A strong post-pandemic economy combined with an influx of federal relief dollars provided states with better-than-expected tax collections and budget surpluses. But what goes up usually comes back down. Declining revenue from income and sales taxes and other economic factors are starting to strain state finances. Axios’ Emily Peck explains:
The larger economic picture is also working against states — the slumping job market, as well as tariffs are expected to curb revenue growth. “All those underlying macro drivers are expected to slow the revenue growth for states, and to continue to put pressure on the cost side of the income statement, making it harder and more challenging for states to keep up,” says Jennifer Johnston, senior vice president and director of municipal bond research at Franklin Templeton, an investment management firm. “And we’re seeing that across the country.”
This extra fiscal stress comes before massive federal cuts, which are included in the Trump tax and spending law, take effect. The federal government’s retreat will put further pressure on state budgets:
The big bill also makes deep cuts to health care, food assistance and funding for climate resilience. Some of these will take time to fully kick in, and states will have to decide whether to fill in funding gaps or let the cuts happen. That could be painful. When it comes to [Supplemental Nutrition Assistance Program], or food stamps, states are now required under the big bill to pick up a share of its costs — previously 100% covered at the federal level.
The new SNAP provisions could pile between $95 million and $283 million in new costs on Louisiana.
Deporting workers who helped rebuild New Orleans
Immigrant workers played a pivotal role in helping New Orleans rebuild after Hurricane Katrina. But as the city marks the 20th anniversary of the storm this week, many of these workers have been or are set to be deported by the Trump administration. The Times-Picayune | Baton Rouge Advocate’s James Finn explains immigrants’ foundational role in New Orleans’ recovery:
Demand for workers so outstripped supply after the storm that the Bush administration suspended rules requiring employers to verify workers’ immigration status. A 2006 survey of construction workers in the city found half were Hispanic, and half of those were here illegally. And New Orleans’ Latino population grew by 71%, to 103,000 residents, between 2000 and 2013, according to Census data. A precise number of Katrina construction laborers who remain in New Orleans is difficult to tally.
The White House’s immigration crackdown is targeting people, such as Abner Uriel Gomez Velasquez, who have created a life in New Orleans and have no criminal history:
“Our church recognizes that a country has the right to regulate its borders,” the Rev. Augustine J. DeArmond, St. Anthony’s pastor, wrote to the judge handling Gomez Velasquez’s case. “Our responsibility is also to act with justice and mercy.”
Investing in early childhood education
The vast majority of brain development occurs before children turn 5, making access to high-quality early care and education programs essential for future success. Unfortunately, Louisiana’s investment in its youngest learners has flatlined in recent years. Firearms magnate Richard Lipsey, writing in The Times-Picayune | Baton Rouge Advocate, explains why Louisiana must prioritize early childhood education:
The positive returns realized across the board by a robust early childhood education system are what led Nobel laureate economist James Heckman to say that early childhood education is the best investment a state can make. That is sound economic policy with lasting impact and government efficiency at its best. If we want Louisiana to continue to compete and prosper, early childhood education must be recognized as a foundational pillar of the state’s success. The cost of inaction, on the other hand, is far too great to ignore.
Concerns for rural hospitals
State Rep. Ed Larvadain is sounding the alarm on the threat that the Trump tax and spending bill poses to rural hospitals. The sprawling legislation lowers provider taxes, an important financing tool that states use to fund health care services for people with low incomes, especially in rural areas. KLAX-TV reports:
Larvadain said many smaller hospitals are already struggling to stay open, and new federal changes could add more pressure to communities that rely on them. “Rural hospitals are important, because if you have a heart attack or stroke and you are in a rural area then they can stabilize you and then get you to a bigger hospital,” Larvadain said. “But if you close those rural hospitals, how will those communities have access to health care? If you close a hospital, who is going to come to a community with no health care?”
Number of the Day
17% – Percentage of homebuyers who used alternative financing arrangements to buy properties valued under $200,000 in 2021, compared to just 3.8% of buyers who relied on these mechanisms for higher-valued properties. Alternative financing can be more costly and expensive than mortgages and lack consumer protections. (Source: Pew Charitable Trusts)