Accelerating toward a fiscal cliff

Accelerating toward a fiscal cliff

A windfall of federal pandemic relief funds this year and a looming fiscal cliff when the state’s temporary sales tax increase expires in 2025 have put tax changes on the legislative agenda in a non-fiscal session. A legislative committee on Tuesday advanced House Bill 438 by Rep. Tony Bacala, which would gradually roll off the .45 percent portion of the sales tax early, beginning in 2023. Another bill, House Bill 1018 by Rep. Rick Edmonds, would shift all the revenue from the temporary sales tax from the state general fund – where it supports health care, higher education and other programs – into a fund for transportation projects. The temporary sales tax brings in $420 million a year. BR Proud’s Shannon Heckt reports

“Going over the cliff means cutting the state budget and cutting services citizens need. That would be a choice of this legislature. They don’t have to make that choice, they can replace that revenue with other revenue,” said Jan Moller, Executive Director of the Louisiana Budget Project. The legislature can only create new revenue streams in fiscal years, which 2022 is not. Some believe that this issue should not be dealt with until next year when it is a fiscal legislative session. The LA Budget Project has concerns there will have to be big cuts to education and other critical parts of the state to make up for the loss of $420 million.

The cost of these tax cuts would be added to the tab run up by last year’s Legislature, which agreed to divert $375 million per year from vehicle sales taxes the state collects away from the state general fund into transportation projects. The Advocate’s Tyler Bridges reports that legislators have no plans for making up the lost revenue: 

Two committee members – state Rep. Buddy Mincey, R-Denham Springs, and Rep. Matthew Willard, D-New Orleans – asked Bacala how lawmakers would make up the loss of revenue over the next two years. Bacala said he didn’t know before adding, “It’s going to be painful.” Some Republican legislators, assuming that they won’t approve the .45-cent sales tax when it expires, are resisting Edwards’ proposal to raise teacher pay by more than $1,500 per year. Raising the pay by another $500 per year would cost the state an extra $50 million.

Don’t roll back juvenile justice reforms
When the Louisiana Legislature passed the “Raise the Age” law six years ago, the state fell in line with 41 others that have recognized that children should be treated differently from adults because their brains have not fully matured. But last week a state Senate Committee took the first step to dismantling that reform. An Advocate editorial cautions that this approach will not work, because we’ve tried it before. 

Society over a period of years invested — or more properly, dumped — immense sums into building and staffing prisons across the nation. In Louisiana, as in the rest of the nation, it became clear that for the staggering costs of the lockups, prisoners were recycled into society in worse shape than they went in: prone to offend again, prone to violence. No one saw this more clearly than the faith-based groups working with offenders in the vast gulags of America, with Louisiana leading the way in imprisonment. The bipartisan criminal justice movement of the past few years has made progress. In the wake of the pandemic’s profound stresses on society, we ought to think before reversing course precipitously.

Taking away public access to TOPS data
Over the last decade, 11,000 Louisiana students who received TOPS had parents that made more than $1 million — information that has recently sparked conversations about how Louisiana can provide more opportunities for students who are not benefiting from the program. But Senate Bill 81 by Sen. Bodi White, which received unanimous approval Monday from the Senate without debate, would end the income reporting requirement for TOPS, leaving members of the public and their elected representatives in the dark about a key factor in how the state supports its students. The Louisiana Illuminator’s J.C. Canicosa reports on why this information is necessary: 

In 2020, the state spent more than $320 million on TOPS. Louisiana also offers GO Grants, a needs-based program that offers a much lower rate of assistance and is funded with roughly $40 million annually, well short of the money needed to meet demand for the assistance, said Jan Moller, executive director of the Louisiana Budget Project. “I would argue we should have this (income) information … not to demonize these TOPS recipients who rightfully earned their scholarships on merit,” Richard Davis, a policy fellow for the Louisiana Budget Project, said as he spoke in opposition to the bill last month in committee. “… Keeping this data at the front of our minds can really force us to have conversations about how we can work to create more opportunities for those low income students who are not being served by the [TOPS] scholarship program,” he said.

Renewable energy politics at the Legislature 
Wind power in the Gulf of Mexico is one of the largest untapped energy resources in the nation, and state lawmakers want the Public Service Commission to study how to start harnessing that power by 2026. The Louisiana Illuminator’s Wesley Muller explains how House Resolution 25 by Rep. Joseph Orgeron pushes to position Louisiana as a leader in offshore wind development. 

Louisiana lawmakers want state regulators to study the most cost-effective pathways to complete an offshore wind energy pilot project in the Gulf of Mexico within four years. The state House of Representatives made its request official Monday with the adoption of House Resolution 25, sponsored by Rep. Joseph Orgeron, R-Larose. According to the resolution, the House “urges and requests” the Public Service Commission to study the benefits, costs and best ways of achieving a demonstrable offshore wind pilot project by 2026.

Lawmakers also advanced legislation that would charge Louisiana drivers who own electric or hybrid vehicles an annual state road usage fee. Louisiana uses the tax revenue generated from its 20-cents-per-gallon state gasoline tax, which hasn’t been raised in more than 22 years, to pay for maintenance and improvements to existing roads and bridges. But hybrid and electric vehicles require little to no gasoline. The Daily Advertiser’s Greg Hilburn reports on Rep. Barbara Freiberg’s House Bill 1031

Freiberg’s bill would charge EV owners $110 annually and hybrid owners $60 annually through the state income tax form, which would rely on voluntary compliance. “It’s a road usage fee so those driving EVs and hybrids pay something for our roads,” Freiberg said.

Didja Know? Podcast
An estimated 15 million Americans could potentially lose their Medicaid health insurance coverage when the federal government declares an official end to the public health emergency associated with the Covid-19 pandemic. In the latest edition of the Didja Know? Podcast, LBP’s Jan Moller and Courtney Foster discuss how Louisiana can ensure that eligible Medicaid recipients don’t lose their coverage when that time comes. Click here to listen

Number of the Day
$420 million –
Annual revenue generated by Louisiana’s temporary $0.45 sales tax. House Bill 438 by Rep. Tony Bacala would end the temporary portion of the sales tax early, beginning in 2023, with no plans for how to replace the revenue (Source: