris introduces plan to cover long-term care at home
Vice President Kamala Harris introduced a new policy proposal aimed at people who care for aging parents. The plan centers on expanding Medicare to include services that will allow elderly people to stay in their homes as they age. The Washington Post’s Yasmeen Abutaleb reports:
The majority of elderly Americans are on Medicare, which provides few, if any, options for long-term, at-home care. Under Harris’s plan, Medicare would cover services such as in-home aides so seniors could stay in their homes rather than move to nursing homes or long-term-care facilities. One goal, Harris said, is to make it easier for caregivers to continue working, as taking care of aging parents with growing limitations can become all-consuming.
The dwindling buying power of Social Security
The buying power of Social Security benefits has decreased by 20% over the last two decades, according to a recent report by the Senior Citizens League. While the federal government implements cost-of-living increases for benefits, the formula doesn’t account for one of retirees’ most significant expenses – rising health care costs. The Washington Post’s Michelle Singletary reports:
“The reality is that the 21st century has overseen a dramatic fall in Social Security’s buying power. The average payment for retired workers in 2024 is worth only about 80 cents on the dollar compared to 2010,” the report said. “COLAs have gradually become less likely to beat inflation over time.” The league’s report offered this example: Suppose you collected a Social Security payment of $1,000 a month in 2009. There was no COLA increase the following year even though inflation was 2.7 percent — same $1,000 payment but less purchasing power. “The COLAs just are not keeping up with inflation,” [the League’s executive director Shannon] Benton said.
Criminalizing homelessness can lead to more crime
Many states, including Louisiana, have passed laws that criminalize homelessness. The Futures Institute’s Thea Sebastian, Brookings’ Hanna Love and Tahir Duckett of the Center for Innovations in Community Safety at Georgetown University, writing in a guest column for Governing, explain why these measures can lead to more crime and costs:
First, the data: Criminalizing homelessness is bad financially and bad for public safety. Homelessness and incarceration have long been linked, as many people shuttle between jails, prisons, emergency rooms and the streets. .. Criminalization policies also bear a significant financial cost. The cyclical churn between homelessness, shelter and incarceration is estimated to cost taxpayers $83,000 per individual annually — far more than providing treatment and housing.
Number of the Day
1,109 – Number of clean-energy jobs created in Louisiana since the passage of the Inflation Reduction Act in August 2022. Tax credits included in the legislation were designed to drive private-sector investments in clean energy. (Source: Governing)