Another REC stalemate

Another REC stalemate

Louisiana created the Revenue Estimating Conference more than three decades ago with a simple mission: to take politics out of the process of forecasting state tax revenues by having non-partisan state economists do the job. But in recent years the REC has become a political cudgel for legislative leaders, who have sought to disregard the economists’ forecasts by substituting their own opinions on what the state should be allowed to spend each year. That trend continued on Friday, as The Advocate’s Sam Karlin reports

(House Speaker Clay) Schexnayder’s proposal ignored the advice of economists who build the projections and opened the door for future REC members to arbitrarily add funding to the forecast, (Commissioner of Administration Jay) Dardenne said, calling it “unprecedented.” The two sides tried multiple motions to reach an agreement to approve a forecast, but none passed. Stephen Barnes, the independent economist on the panel, sided with Cortez and Schexnayder.

What’s next: The last official revenue forecast – adopted last April – remains in place until the REC agrees on a new one. Gov. John Bel Edwards will present his 2020-21 budget recommendations to the Legislature on Friday. The recommendations will be based on the latest forecast by the state’s Office of Planning and Budget – even though it was not adopted. The REC can (and will) meet again before the end of the fiscal year, and it’s highly likely the impasse gets resolved before the Legislature puts its final stamp on the state budget this spring. 

Here’s a backgrounder on the REC and its role in the budget process. This report from the Center on Budget and Policy Priorities explains why Louisiana’s forecasting process – when it’s not politicized – adheres to best practices. 

 

The crisis in rural Louisiana
Large swaths of Louisiana have been in an economic tailspin for generations, with young people leaving for urban areas in search of jobs and opportunity while those left behind struggle to pay for basic public services. The Advocate’s Mark Ballard has been virtually alone in covering this slow-motion disaster. His latest installment looks at the decline of family farms.

The number of farms in Louisiana has dropped 9% and the percentage of farm jobs has dropped by half in the past decade alone, according to the latest U.S. Department of Agriculture Economic Research Service census. The number of people living in the country dropped another 6.6% between 2007 and 2017. Meanwhile, the number of city folk, who congregate mostly along Interstate 10, increased by 14.9% during that same 10-year period in ever-enlarging urban areas. The migration has left wide swaths of the state with higher unemployment, less income, shorter life expectancies and fewer high school graduates — all parts of the rankings formulas with sums that put Louisiana near the bottom of most lists.

 

Housing affordability crisis is hitting the heartland
The spiraling cost of housing – for renters and buyers – has been a problem for years in big urban areas along the coast. Jordan Yadoo and Noah Budayar of Bloomberg report that the problem is now affecting smaller communities as well, making it increasingly difficult for low- and moderate-income workers to find a safe and affordable place to live.

From 2011 to 2018, the proportion of households making $30,000 to $45,000 a year that were “cost-burdened” – paying more than 30% of their income on rent – soared the most in metros including Nashville, Tennessee; Greenville, South Carolina; and McAllen, Texas. … The data highlight a harsh reality of the U.S. economy a decade into the longest expansion on record: For people who don’t make big salaries, there are fewer and fewer affordable places to go.

 

Social determinants of health
Louisiana’s overall spending on health care services has grown substantially in recent years, helped by the influx of federal dollars supporting Medicaid expansion. But Louisiana still languishes near the bottom of many national indicators of health – due in large part to the state’s chronic poverty and persistent racial divides. The Louisiana Department of Health recently created a new office to help address the state’s persistent health disparities along racial and economic lines. The AP’s Melinda Deslatte reports:

(Deputy Director Earl) Benjamin-Robinson said Louisiana’s health department had programs aimed at closing gaps in access, but he said the approach wasn’t consistent. To redirect its focus on combating health disparities, Louisiana looked to other states that have dedicated health equity initiatives and used two in particular as a model, Minnesota and California. Minnesota, ranked among the nation’s healthiest states, created its health equity center in 2013, while California created its similar office a year earlier.


Number of the Day
23,019 – Number of Louisiana farm workers in 2017, down from 101,880 in 1960 (Source: U.S. Census Bureau via The Advocate)