The Bossier City Lions Club got a fresh take on the state budget situation from Stephen Waguespack, the President and CEO of Louisiana Association of Business and Industry at its weekly meeting last Thursday.

“We’ve got to find what our normal, affordable level is, and start acting like adults and living under those terms,” Waguespack said. “So that’s the debate that’s going on in Baton Rouge right now.”

Waguespack explained that the “fiscal cliff” being discussed in Baton Rouge is a collection of temporary taxes set to expire July 1. And while much of the debate is centered on whether to renew those taxes, Waguespack said there is a larger issue at stake.

“The fiscal cliff is going to end this July,” he said. “Those taxes are going to go away. The debate is what to do with it. All you hear about or read about is whether we should raise new taxes or keep the old taxes. What’s often not discussed is, ‘What does the budget look like? How much money do we have? How much money do we need? How well are we spending it?’”

Waguespack explained that the history of these budget issues goes back to 2005 and hurricanes Katrina and Rita.

“The day before those storms hit, the state budget was $17.5 billion,” he said. “A couple of years later, our budget was around $28 billion. So in about two years time, the budget roughly doubled. That’s for two big reasons. First, there is a false economy. When you have that much tragedy, people go out and buy new bricks and drywall and carpets and televisions and all kinds of other stuff that inflates sales taxes and other revenues. That’s a lot more money for the government. The other piece is, back then, the federal government wrote a pretty big check to Louisiana. So you had a lot of recovery dollars come in, insurance dollars. So all of this money flooded into the state.”

Waguespack went on to explain that much of that additional revenue was spent on things like teachers’ raises and higher education. But when those temporary dollars disappeared, the state treaded water for a few years, he said.

“A little duct tape here, and little twine there, and a little piece of gum there,” he said. “We sort of pieced it together. The government didn’t grow, but it didn’t really shrink either. The folks at the Capital waited on a boom that isn’t coming back.”

Waguespack explained that sales taxes and income taxes are the two primary tools state lawmakers have to generate revenue. That’s why the temporary sales taxes were levied two years ago. But he said that continuing such taxes could hurt Louisiana’s business community in the long run.

“From our seat, as the group that represents employers across the state, we’re very worried that a lot of times business falls under the hammer on some of these things,” he said. “Louisiana the past couple of years has been trying to tax everywhere they can because it’s an easy way to get money to the capital. But it scares away some of the best paying jobs we have.”

Waguespack said LABI is supporting a bill calling for a constitutional convention that could change the way the state’s finances operate. State Rep. Neil Abramson, D-98th Dist., introduced a resolution calling for a constitutional convention. That bill advanced out of committee last week.

“We’re actively working with him, as I know other groups are, to try to figure out how you design the convention, what the timing is and all that,” he said. “I think this is the best chance we’ve seen in decades to pass a resolution calling for a constitutional convention. I don’t know if we’ll get there or not, but I think it’s the best chance we’ve seen in a long, long time.”

By Scott Anderson