The Legislature wrapped up its regular session ahead of schedule on Friday evening, setting up a two-week lawmaking period where legislators will try to come up with $648 million in new or replacement revenue to shore up the state budget. The session marks the latest attempt by Gov. John Bel Edwards to find consensus among legislators who don’t agree on how much revenue to raise or what taxes they support. The AP’s Melinda Deslatte reports:
About $1.4 billion in temporary taxes passed by lawmakers in 2015 and 2016 to plug budget holes are expiring with the start of the new budget year. With other tax offsets, Louisiana is estimated to get $648 million less in general tax dollars next year than this year. A February special session on taxes ended in collapse, with no dollars raised to offset cuts, amid partisan disputes. Now, they’ll try again, with a two-week special session starting Tuesday. Lawmakers are not necessarily starting with happy thoughts and excitement. Rather, they’re dragging themselves into a session still smarting from previous divisive debates — and with relations tense between the Democratic governor and the majority-Republican Legislature.
In addition to raising revenue, lawmakers also will have to agree on the 2018-19 operating budget after Edwards on Friday took the rare step of vetoing the budget bill sent to him by the Legislature. That budget made devastating, across-the-board cuts to state agencies, affecting everything from meat inspections and food stamps to district attorneys and sheriffs. The Advocate’s Elizabeth Crisp:
State legislators had said they passed the budget proposal to demonstrate just how drastic the situation will be when more than $1 billion in taxes expire before the next budget year. But Edwards lambasted it as “catastrophic” as it fully funded health care priorities but would have cut most other state agencies by nearly 25 percent. The popular Taylor Opportunity Program for Students would have been cut by 30 percent, and colleges and universities would have had a more than 10 percent cut. “We’re not going to pretend that what they did was adequate. It was catastrophic,” Edwards said. “I think it’s much better to go back to the real world as soon as possible.”
The Nola.com/The Times-Picayune editorial board isn’t crazy about renewing part of the sales tax, but notes that it is the quickest and most realistic path forward for a Legislature that has refused to address the unorthodox deductions that make Louisiana’s personal income tax much less effective as a revenue tool than it should be.
The sales tax is the fastest way to raise money, and the Legislature unfortunately has shown no interest in restoring state income tax reforms that were rolled back during the Jindal years. Congress actually is moving Louisiana toward a more balanced use of income taxes. The federal tax revisions will mean that fewer state residents will qualify for itemized deductions, which they had been able to use to lower their Louisiana taxes. Congress also reduced income tax rates, so state residents will have a lower amount to deduct on their Louisiana returns. All in all, the state is expecting to collect an additional $309 million in income taxes in the new fiscal year.
Edwards is eschewing the traditional session-opening address in the House chamber and instead will give his opening remarks in Lafayette, accompanied by Lt. Gov. Billy Nungesser. The speech is at 1 p.m. Tuesday at the Earl K. Long Gym at the University of Louisiana at Lafayette. Anyone interested in attending can RSVP at gov.louisiana.gov/ourlouisiana.
Sports betting can’t fix the state budget
When the U.S. Supreme Court last week struck down a federal law that bans sports gambling everywhere except Nevada, it all but assured that Louisiana would soon be among the dozens of states where politicians will debate whether citizens should have the right to wager on their favorite team. Nola.com/The Times-Picayune’s Tim Morris looks at the pros and cons of legalized sports betting, but notes that the revenue would only make a small dent in Louisiana’s massive budget shortfall.
Is it worth the risk? Maybe, but only as long as you are not putting too much hope in the payoff. For comparison, Nevada, the only state where it is now legal, pulled in about $17 million in tax revenue from legal sports betting last year, according to Fitch Ratings. Sports betting margins are notoriously narrow in casinos, which use the wagering as a way to attract foot traffic to more traditional gambling. An analysis done by Oxford Economics for the American Gaming Association estimated that once the 40 states that now allow casino gambling get around to offering sports betting that Louisiana’s annual tax revenue from the addition would be about $25 million a year. Nothing to sneeze at, but it doesn’t move the needle much in a $28 billion budget.
The session had some bright points
The budget shortfall may have dominated the just-concluded regular session, but it was far from the only issue on the docket. The inimitable Jim Beam of the Lake Charles American-Press takes stock of what passed and failed, noting continued progress on criminal justice reform, early childhood education, school hazing and sexual harassment in state government.
Members of the Legislative Black Caucus praised two of those positive changes. Persons on probation and parole will be able to vote five years after they leave prison, and voters on Nov. 6 will decide whether to end the state’s 10-2 jury decisions in felony cases. Rep. Randal Gaines, D-LaPlace, chairman of the caucus, said, “For all of those who have given their lives for justice and reform, from the Black Caucus, we say ‘Thank you.’”
Wealth and the role of government
The widening income gap between the wealthiest Americans and those at the bottom gets a lot of attention. But income can change rapidly – for better or worse – as people get promoted, lose jobs or go back to school for more education or training. Household wealth, however, tends to change more slowly over time, but is a critical factor in how children fare in adulthood. As Christina Gibson-Davis and Christine Percheski write in The New York Times, families with children have lost considerable ground over the past quarter-century, while childless households have seen significant gains.
Our research shows that in terms of wealth, those over 65 have weathered the past quarter-century much better than families with children, despite two major recessions. The net worth of older people’s households increased by 45 percent from 1989 to 2013. And for the past 25 years, the distance between the rich elderly and the poor elderly remained stable. The very wealthiest elderly households grew richer, but so did those of working-class and middle-class older people. Families with children fared worse as a group. Overall, their wealth declined by 56 percent in the same period. More important, they also faced a wide and growing divide: Wealth inequality for these households grew significantly from 1989 to 2013. The top 1 percent saw their wealth increase by 156 percent, while parents in the bottom half saw their wealth shrink by 260 percent. About a third of all families with children in 2013 had no wealth, only debt.
Number of the Day:
$-233 – Median net worth for families with children who are in the bottom 50 percent of income earners, a 260 percent drop from 1989 to 2013. (Source: New York Times)