For the first time in nearly a decade, Louisiana’s budget is stable and running a surplus, allowing the state to re-invest in important programs – particularly our public schools and teachers. Less than one year ago, an expiring portion of the sales tax left Louisiana with a $650 million hole in the budget, and on the verge of closing hospitals, bleeding higher education dry, and set to become the only state in the country without a food stamp program. While this year’s surplus is a welcome change of pace, The Advocate’s editorial board offers a timely reminder that with members of the House determined to bring us back to the Jindal years with irresponsible tax rollbacks, the state is never too far from legislating its way into a crisis:
The bill by GOP House leader Lance Harris of Alexandria would have rolled back a seven-year tax compromise struck by state lawmakers last year. The senators on the Revenue and Fiscal Affairs Committee rightly rejected Harris’ bill. It’s far too soon to start meddling with a tax deal that stabilized state finances after a nearly decadelong budget crisis in the Jindal years. The House-backed bill would have gradually reduced the 0.45% portion of Louisiana’s 4.45% state sales tax over four years. It would have been nearly eliminated by mid-2023, lessening state tax collections by an estimated $348 million. That’s $348 million in real money, the state-generated tax dollars in the general fund. That’s the most important money, and it was the cutting of the general fund during the Jindal years that led to crises.
BP oil money should be saved, not spent
Anyone who’s taken a drive through the Pelican State recently knows that Louisiana desperately needs to invest in infrastructure. Numerous legislators and economists have suggested doing this through raising the gas tax, which has remained stagnant for decades. But since not enough legislators support a gas tax increase to win its approval, the state’s lawmakers are left to find alternative and less ideal options to raise money for infrastructure. Because Louisiana has just recently stabilized its budget and remains the worst prepared state for a recession in the country, recent proposals to redirect general fund dollars or raid savings accounts to pay for infrastructure repairs are inadequate and dangerous, despite those repairs’ importance. The AP’s Melinda Deslatte discusses the most recent proposal, set to redirect settlement money from the BP oil spill from trust funds to infrastructure:
With a 90-11 House vote Tuesday (June 4), lawmakers gave final passage to a bill by Rep. Tanner Magee steering that money to infrastructure projects. The proposal goes next to the desk of Democratic Gov. John Bel Edwards for his review. Under the bill, $150 million would pay for improvements to Louisiana Highway 1 in Lafourche Parish, a highway that leads to the critical oil and gas hub of Port Fourchon. Another $125 million would fast-track a Louisiana 415 road project in West Baton Rouge Parish aimed at alleviating traffic snarls. Other dollars would go to Interstate 49 work. “This will be the biggest investment in infrastructure in the state of Louisiana in probably 30 years,” said Magee, a Republican from Houma. He said some of the projects will be matched with local, federal and private dollars, boosting the investment to $1 billion. Under a 2014 law, the oil spill recovery money was earmarked to the state’s “rainy day” fund, an elderly trust fund and a health savings account that were drained during former Gov. Bobby Jindal’s tenure. Despite the law, the Legislature has several times diverted the economic damage money to pay for operating expenses.
Much has been written about Leah Chase, the iconic New Orleans restaurateur and civil rights leader who died at 96 last week. None of it was better than Jarvis DeBerry’s column for Nola.com/The Times-Piacyune, who provides a helpful history lesson of the New Orleans that existed in the mid-1960s:
On a Wednesday night in late May 1965, a homemade bomb exploded in the 2300 block of Orleans Avenue. The Times-Picayune referenced the damage to that automobile — and only that — in its headline, thereby missing the opportunity to tell the real story. That bomb exploded outside Dooky Chase’s restaurant, a well-known meeting place for civil rights leaders, causing fragments from the explosive device to tear through the front door of the establishment. … Every time I’ve met a noteworthy civil rights figure, I’ve asked how he or she dealt with fear. And if that strikes you as odd that I just referred to the Queen of Creole cuisine as a noteworthy civil rights figure, then you’re as myopic as those reporters in ’65 who focused on the damage to an “unoccupied Negro car.” The civil rights movement depended on establishments like Dooky Chase’s. They were places where activists could meet and strategize, and – maybe as importantly – places where they were guaranteed refuge. And the people who operated those places had to be as brave as the civil rights workers they welcomed inside.
Louisiana is spending less than we were 10 years ago
This session, lawmakers looking to trim state spending have argued that Louisiana is spending more than ever before. While Louisiana is bringing in more federal dollars than ever before thanks to the expansion of Medicaid, state government is actually operating with fewer state dollars than a decade ago. The state general fund is 13% below 2009 levels, after adjusting for inflation. Barb Rosewicz of Pew has more on why Louisiana and 22 other states are still spending less than they did at the beginning of the recession:
The recession undercut states’ largest source of revenue: tax dollars. States missed out on an estimated $283 billion when collections fell and remained below 2008’s level until 2013 after adjusting for inflation. That figure likely underestimates the amount of forgone revenue because it does not reflect potential growth in tax receipts under normal economic circumstances. Temporary federal stimulus aid from the American Recovery and Reinvestment Act—including $147 billion in Medicaid and education funds—helped offset some of the shortfall. Still, states were left with less to invest in higher education, public employee pensions, infrastructure, and other needs. Even though total state tax collections in late 2018 were 13.4 percent higher than a decade ago, based on quarterly tax revenue collections adjusted for inflation, nine states still were taking in fewer tax dollars than at their peak before receipts fell in the 2007-09 downturn.6The bottom line is that not all states have regained the purchasing power they had at their peaks and are still playing catch-up in some spending categories.
Number of the Day
-13% – Change in Louisiana’s general fund spending from 2008 to 2018. (Source: Pew Charitable Trust)