House takes tentative steps to right-size LA govt

At least House Republicans have tried to stand on their own two legs to face Democrat Gov. John Bel Edwards. Now let’s see if they actually can get upright and stay there.

Whether they can depends on what happens later today, when the entire chamber considers tax bills forwarded by the Ways and Means Committee. Rather than bottle up bills by declaring the unseemly ones involuntarily deferred, the committee allowed everything to proceed to the floor by the usual favorable passage for ones liked but also by signaling lukewarm interest in some that went through “without action” and hostility towards others passed “unfavorably.”

And that duel also will play out in the days to come with the House Appropriations Committee forwarding about $87 million more in cuts, encapsulated in state Rep. Cameron Henry’s HB 122, beyond the $190 million Edwards said they could pry from his hands. The mix and form of the tax bills and the final shape of HB 122 will determine the strength of the House GOP’s commitment to right-sizing government.

The centerpiece and most dangerous effort to kept inflated government, receiving the no action designation, is HB 62 by state Rep. Katrina Jackson, which adds on a 1 percent sales tax, without any exemptions, onto existing taxable items at sale in perpetuity. Failure to put in a clause that sunsets it no later than Dec. 31, 2016 (if not for the fact that a cutoff of June 30, 2016 would lose much potency as high-value transactions could be delayed that long, that earlier date would signal clearly the emergency nature of the item and makes for the only reason it bears consideration absent its part of an entire tax reform package) will show too many Louisiana House Republicans have abandoned any adherence to limited government principles.

It also has in its quiver an equally effective approach, Jackson’s HB 101 working its way to the floor, which simply strips off exemptions to the existing sales tax rate. But it shares the same flaw in having no definite and temporally soon end to it.

Fortunately, Ways and Means took a stand against higher income taxes by rejecting some bills to accomplish that through marginal rate increases, although those made some attempt to eliminate deductions. And it did report without action HB 75 by state Rep. Julie Stokes that would decrease rates but also wipe out deductions that would foment a small boost in income tax revenues. But it also stupidly permitted a chance for increasing the deficit by reporting without action HB 5 by state Rep. Walt Leger that would double the wasteful Earned Income Tax Credit.

The panel also rightly turned away bills that would make permanent the irrationally-conceived reductions in business tax exceptions put into place last year. Hopefully, by next year’s regular session, which permits consideration of tax measures unlike this year’s, some kind of evidence-based, coherent strategy will emerge that pares these kinds of exceptions on the basis of their utility, not by convenience in grabbing revenue.

The passel of bills that emerged – some good that will pay their own way such as hiking taxes on smokes and booze, others either there only as last resorts that will become destructive in the long term if allowed to linger or are regardless of duration – the full House will tackle today. This defines Ways and Means’ actions as tepid, culling only some of the worst of the herd.

Activities of Appropriations turned out more positively, if insufficiently vigorous. The largest cut came to elementary and secondary education, in essence taking back the $44 million bonus allotted to the Department of Education to pass through for teacher pay. This shifts the bill to local districts. A much smaller cut in the neighborhood of a couple of million dollars also would affect DOE operations, aimed at testing now modified but at least partially adhering to the Common Core States Standards Initiative of which a number of committee members in the past have expressed dislike.

Choosing this as the major reduction came as a result of having few large discretionary collections of funds available, and will rile particularly Edwards, who fought vigorously to include that money in this year’s budget. At the same time, it represents a good prod to induce efficiency into local districts’ spending, as Louisiana ranks 27^th for state and local government education spending per capita (latest actual data, 2013) among the states and District of Columbia but almost at the bottom in achievement in that policy area.

Some Democrats seemed unusually obtuse about the necessity of further spending reductions. Edwards’ point man in the House Leger, in response to the actions, said “I don't know why anyone deemed it necessary to have additional cuts before we look at revenue,” despite the fact that under the most recent estimated data (2015) of total state spending per capita Louisiana ranked 18^th despite having only the 30^th-highest per capita income.

At the same time, out of the $930 million or so state government needs to stay in the black for the remainder of FY 2016, only $287 million to date has come from cuts, representing a miniscule slightly above one percent of the entire budget. The House also has legislation unlocking statutory dedications and of reviewing contracts for savings (albeit in the unrealistically short time of one week) to find further savings.

Still, unless at least a majority of the deficit elimination comes from expenditure reduction that would constitute a failure of common sense and will. Let’s hope the House can build on its initial efforts and have the Republicans who control the Senate join them to put the bullying, scare-mongering Edwards in his place, behind the wishes of the people for right-sized government.