State legislators have had nearly two years to prepare for the $1 billion-plus “fiscal cliff” that Louisiana faces on July 1, when a host of temporary taxes expire. But House leaders have yet to come up with a plan to replace the expiring revenue – or, alternatively, a menu of cuts to state programs and services that they’re willing to live with. The latest excuse for inaction comes courtesy of the new federal tax cut bill, which is expected to boost state tax collections by $200 million or more as the wealthy have less money to deduct on their state returns due to a smaller federal tax bill. The AP’s Melinda Deslatte reports:
“I would not expect big numbers on the corporate side,” Albrecht said. “We are not closing a billion-dollar problem” with the federal tax changes. Some House Republican lawmakers, however, have suggested the action in Washington could generate up to $400 million or $500 million annually. Henry talked of such figures in a video posted to his Facebook page touting the “Trump tax plan.” “That’s one of the reasons that we don’t want to rush into special session. There’s a lot of unknowns,” Henry said. Those numbers don’t appear to be backed up by state revenue data or economic analysis so far, but they seem to be factoring into the state’s budget and tax debate anyway.
If there is going to be a special session this month, Gov. John Bel Edwards and House Republicans will have to strike a deal before this Wednesday. Julia O’Donoghue with Nola.com/The Times-Picayune reports:
This week could be a turning point in negotiations though. Wednesday (Feb. 7) is the last day Edwards can call a special budget and tax session that would start Feb. 15, which the governor and legislative leaders have been planning to do for months. The governor is required under state law to give a week’s notice before a special session convenes. What happens over the next few days will likely inform whether negotiations over the state’s billion-dollar shortfall become much more panicked, or there’s finally a breakthrough at the state Capitol.
What’s past is present
Louisiana has experienced its fair share of fiscal challenges over the last several of decades, which have required governors and legislatures to work together and make difficult decisions. This is one of those times, notes Jim Beam of the Lake Charles American Press, but it’s not clear that today’s legislators are up to the challenge.
Louisiana is now at a crossroads similar to what (Gov.Buddy) Roemer faced in 1988. Unfortunately, the state’s current leaders ended another week Friday without an agreement on how to deal with the $1 billion shortfall coming July 1. If there is a message for today’s legislators in recounting those earlier years, it was something Roemer said when he spoke to lawmakers during that March 1988 special session. “If you act, Louisiana wins,” Roemer said. “If you and I act together, Louisiana wins big.”
Pay-to-play for payday lenders?
Payday lenders are known for their exorbitant interest rates and a business model that is based on trapping consumers in a sometimes-ruinous cycle of debt. They tend to set up shop in low-income and minority neighborhoods that don’t have access to traditional financial institutions, and lure customers in with promises of quick and easy loans. The Obama administration and its Consumer Financial Protection Bureau made significant progress in reigning in the predatory practices of the payday loan industry, but much of that progress could be lost because key members of the Trump administration and Congress have been beneficiaries of the industry’s deep pocketbook.
According to the Center for Responsive Politics, payday lenders have contributed more than $13 million to members of Congress since 2010, with the majority of that money going to Republicans who have made it a priority to roll back the financial regulations put in place by President Barack Obama after the financial crisis. That includes Mr. Mulvaney, who received nearly $63,000 for his campaigns from payday lending groups. Mr. Mulvaney said that the donations were not an issue “because I am not in elected office anymore.” The payday lending industry is cheering Mr. Mulvaney’s approach.
Taking credit where credit isn’t due
President Donald Trump keeps patting himself on the back for the fact that the unemployment rate for African-Americans hit an historic low during his first year in office. But, as Andre Perry with the Brookings Institution points out, Trump’s celebration of black workers’ economic gains obscures how much farther we have to go to reduce racial economic inequality and address the needs of minority workers. What’s more, it’s likely not the current president who is actually responsible for black workers’ improving employment outcomes, says Perry.
Touting numerical improvements in the aggregate tacitly deemphasizes the work on structural inequality that is still needed in order to remove inequalities and encourage inclusive economic growth. Cities must continue their much-needed efforts to provide minority entrepreneurs’ access to capital, improve public school options for low-income families, increase workforce development programs, and create inclusive zoning practices for affordable housing. In addition, give credit to black workers for disproving stereotypes that suggests they are the reason for unemployment disparity.
Number of the Day
$145.7 million – Amount of money Louisiana consumers pay annually in fees on short-term “payday” loans with interest rates of at least 300 percent APR. (Source: Center for Responsible Lending)