Spending debates heat up at Capitol

Spending debates heat up at Capitol

Conservatives in the House of Representatives are zeroing in on Louisiana’s public retirement systems as they weigh how to deal with the temporary 0.45% sales tax that expires in 2025 and how to distribute more than $1 billion in “excess” unspent revenue in the current budget year. Rep. Chris Turner’s House Bill 170, which cleared the House Appropriations Committee on Wednesday, would divert the sales-tax revenue to pay down debt in the Teachers Retirement System, while another proposal would reroute excess dollars to pay off debt from state employee pensions. The Advocate’s James Finn spoke to LBP’s Jan Moller about why this is a bad idea. 

Diverting revenue from the .45% sales tax away from state accounts “would be a huge mistake,” said Jan Moller, executive director for the Louisiana Budget Project. Moller said that revenue funds key services for youth and families. “The Legislature should be looking at ways to extend that revenue or to replace it with other sources,” said Moller. He added that since the state is obligated to pay off the pension debt, the debt has no impact on workers actually getting pension payments.

Turner would like to eliminate $234.5 million allocated for public school teacher and higher education faculty pay raises included in Gov. John Bel Edwards’ 2023-24 executive budget, reasoning that his bill would free up extra money for the hikes. But The Louisiana Illuminator’s Julie O’Donoghue writes that the math doesn’t add up:

Even with those cuts, Turner’s bill would blow an additional $210 million hole into the governor’s budget proposal. Turner and (House Appropriations Committee Chairman Jerome) Zeringue declined to say what other cuts to Edwards’ plan the House might make to close that gap. 


Tax incentives for me, but not for thee
A day after taking no action on a slew of tax credits, including one aimed at helping low-income families with children, the House Ways and Means Committee advanced a costly tax cut for oil companies on Wednesday. Rep. Phillip DeVillier’s House Bill 172 would reduce the states severance tax on oil from 12.5% to 8.5% in half-percent increments until fiscal year 2032. As the Louisiana Illuminator’s Wesley Muller explains, committee members advanced HB 172 despite the fact that it would cost the state $90 million over the next five years – and significantly more in the following years – and the bill’s author not being able to support any of his claims before the committee. 

[LSU Center for Energy Studies researcher Greg] Upton also testified before the committee Wednesday and said two separate studies show Louisiana already has a competitive severance tax structure and is in the middle of the pack, ranking about the same as Texas for oil and gas. When Rep. Matthew Willard, D-New Orleans, asked if DeVillier’s bill would spur new production and create jobs, Upton said it would likely have just a marginal effect. The state will also have less money to spend, he said. “So, in a theoretical sense, reducing the tax rate will increase any activity. But in terms of how much of that is a separate question,” Upton said. “… The amount of new activity is not going to be large enough to make the fiscal note zero, for instance.


Black educators faced disproportionate pandemic challenges 
While most teachers experienced an increased workload and other obstacles as they transitioned to virtual learning during the pandemic, Black educators in New Orleans reported having more personal responsibilities compared to their white counterparts, according to a 2020 report from the New Orleans Trauma-Informed Schools Learning Collaborative. Verite’s Nigell Moses explains the overwhelming challenges Black teachers faced during the pandemic. 

They were “1.7 to 2.4 times more likely to have to take care of people in the home or take responsibility for teaching their own children than white teachers.” The collaborative’s report also found that Black teachers “were 2.7 times more likely than white teachers to have a family member or friend become ill from the disease,” and Black teachers were more than “4 times more likely to receive medical treatment for COVID-19 and to experience the death of a family member or close friend from COVID-19.”


GOP releases debt-ceiling demands
U.S. House Speaker Kevin McCarthy on Wednesday released the GOP’s much-anticipated conditions for lifting the nation’s debt ceiling. House Republicans’ proposal, which could come up for a vote as early as next week, would raise the nation’s borrowing limit for one year in exchange for massive spending cuts, new work requirements for recipients of federal food assistance and Medicaid, the end of student debt relief and more. The Washington Post’s Tony Romm reports: 

The GOP proposal would slash the federal budget back to levels adopted in the 2022 fiscal year, which could amount to $130 billion in spending cuts for 2024. The spending reductions probably would target federal health care, science, education, climate, energy, labor and research programs, while leaving untouched the Pentagon and services for veterans. But the bill does not specify the exact agencies or programs on the chopping block, leaving the task to lawmakers on congressional appropriations committees who craft spending bills that keep the government running and stave off a shutdown. Republicans also proposed to cap any growth in federal agencies’ future budgets at 1 percent, further hoping to save the government money.

Footnote: In the unlikely event that McCarthy can craft consensus among the warring GOP factions in his razor-thin House majority, the plan will not pass the Senate. 


Number of the Day
$90 million – Amount of revenue the state would lose over the next five years under a bill to cut taxes for oil drillers. An industry expert said it would have a marginal effect on job creation.  (Source: Legislative Fiscal Office)