While the second special session was largely a bust, a majority of legislators did agree on one issue: the state should not balance the budget on the backs of Louisiana’s working poor families. They approved a modest increase in the state’s Earned Income Tax Credit (EITC) to offset the partial renewal of the temporary sales tax. As described in a play-by-play by Nola.com’s Julia O’Donoghue, legislators couldn’t actually agree on the sales tax renewal after they approved the EITC increase, but the tax credit boost for low-income families still moved to the governor’s desk where it is expected to be signed. Melinda Deslatte with The Associated Press reports:
Supporters said the Earned Income Tax Credit, known as the EITC, helps low-income families with children who are harder hit by sales taxes, and encourages people to work. They described the credit expansion as needed to offset the effect of what was then an expected sales tax renewal. They said the dollars returned to taxpayers would immediately be pumped back into the economy, spent on groceries, clothing and household items. “This bill in its current form helps families around Louisiana,” [Rep. Katrina] Jackson, a Monroe Democrat, told her colleagues Monday. Louisiana allows low-income workers who qualify for the federal EITC program to take a state individual income tax credit equal to 3.5 percent of the federal credit. About one in three tax filers in Louisiana claim the credit, according to the Louisiana Budget Project, a group that advocates for low- to moderate-income families.
Governor culls list of construction projects
One of the major forms of leverage a governor has over members of the Louisiana Legislature is the ability to make line-item vetoes to budget bills, including the closely watched “capital outlay” budget that funds construction projects around the state. Gov. John Bel Edwards exercised that power on Wednesday when he nixed 40 projects, many of them in the districts of legislators who opposed his plans for fixing the fiscal cliff. While Republicans accused the governor of playing politics, others noted that the amount the state can borrow for construction needs is tied to overall revenues. The Advocate’s Mark Ballard reports:
Democratic Rep. Terry Landry, a supporter of the governor’s saw one of the projects in his district removed by the governor – drainage improvements on Charles, Ann and Dale Streets in New Iberia. Landry said the amount of money the state can borrow to pay for these projects is linked to the state budget, which many representatives want to see balanced through cuts. “The people who think we don’t have a revenue problem and want to cut government, shouldn’t be surprised when the governor cuts projects, including theirs,” Landry said.
Lost childhoods in rural areas
Rural communities often get overlooked when it comes to federal and state investments in services that help children and families struggling with poverty. New research from Save the Children reveals that children in rural areas of the country are actually more likely to live in poverty and to suffer from the negative effects of childhood poverty than children living in urban areas:
Child poverty rates are higher in rural areas – nearly 1 in 4 rural children grow up in poverty.
Many Americans think child poverty is just an urban issue. But in 2016, 23.5 percent of children in rural areas were impoverished as compared to 18.8 percent in urban areas. On the county level, between 2012 and 2016, 41 counties in the United States had child poverty rates of 50 percent or higher, 93 percent of which (38 out of 41) were rural.
The analysis found that rural child poverty is especially prevalent in Southern states, including Louisiana:
The most severe poverty is found in rural communities heavily clustered in the South, where more than three-quarters of relentlessly impoverished counties (31 of 38) are located. Mississippi alone is home to 13 rural counties with severe poverty, mainly in the Delta region. Severe rates of rural poverty are also found in Georgia, Louisiana and South Dakota, where, in some counties, two-thirds or more of rural children live in poverty.
Employment up, but wages flat
The United States is closer to full employment that it has been in decades, but many workers are not feeling the benefits in the form of higher wages. The phenomenon of stagnant wages after a long and steady period of declining unemployment has left economists perplexed. But one thing that’s different from previous periods in history with similar labor market conditions – the strength of workers’ bargaining power. Matt O’Brien with The Washington Post’s Wonkblog has more:
After all, this is supposed to be simple. When unemployment is low, companies are supposed to have to fight over workers by offering them bigger raises. Which for a long time really did seem to be the case. Indeed, between 1995 and 2008, the unemployment rate explained about 55 percent of the raises that nonsupervisory and production employees were getting. Since then, though, it’s 2 percent. What in the name of worker bargaining power is going on? Well, sub-4 percent unemployment notwithstanding, maybe they don’t have any. …One answer is that a lot of places have a few big employers that, by virtue of being the only job in town, can force people to accept whatever wages they’re offering. It’s basically the reverse of monopoly power — they’re the only buyers, rather than sellers, of wages — but the effect is the same: They can dictate terms beyond what a simple supply-and-demand curve would tell you they could.
Number of the Day
35.1 – Percentage of children in rural Louisiana that are living in poverty, compared to 27.3 percent of children in urban areas of the state. (Source: Save the Children)