The Louisiana Legislature convenes at noon on Monday for the start of a two-month regular session that’s supposed to focus on tax and budget policy but will also feature high-stakes debates about how to address the state’s insurance affordability crisis. The Times-Picayune | Baton Rouge Advocate’s Alyse Pfeil has a curtain-raiser, including a look at the efforts to revive the constitutional changes that voters overwhelmingly rejected last month:
One would free up money for more immediate spending needs by combining two state trust funds: the Budget Stabilization Fund, with a balance of $1.07 billion, and the Revenue Stabilization Trust Fund, with $2.73 billion. … Aside from the trust fund plan, [Senate President Cameron] Henry, [House Speaker Phillip] DeVillier and Rep. Julie Emerson, a Carencro Republican who chairs the House tax-writing committee, all signaled that an effort to phase out a property tax on business inventory will also resurface during the session.
Legislators will be crafting a budget as the likelihood of deep federal cuts hangs over their deliberations. Those cuts would fall largely on the Medicaid program that insures 1 in 3 Louisianans:
Some, like [House Appropriations Committee Chairman Rep. Jack] McFarland, say they are remaining calm, proceeding with the facts available to them at any given time — and keeping an eye on what is happening in Washington. “I can’t budget for something that I don’t know yet that the federal government’s gonna do,” he said. McFarland said he has spoken with some members of Louisiana’s congressional delegation. “I think everyone’s fully aware in D.C. that Louisiana has a significant population that depends on Medicaid,” he said.
Lawmakers should spend money wisely
The Times-Picayune | Baton Rouge Advocate’s editorial board provides state lawmakers with some advice for the legislative session, including respecting the will of voters and spending their tax dollars wisely, especially amid the uncertainties coming down from Washington:
In general, we think that this idea of rebuilding trust among constituents is a good move after the voters, in rejecting all four amendments on the March 29 ballot, made it clear they think Landry and the Legislature had been trying to do too much, too fast, with too little explanation. We hope legislators also took away from the defeat that their constituents want them to support the governor when he’s right but speak up when he’s not. After all, the Legislature is a coequal branch of government. This session, we look forward to watching lawmakers use the power vested in them wisely.
Spotlight on teacher pay
The Legislature is under intense pressure to provide teachers with a meaningful pay raise. The Times-Picayune | Baton Rouge Advocate’s Patrick Wall explains how lawmakers are trying to make the budget math work:
“Based on the numbers I got, I’m going to have to make significant reductions in other areas of the budget to do that,” said Rep. Jack McFarland, R-Jonesboro, who chairs the House Appropriations Committee. “I think it can be done, but it’s going to be very challenging.” Some lawmakers want to prune $50 million from Landry’s marquee education program, LA GATOR, which will give families tax dollars to pay for private education. Landry undoubtedly would oppose that cut.
Other legislators are hoping to finance pay raises by the mechanism in Amendment 2 that was rejected by voters. But there are questions about the timeline:
(A)nother statewide vote on constitutional changes is unlikely before this fall or next spring, well after the budget must be complete, lawmakers and observers said. “I don’t know if we can get all that done, get it on the ballot, get it passed and get it all through in time,” McFarland said.
Louisiana’s high sales taxes are bad policy
Last November, the Louisiana Legislature approved permanent income tax cuts for individuals and corporations, and eliminated the corporate franchise tax. To make up part of the revenue loss from the tax cuts, lawmakers agreed to a temporary increase in the state’s sales tax that makes Louisiana’s overall sales-tax rate the highest in the country. The Times-Picayune | Baton Rouge Advocate’s Quin Hillyer explains why relying so heavily on sales taxes is bad policy.
Sales taxes, even if groceries are exempted, are regressive, meaning they take a higher proportion of poor people’s money than of wealthier people’s. While other, more “progressive” taxes, such as income taxes, somewhat counteract this regressive effect, the regressivity of sales taxes doesn’t fit most people’s definition of fairness. The higher the sales tax, the greater the unfairness.
Hillyer explains how the volatility of sales tax revenue can create budget headaches:
The latter point means that if the economy takes a downturn — as it very well might, thanks to President Donald Trump’s tariff regime — sales tax collections drop more than property tax collections. For state and local governments looking for revenue stability to provide consistent levels of law enforcement, road maintenance and education, sales taxes are a bad bet.
Number of the Day
$198 million – Cost of renewing a $2,000 stipend for teachers and $1,000 stipend for support workers. (Source: The Times-Picayune | Baton Rouge Advocate)