On the brink of collapse

On the brink of collapse

The Legislature’s effort to partially replace nearly $1.4 billion in expiring tax revenue is on the verge of failure after the House, for the second time, failed to pass a key sales tax measure.

Number of the Day

$17,409 - Median wealth of a black family in 2016, which is 10.2 percent of the median wealth of a white family ($171,000). (Source: Economic Policy Institute)

The Legislature’s effort to partially replace nearly $1.4 billion in expiring tax revenue is on the verge of failure after the House, for the second time, failed to pass a key sales tax measure. Lawmakers overwhelmingly rejected a bill that would have renewed one-fourth of the “clean penny” of sales tax that expires on July 1, in large part because of ongoing disputes over a separate bill that would eliminate an income-tax deduction claimed by high-income households. The AP’s Melinda Deslatte:

Factions in the House and Gov. John Bel Edwards appear unable reach agreement on which tax types — and how much money — to use to offset the $994 million shortfall that hits July 1. House Republican leaders favor sales taxes, while Democrats, particularly the Black Caucus, prefer income taxes. But even when the factions seem willing to support a tax measure, the deals have broken down over ties to unrelated bills and the order in which bills are heard. Mistrust marks the debates, and frustration is brimming in the chamber. “I don’t see how we move forward at this point. Emotions have been high. There’s been a lot of contention in this session because there are a lot of members who feel like they’ve been left out of this discussion, and I don’t see us moving forward,” said Rep. Jack McFarland, a Winnfield Republican. “I think this is it. I think we go home.”

The 17-day session has been marred by rising acrimony between different House factions, and an escalating war of words between Gov. John Bel Edwards and House Speaker Taylor Barras that could have long-term consequences. Nola.com/The Times-Picayune’s Julia O’Donoghue:

The failed sales tax vote makes it more likely college students, hospitals and people with disabilities will likely have to wait until June to see if their scholarships, health benefits and other services relying on state money will be available later this year. District attorneys and sheriffs also have some of their state funding on the chopping block. … If the Legislature adjourns early, it will put the state’s credit rating at risk because national agencies offering opinions on whether Louisiana is a safe investment are expected to take a dim view of the latest legislative meltdown.

What’s next: The session must adjourn by Wednesday. The House returns at 4 p.m. for one last attempt to move the sales and income-tax bills. It would take a two-thirds vote to bring back the income-tax measure (House Bill 23) for consideration.

 

What’s at stake in the tax debate

The backbiting and bitterness surrounding the revenue debate in Baton Rouge is wildly disproportionate to the effect on Louisiana families. As The Advocate’s Tyler Bridges reports, none of the tax bills would cost any Louisiana family more than 1 percent of their income per year. What’s really at stake in the tax debate – besides trying to fill a $1 billion hole in the budget – is whether to continue relying on a regressive sales tax, or if the burden should be shifted slightly to high-income taxpayers.

Unnoted in this year’s debate is that Louisiana has what economists call a “regressive” tax system, meaning that the poor pay a greater percentage of their income in state and local taxes than the wealthy. In 2015, families that earned $32,000 or less — who represent 40 percent of Louisiana households — paid an average of 10 percent of their income in taxes. By comparison, families that earned at least $470,000 per year — who represent the top 1 percent of households in Louisiana — paid an average of just 4.2 percent of their income in taxes, according to the Institute on Taxation and Economic Policy, a left-of-center interest group in Washington, D.C. “Our tax system is unfair now,” said Jan Moller, director of the Louisiana Budget Project, a Baton Rouge-based group that is associated with the institute.

Reality check: Louisianans already pay some of the lowest overall tax rates in the country.

 

Racial inequality 50 years after Kerner

The year 1968 was a watershed for American race relations. Dr. Martin Luther King was assassinated, the Civil Rights Act of 1968, outlawing housing discrimination, was signed into law. And in the wake of riots around the country, the National Commission on Civil Disorders – better known as the Kerner Commission – reported that “white racism” had helped create widespread discrimination against African Americans in housing, employment and education. So where do things stand 50 years later? The Economic Policy Institute reports that black workers and their families are better educated, healthier and earn more money than their predecessors, but other measurements have hardly budged in a half century.

With respect to homeownership, unemployment, and incarceration, America has failed to deliver any progress for African Americans over the last five decades. In these areas, their situation has either failed to improve relative to whites or has worsened. In 2017 the black unemployment rate was 7.5 percent, up from 6.7 percent in 1968, and is still roughly twice the white unemployment rate. In 2015, the black homeownership rate was just over 40 percent, virtually unchanged since 1968, and trailing a full 30 points behind the white homeownership rate, which saw modest gains over the same period. And the share of African Americans in prison or jail almost tripled between 1968 and 2016 and is currently more than six times the white incarceration rate.

 

Why are universities so powerless?

The looming failure of the special session means a new round of cuts could be in store for Louisiana’s public colleges and universities, which would follow a decade of unprecedented cuts to higher education in the Pelican State. Nola.com/The Times-Picayune columnist Bob Mann, whose day job is at LSU, wonders why state universities have so little clout inside the Capitol, and what would happen if they were more effective at protecting their funding levels.

How different would Louisiana be today if those who ran our colleges and universities 10-12 years ago (especially the Jindal handmaidens who served on the higher education boards) had not capitulated? How different would it be if those defending their institutions had not seen themselves as lobbyists but as public advocates? What if they had rallied students, faculty, staff and parents to storm the Capitol, week after week, and injected fear into the hearts of lawmakers? Put another way, imagine if higher education had been as effective at demanding resources from lawmakers as were the large corporations that extracted billions from Louisiana government during the same period.

 

Number of the Day

$17,409 – Median wealth of a black family in 2016, which is 10.2 percent of the median wealth of a white family ($171,000). (Source: Economic Policy Institute)