LA fiscal reform needs to keep striding forth

Well, it’s not a giant leap for Louisiana fiscal sanity, but it is one small step -- maybe even a stride -- which puts it ahead of anything since the 1974 Constitution came into being. Meaning we won’t see any giant leaps any time soon.

Republican Gov. Jeff Landry won a partial victory in rejiggering the state’s taxing and spending regimes more towards something comprehensible when the 2024 Third Extraordinary Session of the Louisiana Legislature adjourned, a confabulation he called. Landry campaigned on making a more economic growth-friendly structure and he delivered as best he could with the cooperation of almost all Republicans and a few Democrats here and there – needed since almost all matters required supermajorities to approve, and some awaits voter approval Mar. 29.

On the plus side, a flat individual income tax of 3 percent with standard deductions almost tripled (and more in some cases) ensured far more filers would pay no income tax at all and almost none would not see some kind of tax cut. The corporate franchise tax disappeared and some corporate filers saw a rate cut as well with a new flat corporation income tax rate of 5.5 percent and a higher deduction that makes it likely few corporate filers will pay more. Those that may might find themselves in that undesirable situation because the inventory tax break was reduced, although a mechanism to eliminate that was set in place with uncertain prospects about how well it might work. And voters will consider constitutional changes that increase spending flexibility that could redirect collected revenues to higher-priority purposes and make some provisions in the Constitution turn into statute that will make them more malleable for revenue collection and spending choices.

Landry plan roars in, now facing strangulation

While Republican Gov. Jeff Landry’s fiscal reform agenda may have come in roaring like a lion, as the Louisiana Legislature’s special session to vet it comes around the backstretch it may not be going out with whimper, but more like emitting the sounds of strangulation.

Special interests – not a new story when it comes to the history of dealing with the state’s convoluted fiscal structure that instills higher income and sales tax rates than necessary then tries to offset these with far too many carveouts exempting discrete industries who win lobbying battles – have done their best to pervert Landry’s plan of broadening tax bases in exchange for extending sales taxes to activities commonly subject to it in other states and eliminating income tax breaks. Enough Republican legislators have responded to these blandishments to deny the narrow two-thirds majorities each chamber would need to pass changes that reduce tax breaks or increase rates, while almost all Democrats have opposed them from the start since the reforms increase overall sales tax collection at the expense of income tax collections, and as income tax receipts grow faster than sales tax receipts the change would put a natural brake on the growth of government that arouses Democrats.

Snapping at the heels of legislators caused deletion of many activities that would have become taxable at sale, even as that bill continues hung up in the House. The Senate also ratcheted back severely some income tax exceptions that also detracted from revenue. In essence, that caused three major changes to the plan to make up for this, one of these indifferent in impact but the others not so good.

Career-threatening problems mount for Arceneaux

Over the past couple of months, Shreveport Republican Mayor Tom Arceneaux’s margin for reelection error has become quite a bit smaller.

Arceneaux attained office in the majority black, plurality Democrat city almost two years ago largely because he emanated an air of competence after the previous amateurish and detached rule of his predecessor Democrat Adrian Perkins and because he maneuvered his candidacy into a runoff with Democrat former state Sen. Greg Tarver who brought a controversial past and baggage of old political rivalries within the black community to a contest he would lose. With several black Democrats building power bases for 2026 that could challenge Arceneaux successfully, in order to win reelection he would have to govern well with as little drama as possible.

Not unexpectedly, when opportunity arises Democrat councilors oppose Arceneaux. Saddled with a consent decree on water and sewerage that forced higher property taxes in bond sales and higher rates (incrementally increasing over several years), Democrat councilors dragged their feet on the rate hikes and decried it all until (inevitable, given the decree) their approval, using that as a way to cast blame on Arceneaux and deflect it from themselves for the hikes.

More conflict ahead in Monroe govt, over DBE

Looks like heads needlessly will butt again in the future between Monroe independent Mayor Friday Ellis and rookie members of the Monroe City Council, this time over what proportion of contracts should go to disadvantaged business enterprises.

A DBE is a firm owned in the majority by individuals with a presumptive characteristic such as race or sex or any individual found to be socially and economically disadvantaged on a case-by-case basis. Federal law dictates for projects of a certain size eligible for federal funds in transportation they must set an approved goal, and Louisiana requires this as well for state money going to a local project.

New councilors Democrats Rodney McFarland and Verbon Muhammad at the start of their terms complained about DBE goals for work at Monroe Regional Airport. Using the standard methodology, that was computed at 8.31 percent, but they wanted it much higher. As the contract had been let, that could not be changed. This amount was higher than the aspirational goal set in Louisiana for aviation projects of 5.5 percent.

GOP's best plan at risk by greasing squeaky wheels

The same dynamic that sunk Republican former Gov. Bobby Jindal’s fiscal reforms of nearly a dozen years ago now threatens GOP Gov. Jeff Landry’s related measure.

In 2013, Jindal proposed sweeping but basically revenue neutral changes to the state’s fiscal structure that eliminated income taxes, increased business sales taxes, added services to taxation, got rid of some exemptions connected to mineral resources, and increasing the cigarette tax. In 2024, Landry has proposed an essentially revenue neutral plan that creates a low flat income tax with an increased filer deduction that eliminates income taxation for lower-income individuals, increases sales taxes, adds services to taxation, gets rid of some exemptions, and makes permanent a business utilities tax.

Jindal’s plan, which also included some attempt to rebate higher sales taxes passed through to individuals, foundered because it was complex in its attempt to make sure as few people’s taxes increased overall as possible. Only a bit less intensely does Landry’s plan try to do the same thing, and like Jindal’s has run into opposition from those most likely to suffer financially from the changes.