Coronavirus and the state budget

Coronavirus and the state budget

Louisiana’s cratering state economy will almost certainly require a downgrade in the state revenue forecast, which in turn will require major changes to the $32 billion state budget proposed for the upcoming fiscal year. Significant adjustments will also be needed in the current-year budget, which runs through June 30. In a perfect storm of economic impacts, sales taxes and income taxes – at risk as people lose their jobs and throttle back spending – account for about two-thirds of state revenues, while gambling brings in another $60 million per month. Additionally, mineral revenues account for about $750 million a year in revenues, now in jeopardy due to plummeting oil prices. The Advocate’s Mark Ballard reports that officials are so far being cautious with their predictions. 

“We were singing very optimistic tones about the budget. Clearly that has to change,” Commissioner of Administration Jay Dardenne, the governor’s chief budget advisor, told The Advocate. “The investments in education are still going to be our priority.” … He realizes it’s a herculean task for the two economists – Greg Albrecht for the Legislature and Manfred Dix for the administration – to come up with reasonable estimates based on a few weeks of data.

The Revenue Estimating Conference, which forecasts state revenues, is likely to meet April 8, Dardenne said. In the meantime, the Center on Budget and Policy Priorities’ Michael Leachman and Jenny Sullivan report that Louisiana is among the least-prepared states in the country for the coming recession. 

Data are not yet available on the full scope of this collapse, but there is little doubt it is drastic, perhaps unprecedented. Income taxes, which make up another third of state revenues, also will decline sharply as mass layoffs rapidly push down people’s income and therefore their income taxes. Plus, the steep drop in the stock market means that wealthy people will soon begin reporting massive capital losses on their quarterly tax returns, further reducing state revenue.

Reality check: The fiscal stimulus bill being negotiated on Capitol Hill will almost certainly include some fiscal relief for states. The amount of that relief – and the form it takes – will determine a lot about Louisiana’s ability to maintain essential services.  

 

Facing eviction during a crisis
The coronavirus pandemic has affected virtually every American at this point. But it’s been especially hard on some low-income renters, who can still face eviction from their homes despite assurances to the contrary by public officials. The Washington Post’s Jessica Contrera and Tracy Jan report

President Trump on Wednesday declared that the Department of Housing and Urban Development would be “providing immediate relief to renters and homeowners by suspending all foreclosures and evictions until the end of April.” But Trump misstated what is actually occurring. The federal actions announced last week would protect more than 30 million homeowners from eviction, but they do not cover the nation’s 40 million renters.

 

“Grab-and-go” meals suffer in shutdown
Gov. John Bel Edwards’ “shelter-in-place” order has prompted at least five Baton Rouge-area school districts to suspend their emergency meal service for students. The Advocate’s Charles Lussier reports that Ascension, St. Helena, Livingston, St. James and East Feliciana have suspended their “grab and go” meal service – vital for many low income students – that started last week after public schools shut down due to the COVID-19 pandemic. But the governor’s order exempts “essential services,” which includes making sure children have food to eat. 

Christina Stephens, spokeswoman for Gov. John Bel Edwards, said it’s a big misunderstanding: “K-12 schools, public and private, are a central function that will continue to operate.” St. Helena and St. James parishes, however, offered another reason for canceling food service: Both districts learned this weekend they each have an employee who has tested positive for COVID-19. 

 

The flaws in the Senate stimulus bill
Negotiations in Congress continue on a massive bill to provide economic relief to Americans affected by the coronavirus pandemic after Senate Democrats rejected a version crafted by Majority Leader Mitch McConnell. The Center for American Progress notes that while the bill is generous to corporations, it falls far short of providing displaced workers with the boost they need. 

The bill offers only one solution to the immediate, acute crisis these workers and families are facing—a necessary but insufficient direct payment program, which will take time to implement and either excludes or provides less money to many of those who are experiencing the greatest need. On top of that, the bill entirely ignores the financial strain that states are facing now, one that is only going to deepen, as they appropriately direct their full attention to this crisis.

The Center on Budget and Policy Priorities’ Robert Greenstein writes that Congress should strive to avoid the mistakes it made in 2008, when far too many families were excluded. 

That means that lawmakers must not only make low- and moderate-income people eligible for the full payments; they must also ensure that the government delivers the payments without imposing new requirements on individuals to file tax returns or fill out and submit other complex paperwork. In essence, today’s lawmakers must not repeat the mistake of 2008, when the lawmakers of that day unnecessarily required people to file tax returns to get stimulus payments. By avoiding that mistake, lawmakers will ensure that millions of the nation’s most vulnerable people will, in fact, get their payment rather than lose out.

 

Number of the Day
482,813 – Number of Louisiana adults enrolled in Medicaid expansion as of Feb. 21. Today is the 10-year anniversary of the Affordable Care Act, which also guarantees coverage protections for nearly 1 million Louisianans with pre-existing medical conditions. (Source: Louisiana Department of Health)