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A Partial Solution is Not Good Enough

Posted on May 29, 2018

The second special session of 2018 is past the halfway point, and so far the only major revenue bill to make it to the Senate is House Bill 27 by Rep. Lance Harris. This bill would raise an estimated $363 million for the 2018-19 budget to help address the fiscal cliff.

When combined with other revenue bills that are still working their way through the process, the Legislature is on track to come up nearly $200 million short of the money that’s needed to solve the “fiscal cliff” and avoid unnecessary cuts to health care, higher education and other services.

House Bill 27 would renew one-third of the temporary “clean penny” of sales tax that is scheduled to expire on June 30. It also would eliminate certain sales tax exemptions on the existing four pennies of state sales tax.

There are two fundamental problems with this bill: First, it contains a sunset date and thus represents yet another temporary answer to the state’s long-running revenue problem, rather than the permanent fix that is needed. As First Assistant Treasurer Ron Henson testified in committee, this would imperil Louisiana’s fragile credit rating and potentially drive up the cost of financing future construction projects.

Most importantly, it would force unnecessary cuts to health care and higher education, and other services that citizens expect state government to provide.

As this legislation moves through the legislative process, those who say Louisiana should not address the whole fiscal cliff have a responsibility to explain, in detail, which services the state should cut to make up for the lack of revenue. The millions of Louisiana citizens who depend on our hospitals, nursing homes, universities and other critical services deserve nothing less.

A better solution than another inadequate, temporary budget patch is for lawmakers to come together around a bill that fills the entire $648 million shortfall, while leaving Louisiana taxpayers with a lower sales tax on July 1. The easiest way to do this would be for the Senate to amend the bill so that it renews one-half of the expiring sales tax.

As it stands, House Bill 27 would leave lawmakers in the undesirable position of both voting for a tax increase but still having to cut services and programs that are important to their constituents. Majorities of Louisiana voters support tax increases to fund public education, higher education, health care and infrastructure.

Solving this budget shortfall does not even require increasing taxes. It simply requires replacement or renewal of existing temporary taxes. It’s vital that the amount of tax revenue that’s replaced fills the full budget shortfall. The people of Louisiana deserve a solution that solves our full budget problem, funds the programs they care about, and protects the financial standing of the state.

-by Jan Moller

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