Louisiana’s budget and tax structure will be the main topic of discussion as lawmakers gavel in on Monday for a two-month “fiscal” session. While the state’s coffers are strong – lawmakers have $1.6 billion in surplus and “excess” revenue that can be spent on one-time needs – a spending limit in the state’s constitution limits how much of that can be appropriated without a two-thirds vote of the Legislature. Legislative analysts say the current-year budget is just $460 million below the cap and that only $500 million of room remains in the 2023-24 budget. The Advocate’s James Finn reports:
(Senate President Page) Cortez, though, favors lifting the spending cap. “I think you would be doing a disservice to the constituents who pay those taxes to just say, ‘I’m going to put those into a savings account’ rather than giving you the services you expect,” Cortez said last week. …. The situation is less clear in the lower chamber. Republican House Speaker Clay Schexnayder told a forum last week that he would have to “see whether we need” to raise the spending limit. Some members have said publicly they do not support the idea, including House Conservative Caucus Chair Rep. Jack McFarland, R-Winnfield. The Conservative caucus, formed in 2021, can block the required two-thirds vote if it votes as a bloc.
While budget and tax policy debates will dominate, lawmakers will also try to tackle property insurance reforms and debate an array of bills that would drive up Louisiana’s world-leading incarceration rate.
Several tough-on-crime measures propose sentencing fentanyl dealers to life imprisonment without parole and curtailing policies that allow people held in state prisons to get reduced sentences for good behavior. Those efforts come as some Republicans push to roll back sweeping criminal justice reforms Louisiana approved in 2017 in a bipartisan deal.
Repealing income tax is still a terrible idea
Louisiana’s personal and corporate income taxes generate nearly $5 billion per year that supports health care, higher education, public safety and other programs in every community in the state. But two separate plans for repealing the state’s income tax have been filed for the legislative session, and four Republican candidates for governor have already endorsed the idea. The Advocate’s Tyler Bridges explains why making the math work to replace the massive amount of revenue these taxes generate isn’t easy.
(H)ere’s what’s not gotten much attention: Getting rid of the individual income tax could lead to a doubling of local property taxes, said Jim Richardson, the state’s preeminent public affairs economist. Or it could lead to a doubling of the state sales tax, or to some other combination of increases in property and sales taxes and cuts to state education and health care programs, he said. “The idea of no income tax might sound appealing, but to get there requires a willingness to make broader changes to the tax system,” added Stephen Barnes, an economics professor at the University of Louisiana-Lafayette. “It’s not like we’re a high tax state.”
Bridges also points out the fallacy that Louisiana’s income tax – not ranking near the bottom on virtually every quality-of-life metric for states – is what’s holding the state back.
Essentially, (Rep. Richard) Nelson is making a huge bet that the changes will make Louisiana as enticing as Florida and Texas to investors and would-be residents. He has not pointed to any studies backing up his plan. … Jim Richardson co-chaired a 2016-17 commission in Louisiana that studied the state tax system and called for lower rates and fewer tax breaks. He finds serious fault with Nelson’s proposal. Nelson, Richardson said, “is not mentioning states like Georgia, Virginia, North Carolina and South Carolina that have income taxes, and they’re doing better than we are, too. Maybe there’s some other problem we’re having. I don’t think the income tax is the barrier that keeps us from growing.
Why mess with the excess?
A strong post-pandemic recovery, combined with federal relief dollars, has produced better-than-expected tax collections and about $1.6 billion in surplus and “excess” revenue for state lawmakers to spend over the next 18 months. Deciding how to spend these dollars – or how much – will play a significant role in budget debates over the next two months. An Advocate editorial urges lawmakers not to mess up this opportunity and takes time to focus on benefits that the current excess and previous years of budget stability have brought the state.
Still, the big picture that (Commissioner of Administration Jay) Dardenne framed last month before the Press Club of Baton Rouge is one of fiscal probity, compared to the administration of Gov. Bobby Jindal, who left finances in chaos — and the state $2 billion in the hole — for Edwards and lawmakers to sort out in 2016. … Stability over the last six years has meant a larger capacity for the state to improve the social and economic progress of Louisiana’s people, which should be any legislative body’s main focus.
Seas have drastically risen in Gulf of Mexico
Coastal communities along the Gulf Coast, including New Orleans, may be more at risk to rising seas than previously predicted, according to two recently published studies. Scientists have documented a sudden and abnormal increase in sea-level rise since 2010 that is ‘unprecedented in at least 120 years.’ One study suggests that the increase made recent devastating hurricanes worse. The Washington Post’s Chris Mooney and Brady Dennis report:
“It’s a window into the future,” said [Tulane University’s Sönke] Dangendorf, who collaborated with experts at multiple U.S. institutions and Britain’s National Oceanography Center. The rates are so high in recent years, Dangendorf said, that they’re similar to what would be expected at the end of the century in a very high greenhouse gas emissions scenario. … The new findings are striking in part because the rapid rise appears to be caused by profound changes in the ocean. In parts of Texas and Louisiana, sinking land has long been a factor that contributes to sea levels growing relatively higher over time. But in the latest studies, scientists show a rapid rise of sea levels in places such as Pensacola and Cedar Key, Fla., where the land is not sinking as rapidly as it is in places such as Grand Isle, La., or Galveston, Tex.
Number of the Day
$1.6 billion – Amount of surplus and “excess” revenue that state lawmakers have to spend over the next 18 months on one-time needs. (Source: Revenue Estimating Conference)