By Grace Reinke
The Legislature will soon start the long process of patching up the state’s bleeding budget. With a mid-year deficit of at least $700 million and a $1.9 billion shortfall for the next fiscal year, it is clear that a cuts-only approach will simply not work. But as lawmakers consider their options for raising necessary revenues, they should make sure that low-income and working Louisianans aren’t disproportionately hurt by any tax increases. The best way to do that is to expand Louisiana’s Earned Income Tax Credit
Gov. John Bel Edwards has laid out a broad menu of revenue-raising ideas to fix Louisiana’s long-term structural budget gap, including some long-overdue reforms to the state personal and corporate income tax structure. But legislators have far fewer options when it comes to plugging the mid-year budget gap, since most changes in tax policy wouldn’t bring in revenue quickly enough to help the state pay the bills that are due by June 30.
One exception to this is the state sales tax, and that’s a major reason why Edwards has proposed a 1-cent increase in the 4-cent sales tax. If the Legislature agrees to the change, it would raise an estimated $216 million in the current budget year and more than $900 million next year. But if the Legislature refuses to go along, the alternative is deep cuts to public colleges and health-care services for the state’s most vulnerable residents. Continue reading…