The coming budget crisis

The coming budget crisis

States, unlike the federal government, cannot operate with a budget deficit to keep vital public services up and running. That will present a major problem for Louisiana, which could end up with $1 billion less than expected next year as revenue from sales taxes, personal income, gambling and oil revenue come in below earlier projections. The federal aid that’s been approved so far isn’t enough, and comes with too many restrictions. Sam Karlin reports for | The Advocate elaborates: 

And despite $1.8 billion in federal aid coming to Louisiana’s governments, that money can’t currently be used where some officials say it is most needed – to fill massive holes left by lost tax revenue. … About 10% of Louisiana’s state revenues come from severance taxes, and oil prices have crashed, leaving that revenue stream uncertain. Meanwhile, hundreds of thousands have filed for unemployment, including nearly half of food services and accommodations workers, according to research from Stephen Barnes, an economist at the University of Louisiana at Lafayette. The state relies heavily on sales taxes, which are expected to drop precipitously, and it is not clear how fast they will rebound as the country enters a slow-moving economic reopening.

A post-Covid vision for Louisiana

Louisiana will rebuild after Covid-19, just as we have done after previous disasters. LBP founder and former state Rep. Melissa Flournoy, writing in The Advocate, argues that the pandemic recovery should avoid the mistakes of the past by prioritizing equity instead of the needs of the wealthy. 

Louisiana needs a vision for the future that is inclusive and equitable and lifts families out of poverty and on a pathway to prosperity. The world is changing fast and we need to focus on the impact of the pandemic, the role of technology in work and education, and new ways of doing business.

Center for Planning Excellence President Camille Manning-Broome struck a similar note, focused on community planning and investment to build a more resilient Louisiana:

Many low income and minority residents live in areas with blight; inadequate infrastructure for transit users; few parks and green spaces; poor air quality; and limited access to healthy foods, safe housing and appropriate medical care resulting in higher rates of chronic conditions such as obesity, asthma, heart disease, several types of cancers, and hypertension. These are the circumstances driving the shockingly disproportionate burden African Americans in Louisiana are bearing with COVID-19. So how can land use planning, healthy community design, and environmental stewardship reduce vulnerability to a pandemic? First, we have to reject business-as-usual and embrace a vision for a future that is healthy, equitable, economically sustainable, and climate-friendly.

Tort “reform” in a pandemic

Gov. John Bel Edwards’ stay-at-home order has been extended for another two weeks, but that isn’t stopping the Louisiana Legislature from reconvening on Monday. While lawmakers have some must-pass items, including the state budget and agency reauthorizations, they also plan to take up tort “reform” bills that aim to reduce people’s access to the civil justice system. Mark Ballard writes in | The Advocate

(Senate President Page) Cortez said an effort to enact tort reform – that is, limit access to the courts for people injured in auto accidents – is one of those legislative efforts that will be heard. He said proponents have argued that insurance companies would lower the premiums they charge for auto insurance if tort reform become law, which is something that would benefit a population in which about 350,000 workers have been unemployed and dozens of businesses have closed in an effort to restrict the spread of the often-deadly COVID-19.

State unemployment systems are working against jobless workers

Nearly every state tightened the purse strings on their unemployment insurance trust funds since the Great Recession. Benefits remained stagnant, computer systems have not been updated and red tape was added to make it harder to access benefits. Emily Badger and Alicia Parlapiano document these changes in the New York Times’ Upshot blog

Loretta Lee, who lives in Detroit, was furloughed in late March from her job in supply chain management for a manufacturer. The state unemployment site kept crashing; the system told her she was missing required information. She called an overloaded call center more than a thousand times. She called her U.S. senator, then her state senator. “I felt like a child,” said Ms. Lee, 32. “I was so helpless.” Finally, she reached a state worker by phone who told her to send in a copy of her pay stub — by fax, marked “Attention: Pam.” And so, wearing a mask, she took the pay stub to a hotel concierge desk, entrusting her personal financial information to a woman she did not know who had access to a fax machine in a pandemic.


Number of the Day
66,141 The number of unemployment insurance claims received by the Louisiana Workforce Commission during the week that ended April 25, down from 91,923 filed the previous week. (Source: Louisiana Workforce Commission)