Louisiana’s tax structure is unfair, unsustainable and inadequate, LBP Director Jan Moller explains in a guest column for The Advocate. Moller argues that leadership is needed not only to solve the $440 million budget shortfall for the current fiscal year, but the looming fiscal cliff that will occur in 2018, when a slew of temporary taxes roll of the books. Modernizing Louisiana’s byzantine tax structure cannot be accomplished through cuts alone.
This problem cannot be fixed just by cutting the budget. It will take a serious reform of Louisiana’s broken tax structure — a debate that the Legislature has largely avoided in the first four weeks of the session. This debate should start with the premise that our tax system is unfair, unsustainable and inadequate to meet the basic needs of the state — let alone make the new investments in education and infrastructure that are needed to make Louisiana’s economy work for everyone in the future.
Unfortunately, time is running out and all indicators point to another special session. Jim Beam of the Lake Charles American Press doesn’t mince words in his most recent column.
Legislators at the current session had three major goals — reform the state’s budget and tax systems, reform the penal system and raise revenues to avoid a $1.3 billion fiscal cliff on July 1, 2018, when temporary revenue raising measures that were enacted last year expire. None of the three goals appear to be even close to being achieved with the session’s June 8 deadline fast approaching. … So, there you have it. We are witnessing what may eventually become one of the most do-nothing legislative sessions in state history.
EITC and minimum wage work together
Louisiana is one of only six states without a minimum wage law, and a Washington, D.C. -based policy organization backed by the hospitality industry wants to keep it that way. Michael Saltsman of the Employment Policies Institute writes in The Advocate that the Earned Income Tax Credit is preferable to the minimum wage for supporting workers struggling to make ends meet. But, as Erica Williams of the Center on Budget and Policy Priorities points out, a strong minimum wage and robust EITC go hand in hand.
The EITC and minimum wage are targeted differently, so enacting or improving both policies in tandem will reach more workers than either on its own. For example, the EITC targets low-income working families with children. Workers without children working full-time, year-round at the minimum wage are eligible only for a federal EITC worth about $27 and are ineligible for the credit if they are younger than 25 or older than 64. Higher minimum wages, in contrast, benefit low-wage workers regardless of age, presence of children in the household, or total family income. Similarly, while the minimum wage is focused on workers with the very lowest wages, the EITC remains available (albeit at gradually declining levels) to families as their income rises.
TOPS changes debated
Rep. Gary Carter’s House Bill 390– which would protect low and moderate-income students from TOPS cuts along with the highest-achieving students- failed to advance out of committee Wednesday. Carter emphasized that the bill would only kick-in if TOPS isn’t fully funded, arguing that the Legislature should use a “scalpel instead of an ax” to cut the popular college scholarship program when full funding isn’t available. The AP’s Melinda Deslatte has the story:
“We live to fight another day,” he said. Carter said his approach was aimed at responding to a long-term disagreement about TOPS, whether it should be merit-based or needs-based, as program costs have ballooned and reached $290 million for full financing. A separate program to provide aid to needy students has stagnated at $26 million. Carter sought a compromise, saying his approach would help retain the most talented students in Louisiana, while also giving poor students “the ability to educate themselves out of their circumstance.” He stressed the scenario would only take effect if lawmakers don’t cover the full cost of the TOPS program.
While Rep. Carter’s bill took nearly two hours of debate along with public testimony from numerous individuals and groups in support, House Bill 117 sponsored by Rep. Franklin Foil, which would increase the grade point average (GPA) required to qualify for a TOPS Opportunity award from 2.50 to 2.75, sailed through. The Advocate’s Will Sentell reports:
Foil noted that the change would also trim costs of the program, which was underfunded for the first time in the 2016-17 college school year. Students got 67 percent of the traditional assistance, with most of the reduction in the spring semester. Annual savings would range from $12 million to $17 million, legislative officials said. Nearly 52,000 students get the aid. Under the current snapshot, about 1,800 fewer students would qualify if the higher standard was in effect.
The increased academic requirements would apply to high school graduates starting in 2021. Gov. John Bel Edwards opposes Foil’s proposal.
Changes to SNAP ban advances
The House Committee on Health and Welfare advanced a bill Wednesday aimed at reducing recidivism rates by allowing individuals convicted of drug felonies to receive food stamps and welfare benefits upon the completion of their sentences. The author of House Bill 177, Rep. Helena Moreno, argued that the current ban against receiving these benefits causes financial burdens, which increases the chance of returning to a life of crime. Julia O’Donoghue with Nola.com/The Times Picayune reports:
The current ban makes it more difficult for people released from prison to live a clean life and can financially burden them in a way that makes drug use and crime more tempting, according to advocates for the change. Only six states have a similar ban on food stamps, and only 12 states restrict felons from receiving other cash benefits, said Rep. Helena Moreno…”This is a bill that is aimed to reduce recidivism rates that we have in our state,” Moreno said.
Number of the Day
1.1 percent – First quarter growth in Louisiana’s gross domestic product (GDP). That’s slower than Texas (3.4), Alabama (2.2) and Georgia (1.8) but faster than Mississippi (0.1) and Arkansas (0.5) (Source: Bureau of Economic Analysis)