A cynic might conclude after conducting a little research into the state of the state’s finances that all of the ballyhoo about raising taxes in Louisiana by as much as $2 billion represents nothing but a money grab to expand the social welfare state.
Yes, you could arrive at that conclusion in light of the contradictions on the so-called budget catastrophe that were ginned up by Gov. John Bel Edwards’ Transition Committee on Financial Matters as well as the sky-is-falling picture incoming Commissioner of Administration Jay Dardenne painted just days before Edwards took the oath of office to succeed Gov. Bobby Jindal.
Meanwhile, there’s a tub load of money — some $1.34 billion — that the state treasury will realize in the coming year that no one — I repeat no one — is talking about. Why?
First, let’s take a peek at the budget figures Edwards’ transition committee produced to justify asking the Legislature to entertain a host of new taxes, including raising state income tax rates, taking away the deduction on our state income tax filings we currently take for the federal income taxes we pay, an oil and gas processing tax and the list goes on and on. About as long as your leg.
According to the Transition Committee on Financial Matters, the state faces a current fiscal year deficit of some $227 million to as high as $500 million. That would be a deficit stemming from the budget lawmakers approved in the 2015 regular session, commonly known as Jindal’s last budget as governor. The transition committee also said the state faces a minimum of a $1-billion deficit heading into the 2016-2017 fiscal year. The deficit could be as high as $1.5 billion, according to the transition committee.
Remember, the 2016-2017 fiscal year begins July 1. Lawmakers will piece together that budget during the regular session in the spring.
The budget numbers Dardenne rolled out during a news conference earlier this month differed from the transition committee’s figures.
According to Dardenne, who ran fourth in last fall’s governor’s race and eventually endorsed Edwards in the run-off, the state faces a $750-million deficit in the current fiscal year as well as a $1.9-billion deficit heading into the 2016-2017 fiscal year. That’s assuming the Legislature approves a standstill budget in the spring, meaning the state would spend just as much money in the new fiscal year as it spent in the previous fiscal year. No rhyme or reason was given for why Dardenne’s take on the budgets contradicted the transition committee’s figures.
Now let’s turn our attention to that pot of money — some $1.34 billion — the Edwards administration isn’t talking about.
It’s quite possible you are one of the lucky souls who received a notice in the mail from the state Office of Motor Vehicles (OMV), notifying you that you owe the state some money for lapses in car insurance that every Louisianian is required to carry in order to own and operate an automobile. The fines, which date for years, also are being collected for failing to turn in license plates when one possibly transferred ownership of an automobile to another individual or simply quit using the automobile for one reason or another. You just parked it, cancelled the insurance but forgot to notify the state. That’s a no-no. It’ll get you fined, too.
It seems OMV’s program to extract cash from the citizenry over those pesky lapses in automobile insurance and license plate slip-ups has been so successful that the state treasury expects to collect some $400 million from it.
You might recall the crisis lawmakers faced last year when trying to cobble together a balanced budget for 2015-2016 fiscal year. Perhaps you remember the conniption fit the Louisiana Association of Business & Industry pitched in response to the Legislature tinkering with a host of tax credits and rebates the business community in Louisiana has been granted for years.
It seems scores of businesses applied for those credits and rebates before they were officially declared suspended, meaning the state was on the hook to honor them for one more year. In other words, that gravy train — or however you care to describe it — will come to an end to some degree at the end of the current fiscal year.
To surmise, the suspension of those credits and rebates, including the sales tax exemption on energy bills paid by businesses, will drum up some $940 million for lawmakers to spend in the fiscal year beginning July 1.
That, my friends, is how we arrive at the $1.34-billion tub of money for the Legislature to spend, which no one is talking about, though it’s within reason to suggest few lawmakers actually know about it.
So it would behoove the Legislature, particularly those Republicans in the House of Representatives who are fresh off electing a Republican Speaker of the House, to start asking questions. Or be prepared to get blamed for raising a boatload of new taxes that might not necessarily be needed.
To be fair, though, the state’s financial picture will continue to erode as long as the price of oil continues its decline. Like it or not, Louisiana isn’t as dependent on severance taxes as it was the last time the oil industry collapsed — mid 1980s — but severance taxes aren’t the only taxes the state, as well as local governments, collects thanks to oil and gas. Let’s not forget about state income taxes paid by oil field workers, who are being laid off at a fast clip these days. Let’s also not forget about sales taxes state and local governments collect from activity in the oil patch.
All of it matters.
Still, there’s $1.34 billion sitting on the table in Baton Rouge, and it needs to be accounted for before lawmakers levy another burden on the backs of the people and the business community.
Sam Hanna is a state political writer.