Budget threats loom as session winds down

Budget threats loom as session winds down

Legislators have wrapped up most of their work, but still have a critical decision to make before they adjourn on Thursday: whether Louisiana should redirect dollars that currently support health care, education and social services to pay for road construction. The latest effort comes from Rep. Mark Wright, whose House Bill 40 would require all the money from the state gasoline tax to go for road projects instead of paying employee salaries in the Department of Transportation and Development. As the Advocate’s Will Sentell reports, that would require the salaries to be paid from the general fund, which means fewer resources for other state services: 

Similar proposals in the past have sparked controversy because of concerns on how DOTD employee costs would be paid for without damaging education, health care and other state services. Eric Kalivoda, deputy secretary for DOTD, said Gov. John Bel Edwards does not want to leave a “structural deficit” when he leaves office in 2024 similar to the major shortfall he inherited in 2016.

Wright’s bill comes as the Senate prepares to debate a separate measure that would permanently extend Louisiana’s “temporary” 0.45% sales tax, which is due to expire in 2025, and use that money to chip away at the state’s $14 billion backlog of transportation needs. An Advocate editorial notes that this is a bad idea.

Rather than rely upon those who drive the most, a permanently higher sales tax would disproportionately hit lower-income Louisianans. It’s not what politicians promised three years ago, when they fought ferociously over how many fractions of a cent they’d charge. But then they made it clear that the sales tax hike was meant to buy time until a better plan could be hammered out. Instead, this proposal would simply delete the additional tax’s sunset date of June 30, 2025.

Speeding toward Sine Die
The $37 billion state budget sits on Gov. John Bel Edwards’ desk, and the major elements of the GOP’s tax overhaul package appear headed for final passage this week. But plenty of good ideas were discarded along the way. The AP’s Melinda Deslatte reports that lawmakers rejected numerous reform measures aimed at lifting up low-income and vulnerable Louisianans. 

Among the ideas that have been shelved or rejected were proposals to increase Louisiana’s minimum wage, get rid of the state’s special interest tax breaks, decriminalize prostitution, increase unemployment payments to jobless workers, ban the use of corporal punishment at schools and overhaul the public defender system. … The state won’t offer a path to release for an estimated 1,500 prisoners convicted of felonies by juries that were not unanimous.

Power is shifting in the labor market
The complaints from corporations and their lobbyists about a “worker shortage” underscores an important change in America’s labor market: power shifting toward workers. The New York Times’ Neil Irwin reports that the trend started before the pandemic, and has picked up momentum now that the economy is reopening. 

People are demanding more money to take a new job. The “reservation wage,” as economists call the minimum compensation workers would require, was 19 percent higher for those without a college degree in March than in November 2019, a jump of nearly $10,000 a year, according to a survey by the Federal Reserve Bank of New York. … That follows decades in which union power declined, unemployment was frequently high and employers made an art out of shifting work toward contract and gig arrangements that favored their interests over those of their employees. It would take years of change to undo those cumulative effects.

Heidi Shierholz of the Economic Policy Institute writes that fears of a labor shortage are overblown, and that there are plenty of workers available to take jobs that pay a decent wage:

While we haven’t seen widespread labor shortages, there is one sector where wage growth points to the possibility of an isolated one: leisure and hospitality. For typical workers in this sector, which includes restaurants, bars, hotels and recreation, the current weekly wage translates into annual earnings of $20,714. With that figure so low, there is little concern recent pay increases will generate broader pressure on wages. In addition, wages in this sector plummeted in the recession and have largely returned to where they’d be if there were no pandemic.

Expanding the child tax credit
The expansion of the federal Child Tax Credit, included in the American Rescue Plan Act, is an historic effort to reduce child poverty by steering cash payments to families with very low incomes, or no income at all. Now comes the truly difficult part: making sure that every eligible family actually receives the benefits. Chabeli Carrazana reports for The 19th on the complex logistical problem facing the federal government: 

(M)any (intended recipients) don’t know the expansion happened. Even if they do, information about what they have to do to get it is still scarce. Many lack access to a computer or don’t have the digital literacy to fill out the form and provide the necessary paperwork. Making a mistake is costly — it could bar them from getting the credit for two or 10 years, depending on whether the mistake was careless or intentional.  The work of finding those people, educating them and helping them through the process is going to fall on hundreds of community organizations who are taking on the task — sometimes as volunteers. And the timeline to do it is short: The first monthly checks under the expanded credit will begin rolling out on July 15

Number of the Day
31% – Percentage of wardens in the state Department of Public Safety and Corrections who are Black. A committee of retired agency employees says institutional and systemic racism is to blame for Black people being underrepresented in the agency’s top ranks (Source: The Advocate)