More money, more (self-inflicted) problems

More money, more (self-inflicted) problems

Two key questions confront state legislators as they work on the state budget: Whether to raise a cap on state expenditures (they should), which is a precondition for raising teacher pay, investing in young kids and continuing to rebuild state infrastructure; and whether to pour additional dollars into the state’s Rainy Day Fund (they should not), which would trigger automatic, across-the-board tax cuts that would lead to budget shortfalls. The debates came into clearer focus on Thursday, when the Revenue Estimating Conference recognized another $806 million in recurring revenue that’s available to spend over the next 14 months. The Advocate’s James Finn has the latest:  

The Senate and Gov. John Bel Edwards want portions of the one-time cash spent on a slate of infrastructure costs. Edwards also wants $296 million in recurring money spent on $3,000 raises for K-12 public school teachers plus a $1,500 hike for support staff. Bucking those wishes, the House recently advanced a budget package that stripped out the teacher raises, plus a number of Edwards’ other education priorities, and pitched using the extra money to pay down state pension debt. 

LBP executive director Jan Moller and state tax and budget policy analyst Paul Braun explain the best way to resolve the budget gridlock consuming the Capitol:

There is a clear and responsible path forward: The Legislature should raise the expenditure cap. That way it can use the available, recurring revenue to give all classroom teachers the $3,000 pay raise they’ve earned, restore funding for early childhood programs so that young families can continue to access high-quality care, and start chipping away at Louisiana’s long backlog of repairs and infrastructure improvements. 


Money for me, but not for thee
The spending plan the House passed last month includes $43.8 million for earmarks sought by individual legislators. While the local projects were a bipartisan affair, approximately 30% of the dollars will go to the three parishes where the lower chambers’ leaders live. The Louisiana Illuminator’s Julie O’Donoghue reports: 

Terrebonne, where [Rep. Tanner] Magee and [Rep. Jerome “Zee”] Zeringue live, would receive more pet project money — $5.8 million — than any other parish in the state under the House plan. Lafayette Parish ($3.8 million), where [Rep. Stuart] Bishop resides, and Ascension ($3.6 million), home to [Rep. Clay] Schexnayder, would have the second and third largest allocations overall, according to a Louisiana Illuminator analysis. Schexnayder also represents Livingston Parish ($3 million), which is receiving the fourth largest amount of money. … Magee and Zeringue said a lot of funding for Terrebonne is needed to deal with continued problems from Hurricane Ida.

There’s little transparency in this process, as lawmakers earmark district dollars without public debate or vetting. This year’s pork parade also comes at a time when House members have demanded less spending on teacher pay raises and early childhood education, claiming the state cannot afford it. 

Critics of the pet projects said the spending reveals what lawmakers consider the state’s priorities. The state shouldn’t be directing money to local governments, nonprofits and other programs that haven’t been vetted publicly, they say. “Some of [the pet projects] don’t look as worthy as others,” said Steven Procopio, head of the Public Affairs Research Council of Louisiana, which tracks government spending. “[Are these pet projects] more important than early childhood education funding? I haven’t seen too many that are more important.” 


Averting a debt limit crisis
America could default on its debt in less than two weeks unless lawmakers raise or suspend the nation’s borrowing limit, a move that would cause catastrophic consequences for American families and the economy. The standoff stems from congressional Republicans who are demanding spending cuts in exchange for allowing America to pay its debt obligations and The White House who feels the debt ceiling, which was raised or suspended three times during President Donald Trump’s administration, is not up for negotiation. While the two sides may be nearing a compromise, new reporting from CNN’s Melanie Zanona explains that talks have hit a snag. 

Negotiators met briefly in the Capitol on Friday before breaking up, and as of right now, there are no more meetings scheduled for the day. This setback dashes hopes that there could be a deal in principle by this weekend. “We are not there,” GOP Rep. Garret Graves, who is leading negotiations for House Republicans, said on Friday. “We decided to press pause because it’s just not productive.” Asked if there would be meetings in person over the weekend, he said, “I’m not sure right now.”

The House’s debt-ceiling demands include imposing irresponsible and ineffective new work requirements for recipients of federal food assistance and Medicaid. But evidence is clear that work requirements don’t work, and make it harder for people to find and maintain employment. 

A study in The New England Journal of Medicine found that 13 percent of Medicaid recipients there lost their health coverage — about 17,000 people — but that there was no significant change in employment. One of the reasons for this phenomenon is that it’s very difficult for the subjects of these cruel experiments to report their employment or their search for a job to the state. Many people in Arkansas didn’t know about the work requirements or didn’t understand the rules or lacked internet access, the study found. But since the goal of Republicans is cutting spending, not putting people back to work, the burdensome rules do save billions through human suffering.


Historically strong job prospects for Black workers 
The unemployment rate for Black workers fell below 5% in April for the first time since the U.S. Labor Department began measuring in 1972. While Black workers have seen previous employment gains as the economy came out of previous recessions, the gains were always temporary. But as the Wall Street Journal’s Sarah Chaney Cambon and Gwynn Guilford explain, the improved job prospects could last this time around. 

The gap between the unemployment rate for white Americans, which was 3.1%, and the higher rate for Black Americans was 1.6 percentage points in April, the narrowest on record. The gap has become smaller in each economic expansion since the 1980s. “The underlying trend is improvement—not just in this cycle, but also over time,” said Karin Kimbrough, chief economist at LinkedIn. Long-running forces are reshaping the U.S. labor market and could mean the growth of the Black workforce will endure beyond short-term ups and downs in the economy. Black workers are growing as a share of the overall U.S. workforce, making up 13.1% of the civilian labor force in April, up from 12.7% in December 2019, before the pandemic. 


Number of the Day
30% – Percentage of the $43.8 million House lawmakers set aside for pet projects that will go to the three parishes where the lower chamber’s leaders live. (Source: Louisiana Illuminator