“Dynamic scoring” is a terrible idea

“Dynamic scoring” is a terrible idea

When legislators consider proposals that would impact the state budget, such as fee increases or tax breaks to corporations, they look to the Legislative Fiscal Office for reliable, independent estimates of the price tag. But the reliability and independence of those estimates is now in question, after the Republican leadership fired the long-serving head of the office. Nola.com |The Advocate’s Mark Ballard reports on a key reason the change was made: Republicans want tax bills to be evaluated using a controversial method called “dynamic scoring,” which obfuscates the true cost of tax giveaways until it’s too late. 

“You can look at a glass as being half-full or half-empty,” Cortez said in an interview Wednesday, referring to dynamic scoring or what he calls “dynamic fiscal notes.” “I’d like to include information that shows the glass is half-full. I’m interested in seeing more information, not less.”

Paul N. Van de Water and Chye-Ching Huang of the Center on Budget and Policy Priorities explained in 2014 why building uncertain and easily manipulated assumptions into cost estimates for tax bills is a bad idea: 

[In Congress,] Chairman Ryan and others call for tax reform that drastically cuts top tax rates without boosting the deficit, but, politically, that is very hard to achieve without raising taxes on low- and moderate-income families or relying on timing gimmicks. Facing that reality, policymakers could use dynamic scoring to appear to finance large cuts in tax rates by assuming those cuts would significantly boost economic growth and thereby raise revenues. They could seek to manipulate the assumptions to produce the most favorable results.

As Governing magazine reported in 2015, the states that have tried such an approach have come to regret it. 

Policy staff in least 21 states — and possibly many more — have experimented with dynamic scoring since the early 1990s. While many states regularly use dynamic models to assess the economic impact of infrastructure investments, almost all state-level efforts to dynamically score tax policies have been abandoned. The primary culprits: wildly unrealistic expectations of revenue changes and serious problems using a highly imprecise policy tool in a balanced-budget environment.

A better approach would be for the Legislature to evaluate the long-term savings that come from smart investments in people by providing early childhood education, nutrition support and tax credits that lift up low-income workers and children.  

 

“We can’t move forward without looking at the facts” -Rep. Royce Duplessis
As millions of Americans take to the streets to protest police brutalization of Black bodies, Louisiana’s House and Governmental Affairs committee passed a resolution to study the problem—but only after stripping out any reference to the police killing of George Floyd and to Black people, specifically. House Resolution 13 by Rep. Ted James, creates a committee to study policing and the use of force in Louisiana. Nola.com | The Advocate’s Sam Karlin has the story:

In the end, white lawmakers stripped out the language that references Floyd and the deaths of black men at the hands of white police. James said he was fine with the amendment if it meant the measure passed and the issue was studied, saying that would “honor (Floyd) more than his name being included in the resolution.”

 

Budget bills on the move
The Louisiana legislature is moving quickly to pass a budget that uses federal coronavirus relief funds to plug holes caused by the virus’s economic effects. But with an additional coronavirus aid package stalled in the U.S. Senate, state lawmakers have also pressed forward with ill-considered plans to give millions of dollars to profitable corporations, putting vital services in jeopardy during a crisis. The Associated Press’s Melinda Deslatte explains:

Beyond the hospitals, Louisiana’s child welfare and food stamp agency, K-12 public school financing formula and the TOPS college tuition program would avoid reductions. College campuses, health programs and some other agencies would take some cuts. The proposal doesn’t account for millions of dollars in business tax breaks being considered in the ongoing special session, however. Additional cuts could have to be made to keep the budget in balance if those tax breaks appear likely to pass.

 

Lessons from 2009
More federal aid to state and local governments is essential to slowing our nation’s economic slide. But if and when that aid does arrive, coordination across federal and state governments will be crucial to ensuring that the relief is as effective as possible. As Katherine Barrett and Richard Greene write in Route Fifty, it’s not only the federal relief itself that matters, but how it’s delivered. 

It takes coordination, teamwork, trust, and a willingness to openly confront problems to make a large stimulus program work. It takes the involvement of all the stakeholders in prioritizing effective implementation. “Is that going to happen here?” asks Werfel. “I hope so and I think there is a successful model to look to.”

 

Come work with us
LBP is accepting applications for paid, part-time interns in its Baton Rouge office for Summer 2020. This is an exciting opportunity for candidates interested in developing research, data analysis, writing and advocacy skills. Apply today!

 

Number of the Day
30.1% – Proportion of Louisiana residents who couldn’t always afford adequate food in April and May. (Source: Northwestern University Institute for Policy Research)