In the first of what is sure to be a long train of editorials in Louisiana’s newspapers drying over the “crippling” of Louisiana’s public fisc, the Baton Rouge Advocate had a piece over the weekend lamenting the “original sin” of repealing the Stelly Plan by Gov. Bobby Jindal and the “reckless” state legislature in place in 2008…
Their repeal of the Stelly income tax hikes devastated the state’s tax base. The timing was horrible, as the recession hurt the state’s economy immediately after the Legislature went home.
Since then, the state budget has been a mess, even as the state’s economy has improved: The Original Sin took away huge portions of the state’s income tax base, and revenues have never really recovered. Tragic cuts to higher education, vital to the state’s future growth, have followed from the Original Sin.
The Legislature’s chief economist, Greg Albrecht, noted the problem last month in a talk to the Press Club of Baton Rouge. Lawmakers ask where the money is, as Jindal goes around the state cutting ribbons on new businesses. The answer is that the state’s tax structure was cut at its base, basically a billion dollars every year from general fund revenues.
You’re going to see more and more of this as the legislative session approaches. The media wants the state budget closer to $30 billion than $24 billion, and they want you to pay for it.
Of course, the Stelly Plan was amazingly good at running Louisiana’s productive classes out of the state and helping to boost Texas’ economy. Nobody in Louisiana’s media seems to understand that Louisiana’s tax code as it already is isn’t competitive with Texas, and that making that situation worse is going to have real consequences.
Stelly was repealed because of a massive public groundswell demanding it. Stelly was passed by 51 percent of the vote because it was sold as a tax swap, not a billion-dollar fleecing of Louisiana’s middle and upper-middle class.
And yes, Louisiana’s budget is in a major hole because the price of oil has taken a nose dive. And yes, they problem has been made far worse because idiot legislators and an uninformed public continue to pass legislation dedicating funds to specific pet causes when what Jindal and the legislature desperately need is maximum freedom to allocate scarce resources.
And because of those poor circumstances you’re going to see healthcare and higher education get slaughtered in midyear budget cuts. You’ll especially hear the screaming from LSU, because there is no political will to do things like closing SUNO, Grambling and LSU-Alexandria when there is neither a public-policy need nor a demonstrated consumer demand for them. Louisiana can’t sustain as many four-year public colleges as it has, and it’s long past time that someone begin publicly recognizing that fact and advocating something be done about it so that the ones it needs can be properly allocated the resources necessary to sustain them at levels competitive with their peers in other states.
Louisiana needs a state government which its tax base can sustain. Stelly was an exercise in sucking the blood out of Louisiana’s private sector and running its tax base to Texas. It was killing the goose that laid the golden eggs. Louisiana needs a much more aggressive program of downsizing state government, so as to have something we can actually pay for in both good and bad years.