The bad news keeps coming for the state budget. As the Legislature struggles to raise enough revenue to fill a $600 million hole in next year’s budget, now comes news that Louisiana may finish the current year with a $200 million deficit. State economists say corporate tax collections are coming in far below earlier projections, creating a problem that will spill into the budget year that starts July 1. The AP’s Melinda Deslatte is on the case:
Jim Richardson, an LSU economist who serves as the independent member of the state’s Revenue Estimating Conference, said he met Thursday with Edwards, Senate President John Alario and House Speaker Taylor Barras, among others, to talk about how far business tax collections have fallen below the state’s official forecast. Richardson’s assessment was Louisiana appeared on track to collect up to $200 million less than the $359 million expected from corporate income and franchise taxes in the budget year that ends June 30. “Unless it’s a real miracle, I don’t think we’re going to make it,” Richardson said Thursday night. This year’s budget was built on the income forecast. If the tax dollars fall short, the state would end the financial year with a deficit that would have to be closed in the next year.
Revenue measures stall in House, advance in Senate
The House delayed a vote Thursday on House Bill 38 by Rep. Malinda White of Bogalusa, which aims to raise $113 million next year by limiting the ability to claim certain deductions on state income tax returns. The bill would only affect the 23 percent of taxpayers who itemize deductions on their federal tax returns – mostly those earning at least $100,000 a year – and sunsets in two years. The Senate, meanwhile, passed more than $400 million worth of revenue-raising measures. The Advocate’s Tyler Bridges:
Senate Bill 10 would force large manufacturing companies to choose between two lucrative tax breaks. SB10 would raise $139 million by making companies that qualify for both to choose between claiming the industrial tax exemption or the inventory tax credit. Sen. Rick Ward III, R-Port Allen, is the sponsor. Senate Bill 6 would raise $50 million by eliminating tax rebates — but not the tax credits — taken by big companies on their inventory taxes. State Sen. JP Morrell, D-New Orleans, is the sponsor. The next step for SB10 and SB6 is to win passage from the House Ways and Means Committee. Rep. Neil Abramson, D-New Orleans, the committee chairman, did not respond to a text Thursday afternoon asking whether he would schedule the bills.
With less than a week to go before the session adjourns on June 23, Bridges gives an overview:
Senate President John Alario, R-Westwego, said earlier in the week that he would be “awfully happy” if the Legislature raised $450 million of the $600 million, but that now seems a stretch. The House and Senate have both approved measures that would raise $222 million next year. The $113 million from White’s bill would take that to $335 million. Adding the $189 million from the Ward and Morrell bills would take the $222 million to $411 million. Given the House’s opposition to taxes, the Legislature may raise no more than the $222 million.
The gap between rich and poor in Louisiana – and elsewhere – continues to widen, according to a new report by the Economic Policy Institute. In 2013 in Louisiana, the average income in the top 1 percent ($859,619) was 20.7 times higher than the $41,600 average income in the bottom 99 percent of earners. Nationally, a household in the top 1 percent made 25.3 times as much as the bottom 99 percent. Between 2009 and 2013, incomes in the top 1 percent grew 17.4 percent, compared to 0.9 percent for everyone else.
The rise of top incomes relative to the bottom 99 percent represents a sharp reversal of the trend that prevailed in the mid-20th century. Between 1928 and 1979, the share of income held by the top 1 percent declined in every state except Alaska (where the top 1 percent held a relatively low share of income throughout the period). This earlier era was characterized by a rising minimum wage, low levels of unemployment after the 1930s, widespread collective bargaining in private industries (manufacturing, transportation [trucking, airlines, and railroads], telecommunications, and construction), and a cultural and political environment in which it was outrageous for executives to receive outsized bonuses while laying off workers. We need policies that return the economy to full employment, return bargaining power to U.S. workers, and reinstate the cultural taboo on allowing CEOs and financial-sector executives at the commanding heights of the private economy to appropriate more than their fair share of the nation’s expanding economic pie.
How children learn
New York Times columnist David Brooks writes that a child’s ability to perform well in school depends just as much on a loving and nurturing environment as it does on their ability to recite the alphabet. Even with schools better than they were 20 years ago, the gap between the rich and poor has not improved because the emotional environment is worse.
The most important educational environment is the one that surrounds a child in the first five years, when the emotional foundations are being engraved. The gap between rich and poor students opens up before age 5 and stays pretty constant through high school. Despite this, the U.S. ranks 31st out of 32 developed nations in the amount it spends on early childhood. Better policy can help. Some of the best programs help parents do what they are already doing but more consistently — to have “serve and return” interactions with their kids; to practice distanced empathy — to hear their children when they are upset, and to guide them back toward calmness.
Number of the day
17 – Percent of income in Louisiana that goes to the richest 1 percent. (Source: Economic Policy Institute)