Nov. 11: Louisiana tax system fix

Nov. 11: Louisiana tax system fix

A $313 million deficit from last fiscal year is a stark reminder that even after two special sessions and new temporary taxes, Louisiana is still in the midst of a major revenue crisis.

A $313 million deficit from last fiscal year is a stark reminder that even after two special sessions and new temporary taxes, Louisiana is still in the midst of a major revenue crisis. Now, mid-year budget cuts will bring more pain to already stretched state agencies. Nola.com/The Times-Picayune’s editorial board calls on the Legislature to heed the recommendations of a recent task force focused on the tax system. The problem: while a good first step, even if the Legislature implemented all the changes recommended by the task force, we’d still be short. Long-term creative thinking and bold action is needed to put the state on a sustainable revenue path.

Louisiana’s midyear deficit is at least $313 million, which will have to be absorbed with cuts to state agencies to balance the budget. The slow tax collections that caused it are continuing, so the gap is likely to keep growing. The fiscal problems are “going to get worse before they get better,” Commissioner of Administration Jay Dardenne said at a joint meeting of the Louisiana House and Senate budget committees Oct. 28. The Edwards administration wants to be strategic in making cuts, and not slash all departments the same amount across the board. That is a smart approach. Still, the cuts are likely to be painful. “It could have a bearing on everything,” Mr. Dardenne said in an Oct. 27 interview. “Every area of the budget could be impacted.”

 

What Trump win means for Louisiana

Given the lack of policy specifics from Donald Trump’s campaign and his propensity to change positions, it’s impossible to say what a Trump presidency will look like. The Advocate’s Stephanie Grace takes a stab at what may be on the way for Louisiana. She focuses on Trump’s promise to repeal the Affordable Care Act and his victory speech pledge to improve the country’s crumbling infrastructure, a smart investment that could garner bipartisan support.

Take health care. Trump promises a quick repeal and replace of the Affordable Care Act, and with a friendly Congress, it could happen. But doing so is a lot more complicated than Trump’s making it sound. Revoking the far-reaching law would throw millions of Americans off their health insurance, including more than 300,000 new Medicaid recipients in Louisiana. It would cost private insurance customers popular benefits such as the right to purchase coverage regardless of preexisting conditions, and a ban on lifetime coverage caps for those with catastrophic ailments. It would also upend the state’s already fragile budget, which relies upon the law’s large federal Medicaid match…Or take infrastructure. In his conciliatory victory speech early Wednesday morning, Trump focused not on his divisive platform proposals such as building a wall along the Mexican border, but on a massive, job-creating investment in infrastructure — an economic stimulus, for lack of a better term. That’s something Democrats want too, and indeed, Gov. John Bel Edwards seized on the idea and highlighted the state’s vast needs in his congratulatory statement to the president-elect.

 

ACA repeal would be historic, and difficult

Elimination of the subsidies for low and moderate income Americans to purchase health insurance coupled with the scrapping of Medicaid expansion would be the largest repeal of a social program in the history of the United States. Taking away a benefit that millions of people rely upon to see the doctor may be more politically perilous than Republican leaders expect. The Washington Post’s Amy Goldstein has the story:

“Repealing Obamacare has been such a mantra for conservatives. . . . The difficulty for them comes now in trying to come to some consensus about how to unwind it and what to replace it with. “I don’t think there has been a reversal of any public benefit that would be as large as this,” (Kaiser Family Foundation Senior VP Larry) Levitt continued. The only other significant reversal by Congress of a major health care policy — the expansion of Medicare to include catastrophic coverage — took place in 1989 before the benefit took effect.

 

Moving forward on infrastructure

A task force that will provide recommendations to the Legislature on funding sources for the depleted Transportation Trust Fund endorsed public/private partnerships and tolls as two financing fixes for the state’s roads and bridges. They will vote on recommendations to increase the gas tax on December 1 along with other proposals, possibly including a refinery tax being researched by Rep. Kenny Havard. The Advocate’s Will Sentell has more:

“The tolling option is just part of the package,” said Shawn Wilson, secretary for the state Department of Transportation and Development and co-chair of the committee. The group — called the Governor’s Task Force on Transportation Infrastructure Investment — is set to begin debating possible gas tax hikes and other proposals on Dec. 1. Recommendations are due to Edwards by Jan. 1, and the governor is expected to make transportation a key issue for the 2017 regular legislative session. The 18-member panel is grappling with twin challenges. The state has a $13.1 billion backlog of road and bridge needs. In addition, a new bridge and other mega projects make up a separate, $16 billion list.

At the federal level, President-elect Trump has promised a major investment in infrastructure. Emma G. Fitzsimmons has the story for the New York Times:

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” Mr. Trump said. “We’re going to rebuild our infrastructure, which will become, by the way, second to none.” The sentiment was echoed across the country on Election Day as voters supported dozens of local ballot measures intended to improve public transportation. In Los Angeles, Seattle and Atlanta, voters were poised to approve spending billions of dollars on buses, rail lines and other projects. During the presidential election, Mr. Trump pledged to spend nearly $1 trillion on infrastructure, seeking to outshine Hillary Clinton on an issue that is a growing concern for many Americans.

 

Number of the Day

$353 billion – Increase in the federal deficit over a decade if the Affordable Care Act is repealed (Source: Congressional Budget Office via The Washington Post)