Hillyer: Louisiana should tax the rich

A conservative columnist for The Advocate says it’s a “moral abomination” for the poorest Louisianans to pay taxes at a higher rate than those at the top, as the Institute on Taxation and Economic Policy outlined last week in the latest edition of its “Who Pays?” report. While Quin Hillyer doesn’t agree with all of LBP’s recommendations, his comments serve as a welcome reminder that working toward a fair tax structure doesn’t have to be a polarizing issue.

In Louisiana, the more you earn, the smaller percentage you pay. It’s Robin Hood in sharp reverse. Or, to put it in a sort of pigeon vernacular, it’s bass-ackwards. Lawmakers darn well ought to fix it.  The question is, how? It’s a difficult question.

College budget cuts can’t continue

The specter of cutting more than $300 million in state support from public colleges and universities raised alarms at Nola.com, which says it plans to spend the next several months “looking for the best ideas from policy experts in Louisiana and elsewhere.

Gov. Jindal and legislators have patched a budget together since 2008 by using one-time money from trust funds or the sale of property and by raising tuition. Such a shortsighted approach can’t continue. Louisiana’s leaders must find permanent solutions that will ensure that the state higher education system — every institution — is able to prepare students to compete for jobs in a global economy. Lurching from budget crisis to budget crisis wears on every institution.

Shortfalls as far as the eye can see

The latest evidence that Louisiana’s budget problems have very little to do with falling oil prices and everything to do with a structural gap between revenues and expenses comes from the governor’s budget office. Its five-year revenue forecast, presented Friday to the Legislature’s Joint Budget Committee, that predicts shortfalls of between $1.38 billion and $1.87 billion through 2018-19. The Advocate’s Mark Ballard writes that despite the gloomy news, any structural changes to the budget will likely have to wait until 2016.

If history provides any guide, then the first phase is to scare everyone with the possibility of shutting down institutions and laying off employees, [PAR President Robert] Scott said. Then, with everyone terrified, some of the ideas that under normal circumstances should be ignored suddenly become viable.“The level of anxiety is higher this year than in the past,” Scott said. “Long-term solutions, a better structure, that’s the way to go. But I think what you’ll end up with will be some fixes to get by for this budget. But I’d like to be proven wrong. Please prove me wrong.”

No progress on transportation funding

Blue-ribbon commissions are often designed to give politicians the cover they need to make difficult choices. But things didn’t work out that way for the Transportation Funding Task Force, which was created last year to look for ways to solve Louisiana’s massive backlog of transportation needs. As the AP’s Melinda Deslatte reports:

But the task force, which approved a draft report last week, hit the obvious roadblock: How do you generate new money for roads in an anti-tax environment amid budget problems that some lawmakers say have reached crisis-level proportions? The eight-member panel took the approach of throw everything at the wall and see what sticks. Rather than offer specific recommendations, the Transportation Funding Task Force is forwarding all the ideas it heard.

Oil price plunge is middle-class stimulus

The falling price of oil may be giving heartburn to state budget officials, but it’s good news for middle-class Americans who have yet to share in the economic recovery. The New York Times reports that the average household is projected to save $750 this year from lower gasoline prices, with larger savings for people in colder climates who rely on oil to heat their homes.

In recent years, most of the other positive economic trends — things like efficiency gains driven by new technologies, higher corporate profits, rising home prices, lower borrowing rates and stronger demand for white-collar workers with advanced degrees — have also mostly benefited businesses and wealthier Americans. But the latest drop in energy prices — regular gas in New England now averages $2.35 a gallon, compared with $2.94 in early December, and it is even cheaper in the Midwest at $1.95 — is disproportionately helping lower-income groups, since fuel costs eat up a larger share of their more limited earnings.

Number of the Day

$6.27 billion — Cumulative gap between revenues and expenses from 2016 through 2019 (Source: Office of Planning and Budget via The Advocate)