Reflections on a meltdown

Reflections on a meltdown

The Legislature’s failure to agree on a revenue package that supports the budget bill they passed brought swift condemnation from editorial writers and opinion columnists throughout the state.

Number of the Day

$.17 - The difference in sales tax on a $100 purchase between the House GOP plan (4.33 percent) and the one backed by broad majorities in the House and Senate (4.5 percent). (Source: Simple arithmetic)

The Legislature’s failure to agree on a revenue package that supports the budget bill they passed brought swift condemnation from editorial writers and opinion columnists throughout the state. Common themes include a lack of leadership in the House, needless partisanship and a need for true compromise. The Advocate kicks things off with a rare front-page editorial:

Compromise shouldn’t be a dirty word, but the House leadership seems unwilling to accept anything that can be construed as a political win for Edwards, who is, after all, allied with Republicans in the Senate. Edwards certainly hasn’t done everything right, but the House leaders appear to be fighting an ideological battle with precious little regard for the consequences for the people of Louisiana. As taxpayers face uncertainty about basic state services, families agonize about the future of TOPS and the cost of college, and Louisiana’s most vulnerable citizens confront continuing anxiety about critical lifelines of support, the Legislature’s own operating budget seems more or less intact. It’s a telling sign of where legislators’ priorities are — a reality already made obvious by their willingness to waste an estimated $60,000 a day on six special sessions in two years that have done virtually nothing to advance Louisiana’s future.

The Nola.com/Times-Picayune weighs in:

The sales tax isn’t the fairest or best way to pay for state government, but at this point, it is the only option for raising the money that’s needed. The difference between 4.3 percent and 4.5 percent amounts to less than 20 cents on $100. The Senate found a way to lower the sales tax and reduce the budget without throwing it into chaos. A large majority of the House wants to do the same — but their leaders are playing politics, hoping to hurt Gov. Edwards’ chances at re-election.

Columnist Tim Morris calls it a “dumpster fire” and throws blame in all directions:

Some Democrats called the Republican-backed budget “immoral,” and the GOP House leadership has not done a lot to defend the choices except as a general effort to reduce taxes and slow the growth of government, both worthy goals. It would help their case if they launched an honest debate on controlling the cost of TOPS that didn’t leave students guessing between semesters and if they pushed debate on long-term tax structure changes rather than random, temporary patches. The same could be said of the governor, who is a lot better at calling sessions than he is at creating coalitions and cultivating compromise.

 

“It all came down to a fraction of a penny”
While the politics at the Capitol were heated, it bears repeating that 85 of 105 House members voted for at least $400 million in revenue renewals on Monday night, while 29 senators went on record in favor of renewing one-half of the expiring “clean penny” of sales tax to fund vital services. In other words, there is supermajority support in both chambers for the idea that a tax renewal is needed to protect TOPS, college campuses and public safety. Paul Braun and Drew White of LSU’s Manship School News Service report for the Shreveport Times:

Jan Moller, head of the Louisiana Budget Project, a nonprofit group that monitors how public policy affects Louisiana’s low-to moderate-income families, chided legislators supporting only a one-third tax renewal, or no extension of the sales tax at all, and their “petty politics.” “It’s not about growing government; it’s about maintaining vital services,” he said. Jim Richardson, an LSU economics professor, said the difference between the two sales tax levels would cost a family making $25,000 an additional $7 each year. A household income of $50,000 would pay about $23 more.

 

Spending and strikes
After years of steady increase during the 1990s and early 2000s, spending on K-12 education declined in Louisiana and elsewhere after the Great Recession, and in many states it has still not returned to pre-recession levels. Robert Gebeloff of the New York Times writes that this correlates with the recent disturbances and strikes seen across the country:

It’s easy to see why teachers are in the vanguard of the protest. Teacher salaries make up the bulk of education spending — so when education spending stagnates or is cut, teachers feel the pain most directly. …  In many of the states spending less on education, average teacher pay has fallen sharply. Nationwide, pay is down 5 percent this decade, to an average of $58,950 from $61,804.

Gebeloff concludes that this is why statewide strikes have gained momentum, as opposed to local strikes, as many feel state policy has disadvantaged teachers, students, and schools.

 

New corporate tax brackets skewed towards the rich
Although supporters of the recent corporate tax cuts of 2017 praised them as a win for the middle class, new research suggests they are heavily skewed to the wealthy. A new policy brief by the Center on Budget and Policy Priorities outlines the flaws of the new legislation:

The deep cut in the statutory corporate tax rate from 35 percent to 21 percent is the centerpiece of the 2017 tax law and contributes to all three of these major flaws: the corporate tax cut is skewed to the top since it mostly benefits wealthy shareholders and highly compensated employees such as CEOs; it loses much-needed revenue; and by placing the corporate tax rate far below the top individual tax rate, it creates a significant potential tax sheltering opportunity for wealthy Americans.

 

Number of the Day
$.17 – The difference in sales tax on a $100 purchase between the House GOP plan (4.33 percent) and the one backed by broad majorities in the House and Senate (4.5 percent). (Source: Simple arithmetic)