Yet another reason to raise taxes
As you may recall, the Legislature created another task force earlier this year to study the state’s finances in hopes of coming up with a plan to put state government on sound financial footing.
The Task Force on Structural Changes in Budget and Tax Policy was expected to make its recommendations public this week. In light of the flooding that pummeled south Louisiana earlier this month, that deadline was extended until Sept. 30.
At the heart of the problem — assuming you believe state government needs more tax revenues — is a projected $1.5-billion budget shortfall by 2018. That’s when all of those so-called “temporary” taxes the Legislature approved in two special legislative sessions this year will expire, or are supposed to expire.
Meanwhile, Gov. John Bel Edwards’ Commissioner of Administration, Jay Dardenne, says the state must still grapple with a roughly $200-million deficit left over from a prior budget. One way or another, the $200-million hole must be rectified before the end of the current fiscal year. Cuts in state spending are on the horizon, but let’s face it, a $200-million cut out of a roughly $30-billion budget is a drop in the ocean.
Like every other task force on the budget that the Legislature has created in years past, the current crop of do-gooders is comprised of accountants and economists and businessmen. Of course, politicians are in the mix, too. Of the 13 members of the task force, there’s a few who know a thing or two about finances, and then there’s the rest of them who are simply on the task force to guard the status quo.
If history tells us anything, the 2016 version of the most recent task force to study the budget will produce a report that tells us the state is too dependent on sales tax revenues and needs to raise personal income taxes in some fashion, whether that’s a spike in the state income tax rate or the elimination some of those deductions that we all love and would fight to the death to keep.
The task force’s report, due to surface in about a month, won’t breathe a word about cutting spending. Trust me. The governor and his allies in the Legislature most likely will point to the report and say it says it all about why Louisiana must pursue “fiscal reform.” Reform is fine as along as it’s revenue neutral, but in this instance the word “reform” will equate to more money for state government to spend.
Trust me. A cynic might surmise that Edwards wants to avoid a legislative session in 2018 — one year before his re-election campaign — in which a boatload of tax increases will be on the table for lawmakers to entertain. Instead, the governor will want the Legislature to tackle money matters long before the so-called “temporary” taxes expire.
And that’s why it’s more likely than not that lawmakers will make permanent at least some of the “temporary” taxes they green lighted in the special sessions earlier this year. Your guess is as good as mine which taxes are here to stay and which ones, if any, will fall off the books in two years. But the 800-lb. gorilla in the room is the flood that ravaged the greater Baton Rouge metropolitan area and much of Acadiana just a few weeks ago.
Though the federal government most likely will cover some 90 percent of the costs to clean up and rehabilitate the flooded areas, this state and the local governments that were adversely affected by the flooding will be stretched, to say the least, to come up with even the 10-percent share of the costs to rebuild.
Let’s not forget about the thousands of homeowners who lost everything in the flood. Some of them had flood insurance, but most of them didn’t. In too many instances, they’ll be left with a mountain of bills and very little to show for it.
Yes, local and state governments will see a spike in sales tax collections in the short-term as homeowners and businesses spend money to get back on their feet, but it will represent only a temporary bump in revenues. Yet, the $1.5-billion shortfall over at the Capitol will still be there, awaiting an infusion of cash to make it all right.
Without a doubt, the great flood of 2016 eventually will serve as a whipping boy to justify another round of new taxes.
Sam Hanna is a state political writer.