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Temporary tax extension best for LA fiscal reform

The best alternative for Louisiana to deal with a looming budgetary shortfall lies in continuing to do the same thing.

Legislators began meeting earlier this week in the hopes of erasing a potential fiscal year 2019 spending plan deficit. Current spending levels less temporary taxes rolling off on Jun. 30 equals nearly a billion-dollar hole.

A number of proposals have surfaced to address this, guided by the parameters of the special session call issued by Democrat Gov. John Bel Edwards. But the Republican-controlled Legislature, especially the House of Representatives, wisely seems unlikely to approve his first choice, increases on marginal income tax rates geared towards higher individual earners and corporations.


Speech signals Edwards knows his weakness

Democrat Gov. John Bel Edwards’ address at the start of the Louisiana Legislature’s special session yesterday confirmed one thing: he’s in trouble, he knows it, and now so do we.

Edwards delivered a speech imploring that he and the legislative branch’s Republican leadership – although really pitched at the House of Representatives – to work together, yet was one relentlessly partisan and tone-deaf to real world data and experience. It strung together numerous talking points that don’t stand up to the glare of reality. Such as:

We addressed that [2016] shortfall by taking a balanced approach of revenue, strategic spending cuts, significant savings, and economic growth …. [S]ome want to argue that these weren’t real [spending] cuts.


Renegade Republicans threaten LA govt inflation

It’s not so much whether Louisiana’s House of Representative’s Republican delegation can unite to address immediate fiscal concerns, but whether some faction of it will defect to hand Louisianans a big tax bill for the foreseeable future.

As lawmakers convene for a special session that could last almost two weeks, five groups have coalesced over dealing with an impending deficit for next fiscal year’s budget. The expiration of temporary taxes, most prominently a one cent levy on sales, at the end of this fiscal year means current spending patterns exceed expected existing revenues by almost $1 billion.

A small group of Republicans don’t want to see any restoration of temporary taxes, much less new permanent ones, and hope a combination of efficiencies and user fees, plus revenue boosts from federal tax changes, make up the difference. Their opposite number of Democrats, also few, want to see only permanent income tax increases focused on corporations and on those individuals above lower-income status.


Use special session to break from old tax model

That Gov. John Bel Edwards endorsed sham “tax reform” in his recent special session call becomes all the more apparent when another example surfaced of Louisiana’s subpar fiscal policy.

In the days prior to the session’s launch next week, the state announced Gameloft would close its New Orleans office, reneging on a deal to bring more jobs to the state. This meant it gave away nearly a million dollars over the past seven years to the gaming firm under the Digital Interactive Media and Software Tax Credit, or almost $25,000 per job created. The total amount actually comes close to $2 million, but the state plans on clawing back over half.

Given its relatively high corporate tax rate, long ago the state adopted a strategy of attracting industry by offsetting this with breaks like these. In fiscal year 2016, these reduced corporate income tax liabilities of around $307 million, compared to total potential corporate income tax liabilities of almost $1.55 billion and actual payments of $145 million. The credit in question handed out around $9 million in that year.


Done right, Medicaid work rules will save much

Although Louisiana imposing work-related requirements for able-bodied adults to receive Medicaid won’t save a lot of money, neither would it have trivial positive pecuniary benefits.

With the state kicking around ideas on how to accomplish this, the devil is in the details. Since federal law doesn’t let the federal government place such a stricture, states must come up with their own regulations consistent with the law’s demand that these improve the health and well-being of participants.

Thus, whatever states come up with, they must show that work conveys physical or mental health benefits, which likely would manifest only among those healthy enough to work and who do not have to care for an infant or one in the offing, and that potential loss of Medicaid because of inability to meet the requirement does not cause the reverse of the law’s imperative.


Democrats ready to sink again good recall bill

Once again, Republican state Rep. Paul Hollis has introduced a sensible bill to put into effect a realistic recall provision in the Louisiana Constitution. Once again, lawmakers, particularly in the Senate, will fight to prevent that from happening.

HB 54 by Hollis would leave unchanged the present 40 percent standard of registered voters for jurisdictions with fewer than 1,000 to trigger a recall election. The remainder of his bill, which tracks his effort HB 272 from last year, would keep 33 and a third percent – the current standard for all populations 1,000 and above – for the 1,000 to 24,999 range, drop it to 25 percent for 25,000 to 99,999, and lower it to 20 percent for 100,000 and above.

Hollis points to the inability to recall past corrupt officials, particularly one in his neck of the woods, as a reason to reduce the numbers in this fashion. Only three recalls in state history (when permitted under a Constitution) have succeeded in gaining ballot placement in jurisdictions over 10,000. Further, no state even approaches Louisiana in terms of the large number of signatures needed; most have far lower standards (although 22 states don’t have such a provision).


Rather than clarify, sweeps decision confuses

Confusion is as confusion does, which sums up perfectly an incomprehensible ruling on an important question in Louisiana governance.

Yesterday, state District Judge Don Johnson issued a ruling declaring a case of a fund sweep unconstitutional. In this instance, the Legislature lifted from Public Service Commission revenues collected by fees on regulated carriers, appropriating some of that amount to pay for other operations of government.

Interestingly, Johnson last week appeared to have delivered two versions, taking different sides. For whatever reason, it all got sorted out yesterday in favor of a dramatic substitution of judicial opinion for the actual wording of the Constitution.