The state Legislature is heading back to work on Monday after its unplanned seven-week coronavirus hiatus. House and Senate committees have scheduled dozens of bills to be heard this week, and leaders seem convinced that tort “reform” remains a top priority. But as Nola.com | The Advocate’s Mark Ballard reports in his curtain-raiser, the state budget tops the priority list:
Sales tax receipts undoubtedly are down for the month April, but just how much won’t be known until collections are completed near the end of May and reported in June after the scheduled session adjourns. Oil prices have collapsed, and the collection of severance taxes has been discontinued for the time being. Plus, the closure of casinos will cut deeply into available revenues. Most of the budget is made up of federal government grants and dedications in the law that direct where the money comes from and how it should be spent. Only about $10 billion of the $30 billion comes from Louisiana-based taxes and sources, which leaves budget architects little wiggle room to absorb a shortfall.
Columnist Stephanie Grace ruefully notes that some things that corporations consider “essential” will be up for debate, but other critical issues could be stymied:
There are some things the Legislature could do, of course, to bring more immediate comfort to those struggling. It could raise the minimum wage, as Edwards has long sought. It could also revisit its wrong-headed ban on allowing localities to do so, as well as the 2012 update that also prohibited them from requiring employers to offer paid sick leave. One of many lessons from the current crisis, of course, is that when people show up to work sick because they can’t afford not to, they sicken others (the federal government has granted paid sick leave to those affected by the coronavirus, but it’s not universal, doesn’t cover other illnesses and expires at year’s end).
The AP’s Melinda Deslatte writes that partisan divisions have returned to the Capitol after taking a welcome break in the early days of the pandemic.
In other words, legislative politics is starting to return to normal even in a pandemic that has killed nearly 2,000 people in Louisiana so far.
Click here to read LBP’s testimony on budget-related House Bills 464, 467, 118.
States face record budget shortfalls
The economic recession resulting from the Covid-19 pandemic is likely to cause budget shortfalls that dwarf anything that states had to grapple with during the Great Recession. Michael Leachman, of the Center on Budget and Policy Priorities projects that states will see shortfalls totaling $650 billion over the next three years. Since almost every state operates with a balanced budget requirement, that means the federal government will need to step up with aid:
No one knows precisely how this unprecedented crisis will affect the economy, but underestimating its effects would have grave consequences for state budgets and thus for families, businesses, and communities. If federal aid ends too soon, states will have to depend much more heavily on spending cuts and tax increases to balance their budgets. Accordingly, the next relief package should include a large new round of fiscal relief, using “triggers” based on job market conditions to determine when assistance phases up or phases out.
U.S. Sen. Bill Cassidy is co-sponsoring bipartisan legislation that would provide $500 billion in much-needed fiscal relief for states and localities. The money would be divided among states under a three-part formula that accounts for population size, the number of Covid-19 cases and the budget shortfall. The Louisiana senator elaborates in a Washington Post op-ed:
If we do not provide stability for states, we risk wasting all the money spent to save small businesses. These small business need basic government services. Who will eat in a restaurant if garbage and rats are out front because a city has laid off sanitation workers?
How will children eat this summer?
With summer approaching as Louisiana families suffer the economic fallout from the coronavirus pandemic, school districts in South Louisiana are grappling with how to make sure children from low-income families have enough food to eat. Summer is traditionally a hard time for hungry families, as school meals give way to summer feeding programs. This year will be especially challenging, as Della Hasselle reports for Nola.com | The Advocate:
“Summer is always a concern for us, because only a fraction of kids who receive free and reduced lunches get meals usually in the summer,” said Natalie Jayroe, president and CEO of the Second Harvest Food Bank, which serves the New Orleans metro area and other southern Louisiana parishes. “We will get our hands on food to meet the need as much as possible, but the question is: How will we reach these children?”
The future of energy
The recent, modest uptick in oil prices isn’t nearly enough to mitigate the economic damage done by the massive price drops of recent weeks, The Advocate notes in an editorial.
(O)f course, no one in Louisiana’s oil patch needs to be reminded that oil was north of $100 per barrel until late 2014. In real dollars, the $15.37 a barrel is less than the $10 a barrel that oil sold for in the ‘80s; this collapse is the worst since then, according to economist Gary Wagner, of the University of Louisiana at Lafayette.
Columnist Bob Marshall writes that now would be the perfect time for Louisiana to start planning and investing in offshore wind energy to take the place of oil:
(T)he Bureau of Ocean Energy Management, part of the Trump administration, recently released two studies on the potential of offshore wind energy in the Gulf of Mexico that shakes up some long-held beliefs. While it has previously been estimated that offshore wind could provide half of the nation’s annual energy needs, there were serious concerns about the costs of getting there. This report clears those up — and offers hope for Louisiana’s tens of thousands of unemployed offshore energy workers. … There is a clear path to address the gravest threat facing the state and world — human-caused climate change — while building a lasting energy industry. And, no, this won’t mean the end of oil, only a transition to much less oil over decades.
Number of the Day
1 in 4 – Americans who are likely to go hungry, up from 1 in 8 before the coronavirus pandemic (Source: Robert Wood Johnson Foundation via Associated Press)