Between The Lines: 06.03.16

12.3.16

9.3.16

Edwards throws fit at opportunity to right-size govt

More good news than bad came out of the 2016 First Extraordinary Session of the Louisiana Legislature. It didn’t advance much the cause of right-sizing state government but neither did it set up the possibility for defeat, either – an evaluation validated in reverse barometer fashion by the state’s foremost advocate of big government.

The end product raised some business taxes, some permanently so, most of which will get passed along to consumers, as well as hiked the state sales taxes a penny and escalated in minor fashion other excise taxes. It featured some modest cuts to government spending, although admittedly perhaps reducing as much as possible given the short remainder of the fiscal year. More notable for what it did not do, it rejected overtures to double the Earned Income Tax Credit and to create more progressive individual taxation, even as it left the door open for that by putting forth a constitutional amendment that could wipe out deductibility of individual income tax credits for federal taxes paid.

Naturally, that result did not sit well with Democrat Gov. John Bel Edwards, who wailed about an estimated $800 million shortfall from his preferred spending level for next fiscal year, called those legislators who did not agree with his resistance to right-sizing government derelict and not working together for the good of the state, and lied about the nature of the recurring revenue generated being ineligible for use for that purpose and also about that future cuts would have to go mostly to higher education and health care. He errantly and audaciously alleged he had intended for the session to undertake structural reform, when he really meant that agenda only entailed increasing taxes to redistribute more wealth.

Gatti, Milkovich act contrary to their party labels

Never before elected to office despite past efforts, they ran against experienced legislators and those House members’ votes for tax increases in 2015 to win Senate seats narrowly in northwest Louisiana. Yet early in their legislative careers, their paths diverged in ways belying their different partisanships.

Democrats received a small amount of cheer from their state Sen. John Milkovich having taken the long-time GOP seat in District 38. Previous runs for office had established him as a social conservative and pronouncements about reining in profligate spending in state government along with a Caddo parish base (his runoff GOP opponent coming from Desoto Parish) gave him enough support for the win. In District 36, Republican state Sen. Ryan Gatti won his contest by relentless criticism of his Republican runoff opponent’s voting record on taxes, alleging he was the “true conservative” in the contest.

However, delving deeper into Gatti’s campaign rhetoric and associations revealed him as somewhat of a Trojan Horse. He criticized state education reforms built upon accountability and school choice, a major conservative policy victory of the past few years. Further, he aided the victorious campaign of his Democrat former classmate and now Gov. John Bel Edwards, leading to fears that he could become a reliable vote for the agenda of one of the most liberal members of the House of Representatives over the previous eight years.

8.3.16

Sales tax increase only fair solution to LA deficit

White knuckle time has come to Louisiana’s policy-makers, but that should not obscure the fact that, given the inevitability of tax hikes, only the sales tax needs increasing.

Today the Legislature will take up again the budget-balancing issue. While the long term looms, what to do to solve the current year deficit remains unknown and most in need of urgent resolution. As the sun set yesterday, legislative rules prevented any more introductions of legislation on the tax side, so any moves that deal with taxation must take place within the confines of any legislation already passed by a chamber, with all matters settled by 6 PM Wednesday.

At that time, given the range of tax instruments already dealt with by at least one chamber, a gap of well over $100 million remained. Since appetites for further spending cuts seem lost, the question has boiled down to whether sales tax adjustments should take up the entire slack, or if some combination of income tax rate, deduction, and credit changes and sales tax exemptions on business also should enter the mix.

7.3.16

LA GOP voters may signal end to Trump chances

The only surprise emanating from Louisiana’s presidential preference primaries last weekend was that financier/celebrity Donald Trump did not do better among the Republican electorate, leading to the possibility Louisianans’ vote choices may play a pivotal role in the GOP nomination contest.

Trump finished with around 41 percent of the vote, only three points better than Sen. Ted Cruz and the remainder split among many others. While the closeness of the contest showed the limitations of polling – these inform only about a snapshot in time, and the electoral environment in the state appeared to change dramatically in a the few days between data collection and election day itself – it also showed some erosion of Trump’s support. The next question becomes whether this replicates and deepens across the primary landscape.

If anyplace, Louisiana is tailor-made for a candidacy like Trump’s. He is the first populist Republican to campaign seriously in the state since, well, Trump endorsee (but not “everything” about him) former state Rep. David Duke. Much mythology and distortion has come about concerning Duke’s rise to prominence, complicating a rather simple phenomenon: Duke became the first to turn the populism in the state’s political culture that always articulated big government as a friend of the people into their enemy. Populism endorses a Manichean view of the world, ratifying the notion of irreconcilable divisions existing within society that only can be solved by levelling the playing field through government intervention (liberalism; government must promote the alleged structurally disadvantaged groups, made so by societal conditions, by rigging outcomes to favor them) or by failure of government intervention (conservatism; government creates the uneven field through special interests using it to advantage themselves).