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The politics of the fiscal cliff

Posted on September 18, 2017

Louisiana faces a $1.5 billion gap between revenues and expenses in the state fiscal year that starts July 1, mainly due to temporary taxes that are expiring. While some officials are optimistic that a deal can come together on taxes by early next year, others say the philosophical gulf separating Gov. John Bel Edwards from hard-line conservatives in the House is far from bridged. The AP’s Melinda Deslatte sees hope in the conversations happening between Edwards and House Speaker Taylor Barras:

Whatever the reason, two of the key leaders critical to getting any tax plan passed to remedy the financial gap — Democratic Gov. John Bel Edwards and Republican House Speaker Taylor Barras — seem to be taking a more hands-on approach to building a consensus ahead of the next legislative debate on Louisiana’s budget woes. … Edwards has been traveling the state, holding closed-door meetings with business leaders and elected officials in Baton Rouge, Houma, Alexandria, Shreveport and New Orleans to outline the situation and build support for a budget-balancing fix involving taxes. … The House speaker, meanwhile, has been engaged in his own outreach effort, visiting with House members around the state to determine what tax proposals they would back. Barras said he hoped — and expected — lawmakers in his chamber to coalesce around tax ideas by January, with an expectation they would be debated in a special session sometime early in the new year.

Nola.com/The Times-Picayune’s Julie O’Donoghue reports that corporate lobbyists – notably the Louisiana Association of Business and Industry and the Louisiana Chemical Association – appear to be lining up behind plans to extend the “temporary” penny of sales tax that gave Louisiana the country’s highest sales tax.  But that, in turn, could bring a backlash from legislators who only voted for the temporary penny as a bridge to more permanent tax reform.

High sales taxes tend to be a greater burden for poor people, and many members of the House Black Caucus haven’t been persuaded to vote to keep the state rate at 5 percent. “An extension of the highest sales tax in the United States is a very tough sell,” said Rep. Gary Carter, an African American Democrat from New Orleans.

 

Shift workers struggle with child care

One of the best investments a state can make is in early childhood education. Giving young children access to high-quality care and education is critical to brain development and makes them likelier to succeed in school, graduate and become productive citizens. While programs such as Head Start and Pre-K are invaluable to many low-income families, they remain out of reach for parents who work irregular hours – a common occurrence in cities like New Orleans with a large hospitality industry. The AP’s Sally Ho reports from Las Vegas:

The National Survey of Early Care and Education said in a 2015 report that just 2 percent of the child care centers it surveyed offer child care in the evening. Six percent provide overnight care and 3 percent have weekend hours. “It’s a huge issue. We have an increasingly service-based economy with non-standard hours, that’s more heavily concentrated in lower income groups,” said Taryn Morrissey, a child development expert and professor at American University. “The child care sector hasn’t really caught up with the realities of hours parents are working.” Sen. Patty Murray, D-Wash., proposed legislation Thursday designed to increase access to affordable child care, including for families that work non-traditional hours. Murray called the bill “a smart investment in our children, our future and our economy,” but its future is far from certain in a Republican-controlled Congress.

 

Cassidy-Graham is the worst repeal bill yet

The Affordable Care Act repeal bill sponsored by Louisiana Sen. Bill Cassidy would be even more harmful to low- and moderate-income Americans than previous bills that Congress rejected. The bill, which could face a U.S. Senate vote by the end of this month, seeks to replace the ACA’s Medicaid expansion and marketplace subsidies with an inadequate block grant. That block grant would expire in 2027, creating a funding “cliff” that would affect the entire Medicaid program and which Congress would have a hard time filling. The CBPP’s Edwin Park and Matt Broaddus explain:

The bill’s sponsors have claimed that the rules that govern the budget reconciliation process, which allows the bill to pass the Senate with only 50 votes, necessitated that the proposed block grant be temporary.  In reality, however, nothing in those rules prevents the bill from permanently funding its block grant.  Furthermore, the expiration of the temporary block grant would create a funding cliff that Congress likely couldn’t afford to fill.  Even if there were significant political support for extending the inadequate block grant in the future, budget rules would very likely require offsets for the hundreds of billions of dollars in increased federal spending needed for each additional year.

 

Higher ed exodus

The president of Nicholls State University resigned last week. Earlier this year the president of McNeese State University did the same. The inimitable Jim Beam of the Lake Charles American-Press thinks the departures are related to the ongoing budget crisis in higher education, which has seen professors go most of a decade without a raise and libraries crumble for lack of basic maintenance.

Deferred maintenance on higher education facilities now exceeds $1.7 billion. When Democratic Gov. John Bel Edwards and a delegation of legislators visited LSU’s Middleton Library they found a leaky basement, ragged furniture, bubbled and cracked wallpaper and rooms that flood so often water vacuums are kept close by. The human toll has been just as devastating. Ballard notes that Kirby Goidel, a former professor at LSU, left in 2014 to teach political science at Texas A&M University. Goidel explained how the tide turned after he was recruited by LSU from Indiana State University in 2002. “There was a lot of movement and a lot of state support — a recognition that higher education was important,” Goidel told Ballard. “Then you move into years and years of budget cuts and you no longer feel like you’re trying to be nationally competitive. You first feel like you’re treading water, waiting for the bad times to pass. Then after a few years of that, you realize we’re not treading water anymore. People are bailing.”

 

Number of the Day

$7.3 billion – Amount of federal Medicaid funding Louisiana would lose in 2027 under a health care repeal bill sponsored by Sen. Bill Cassidy (Source: Center on Budget and Policy Priorities)

 

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