John Bel Edwards’s Tax Increases Didn’t Raise Enough Money So More Cuts Are Coming

This was entirely predictable.


Louisiana’s midyear budget deficit is estimated to be around $313 million, larger than originally expected and likely to produce more budget cuts than originally thought to already-stretched state services such as higher education and health care.

Louisiana budget chief Jay Dardenne is expected to formally announce the deficit estimate Friday (Oct. 28) at a legislative budget meeting. For several months, Dardenne and Gov. John Bel Edwards have been warning of a deficit of around $200 million to $300 million, though they have never used a figure as high as $313 million.

Why is the deficit bigger than expected? The tax hikes proposed by JBE and approved by the legislature haven’t generated enough revenue.

The deficit is actually the result of Louisiana falling short in revenue for its last budget cycle, which ended on June 30. And that $313 million hole exists, in spite of the fact that Edwards and the Legislature passed $300 million in new taxes and other revenue-generating bills during that budget cycle already.

Dardenne said the shortfall is mainly attributed to low corporate tax collections as well as lower-than-expected sales tax revenue. Of the $300 million in new taxes Edwards and the Legislature approved to shore up the budget last year, around $285 million of it was expected to come from sales tax increases and changes. The sales tax revenue, however, fell short of its target.

If sales tax revenue continues to be lower than expected, that could compound the financial problem. The governor and the Legislature largely plugged a giant hole in the current budget cycle by raising the sales tax to the highest average rate in the country. Sales tax changes were expected to produce $1 billion for the state in the current financial cycle.

Julia O’ Donoghue goes on try and blame this on Republicans who didn’t want to raise taxes further. The problem with that is none of these tax hikes on businesses and individuals have generated the expected amount of revenue.

The reason why is simple, you tax something if you want less of it. The state’s economy is suffering and perhaps the state should work on fixing it instead of sucking it dry.

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