LA EITC negative impact increased by virus

Just as Medicaid expansion exacerbated the coming fiscal crisis Louisiana will face for the next year or so, so does the presence of and 2018 increase to the state’s earned income tax credit.

With Louisiana’s unemployment claims shooting up to a third of a million this week because of the Wuhan coronavirus pandemic, which could produce an unemployment rate of 22 percent, more income tax filers than ever will find themselves in a position to claim this. Essentially, at lower earnings levels it refunds income tax liability. For many, it can act as a rebate greater than that liability, resulting in government subsidization lauded by some as a form of welfare that rewards willingness to work.

A minority of states offer this, which piggybacks onto the federal income version. Louisiana for most of the history of the credit offered it at 3.5 percent of the federal level, but as part of legislation that renewed partially the 2016 tax increases in 2018 for five more years, it also received a temporary hike, to 5 percent.

GOP vigilance needed after elections mistake

Earlier today, a pair of Louisiana Legislature committees debased the next two upcoming elections, and maybe more for decades to come, in the state for no good reason.

Last week, the same House and Governmental Affairs and Senate and Governmental Affairs Committees rightly rejected a proposal by Republican Sec. of State Kyle Ardoin, with Democrat Gov. John Bel Edwards’ blessing, that would have expanded absentee voting by mail to make almost anybody eligible to partake of it, nearly doubled the time period for early voting, waived the requirement that registration by mail voters participate in person, and other technical changes that mostly would serve to reduce the chances of large congregations at polling places.

This plan had many faults. With such open-ended justifications not to vote in person, Louisiana would have resembled closely the all-mail elections of Oregon but without added ballot security that would discourage fraud. Particularly troublesome, the waiver of statute requiring in-person voting for mail-in registrants (including over the Internet) created a huge opening for the registration of individuals (whether they existed alive) whose identities could be manipulated by unscrupulous operatives in elections for decades to come.

Crisis made worse by Medicaid expansion

With one stroke of his pen four years ago, Democrat Gov. John Bel Edwards pushed Louisiana farther down the road to a fiscal nightmare exacerbated by Medicaid.

By expanding Medicaid, Edwards committed Louisiana to spend an extra over $300 million next fiscal year on some 450,000 people, almost all of whom are working-age adults without adult children, and of whom roughly a third to a half already had health insurance mainly through employers that now taxpayers must pick up. It capped nearly two decades of exploding state growth of Medicaid as a proportion of state revenues; by 2017 Louisiana paid out 22 percent of these to Medicaid, an increase of 11.5 percentage points since 2000 that was higher by far of all the states, tying it for the fifth-highest proportion spent among them.

Then came the Wuhan coronavirus pandemic, and the decision by Edwards to close up a good portion of Louisiana’s economy by proclamations attempting to stem the spread of the virus. Almost 300,000 people make unemployment insurance claims now, meaning at a minimum the unemployment rate will rise to over 19 percent at the end of this month. A portion of those now unemployed will lose employer-sponsored health insurance.

Jobless claims another LA fiscal time bomb

It may not affect budgeting in Louisiana now, but the state’s remarkably higher unemployment claims will create a ticking time bomb that could stress the state’s fiscal health for years to come.

As a consequence of proclamations by Democrat Gov. John Bel Edwards to ward off ill effects from the Wuhan coronavirus pandemic that has shut down large swaths of Louisiana’s economy, claims for unemployment benefits have mushroomed. Through Apr. 11 from Mar. 14, claims have soared from around 16,000 to 293,000.

(Note that despite this cratering job market the state’s workforce expanded in March by some 42,000 from February. This is because to draw unemployment benefits you have to maintain that you actively seek work, which then counts you for statistical purposes in the workforce. In other words, attracted by extending the special $600 a week benefit to people who normally wouldn’t qualify for regular state unemployment insurance, out of the woodwork came these people many of whom otherwise would not have intended to work anytime in the near future but now suddenly have been handed a guaranteed basic income for the foreseeable future.)

Events further mooting Edwards clampdown

As the Wuhan coronavirus pandemic enters the backstretch in Louisiana, it’s time for Democrat Gov. John Bel Edwards to drop his stubbornness to a nuanced, balanced approach in dealing with the crisis.

One thing hasn’t changed about how the virus has struck the state is that it remains a New Orleans area problem, and to a lesser extent heading upriver to Baton Rouge. As of today, Orleans has a 64:1 infection ratio (although the good news, if you can call it that, is that all but two of New York’s downstate counties have higher ratios – lead by the almost three percent in Rockland – as do two New Jersey counties) and Jefferson 77:1. Surrounding parishes St. Tammany, St. Bernard, Plaquemines, and Lafourche are at 200:1, and heading north up the Mississippi River through St. Charles, St. John the Baptist, St. James, Iberville, Ascension, and West Baton Rouge, that’s collectively at 136:1. Stop after St. James and those nine parishes account for 63 percent of state cases but only 29 percent of state population.

One thing that has changed is that curves definitely have flattened. The seven-day rolling average of infections statewide as of today has slowed to a two percent increase and for deaths six percent. And some areas of the state have seen far lower infection and death rates, even in urban areas. Infection ratios range from 583 to 630 in Calcasieu, Lafayette, and Rapides – lower than the statewide figure (194) and also that excepting the above-listed parishes, all urban parishes, and Tangipahoa (478)  – and their mortality rates per capita are less than 100 per million, compared to the statewide ratio of 279 and the “all other” parishes number of 123.