Research: EITC linked to healthier babies, better family outcomes

Posted on May 22, 2018

Legislators have several options for replacing expiring tax revenue during the special session that convenes this afternoon, including: eliminating sales tax exemptions, curbing tax incentive programs or reducing income tax deductions. None of those options will raise the $648 million to balance next year’s budget adequate without a partial renewal of the temporary sales tax. Because low-income households pay a larger share of their incomes in sales tax than higher income households, legislators should ensure that increasing the state Earned Income Tax Credit (EITC) is part of any budget solution. The EITC has a tradition of bipartisan support and is the single most effective policy tool for reducing child poverty. New research shows that state EITCs are also linked to improved infant birth weights – with the effect of the EITC increasing as the size of the state credit increases. LBP Policy Director Jeanie Donovan and State Policy Fellow Carmen Green explain in a new blog:

As many as 196 babies in Louisiana a year could be saved from risky low birth weight births and the accompanying health risks, if state lawmakers increase the state’s Earned Income Tax Credit (EITC), according to the findings of a recent study. Louisiana’s state EITC is a commonsense way for the state to help working families afford the basics, and in doing so, improve health outcomes.

Increasing the state EITC would could also help to improve long-term outcomes for households and children of color. Research shows children whose families receive an income boost via the EITC are more likely to do better and stay in school longer. The EITC also has been shown to help working women, and particularly single moms, move into the labor force and boost their earnings over the course of their working years. Read more in a new blog post by LBP Policy Analyst Neva Butkus.

African Americans make up one-third of Louisiana’s population, but represent 53 percent of households in the lowest-earning 20 percent of households, those making an average of $9,240 per year. African American households make up 44 percent of those in the second income quintile, which includes households making an average of $27,873 per year.


A plea for local control of housing policy
Increasing access to affordable housing is one of the biggest challenges faced by the newly seated New Orleans City Council members and mayor. That’s why Council Member At-Large Jason Williams is asking Gov. John Bel Edwards to veto Senate Bill 462, which would take away one of the most effective tools in local governments’ toolbox when it comes to affordable housing development: inclusionary zoning. Inclusionary zoning policies require housing developers to set aside a certain portion of new units for low and moderate-income residents in exchange for tax incentives or zoning bonuses. Williams says New Orleans is poised to enact such a policy, if not preempted by the recently passed legislation:

New Orleans cannot continue to be the economic force and tourism hub we are today if the musicians, hospitality workers, teachers, police officers, and others who are the backbone of our economy are pushed out by rising housing prices. …Unfortunately, state Sen. Daniel J. Martiny’s bill would prevent inclusionary zoning. It directly undermines the will of New Orleans voters, who elected a new mayor and city council intent on implementing local solutions to the housing crisis. It is even more disappointing that this preemption comes from a Legislature that has failed to fund our state housing trust fund for a decade. In addition to failing to help solve this problem, it is now preventing local governments from crafting their own solutions. This sets a dangerous precedent of state interference with local zoning decisions.


Possible teacher strike in Louisiana
The Louisiana Federation of Teachers polled K-12 teachers in Louisiana, and a majority of them support  a possible strike and a “massive demonstration” at the State Capitol. Public school teachers have seen their pay stagnate and benefits erode over the past decade as the state’s per-pupil aid has stayed mostly flat. Nearly 6 in 10 (59%) of the teachers surveyed indicated they would support taking the fight to the Capitol, while 60 percent indicated they would support a walkout or strike. Will Sentell at The Advocate reports:

[LFT President Larry Carter] told reporters teacher strikes elsewhere have not gone unnoticed in Louisiana. “I do believe there has been a spark coming out of West Virginia where they (teachers) are looking to colleagues across the country and thinking maybe it is their time,” he said. The action in West Virginia, like Oklahoma and Arizona, sparked attention in part because they are politically conservative states where teacher walkouts are more rare than California, New York and Illinois. No salary hikes are expected from the state this year.


Protesters demand a “moral budget”
While teachers may not have started protesting yet, activists affiliated with the National Poor People’s Campaign, named after a public protest campaign first organized by Rev. Dr. Martin Luther King, Jr. in the late 1960s, have committed to demonstrating at the State Capitol each Monday until the fiscal crisis is resolved. Nine protesters were arrested for blocking traffic on 4th Street, in view of the Capitol building, to bring awareness to the injustice of cuts proposed in both the House and Senate versions budget bill during the regular session. The Advocate’s Mark Ballard accompanied the protesters to the scene to get the story:

The state budget, as passed by the Legislature, disproportionately burdens the state’s poorest disenfranchised citizens by dramatically cutting basic and essential services, [Ben] Zucker said. “We have more than enough resources to help the folks in our state, but instead we spend so much money on prisons that do not rehabilitate, high rises that people cannot afford to buy, and giving tax cuts to the wealthiest businesses that create fake job growth,” said Jasmine Bogue, a protester from Baton Rouge. Leaders also vowed to make their presence known when the Legislature starts the special session.

Gov. John Bel Edwards outlined his plan to address the fiscal shortfall and avoid the deep budget cuts proposed by lawmakers during the regular session, in an op-ed he penned for The New Orleans Advocate over the weekend:

According to the Legislative Fiscal Office, nearly $1.4 billion in revenue will expire on June 30. Because the Louisiana Constitution requires a balanced budget, we have two options: make cuts that will fall primarily on health care and higher education or maintain a portion of that revenue and continue to fund critical priorities for our state. Under the proposal that I have outlined this year, we can fix the $648 million difference and continue to fund higher education without a cut, fully fund TOPS and Go Grants, keep our medical schools open in New Orleans and Shreveport, fund our partner hospitals across the state and critical health care services for seniors and those with disabilities. This plan is a good deal for Louisiana because it would result in a $400 million tax cut for Louisiana taxpayers. Due to an improved economy, continued savings and strategic spending cuts, we can deliver that tax cut and still fund our critical priorities.

Edwards, breaking from tradition, will give his opening address for the second special session at University of Louisiana at Lafayette’s Earl K. Long Gym at 1 p.m. rather than addressing members of the legislature from the front of the House chamber.


Number of the Day:
10.6 percent – Percentage of infants in Louisiana born below the minimum weight for a healthy newborn in 2015, which is higher than the national average of 8.1 percent and is the second highest low birth weight rate in the country. (Source: Centers for Disease Control and Prevention)

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