We haven’t bothered looking at how it’s been written up by the newspapers, largely because we can pretty much guarantee they’ll get this wrong, but what happened today in the Louisiana House Ways and Means Committee signified a real problem for Gov. John Bel Edwards.
Understand that Edwards ran for governor in 2015 on the basis of a lie – namely that despite the fact he had a record as a state legislator of being one of the most hard-core leftists in the House of Representatives he was nevertheless an anti-tax centrist for whom conservatives could comfortably vote and after all, hookers. No sooner did Edwards take office, because, hookers, he immediately demanded massive tax increases.
The problem he had was that he didn’t carry any coattails, and because of that he was saddled with a Republican majority legislature. Louisiana is a red state, after all.
Edwards’ obvious path was to govern as the centrist he campaigned as, and to practice some fiscal responsibility. But he didn’t want to do that, and so he’s been screaming for tax increases since he took office. And it hasn’t been a total failure for him – he did get a billion dollars in tax increases, except those came through a temporary addition of one cent to the state sales tax, which is the one kind of tax Edwards’ base of poor people really doesn’t want.
Ever since he got that tax increase Edwards has been trying to replace it with something that would more disproportionately hit business and upper-income individuals – in other words, the people who didn’t vote for him. His problem is that he doesn’t have the votes in the legislature for that and can’t pass it, and that’s a truth he doesn’t want to believe or tell to his base.
The most significant manifestation of that would be the Legislative Black Caucus, which is a group of state legislators with voting records that look a lot like Edwards’ did when he was in the House. Edwards has been shining those guys on ever since he got elected, and swearing to them that he was going to force the Republicans to replace the sales tax revenue with something else – and he’s run around with all kinds of cockamamie proposals to hit business instead of the LBC’s constituents, who believe they’re the ones who get hit with the bulk of the sales tax burden. That’s not true, obviously – rich people spend more money and pay more sales tax, but it’s less as a percentage of their income than for poor people, and given the entitlement mentality of the Democrat Party and particularly the people on the left side of it, any taxes which don’t exclusively soak the rich are “regressive.”
So the LBC is getting awfully tired of Edwards’ representations to them, and in advance of the special session currently taking place at the Capitol they began chafing at him about his promises. Edwards has told them he’s getting rid of those sales tax increases passed in 2016 and replacing the revenue with something else, which would make them happy except he’s also been telling the Republicans, whose votes he can’t do anything without having at least some of, that he’ll play ball with them on sales taxes.
And the test case came today in Ways and Means. Rep. Stephen Dwight (R-Lake Charles) brought a bill which included a replacement of a quarter-penny of the sales tax, about $220 million in revenue, but a dedication of that money to the TOPS program. That bill has some Republican support; it’s more or less the only one of the tax bills which has any Republican support at all, and the reason is that if the bill creates $220 million worth of dedicated funds to TOPS that’s the end of the governor threatening to de-fund TOPS every time there’s a shortfall he can’t overcome with a tax increase.
Edwards has said he’s against dedicating money, and in theory his position is correct. He doesn’t get any credit for that, because in practice his constant holding of TOPS for ransom as though one of the most popular expenditures in the state budget is somehow not a valid priority is the reason why anybody would want to dedicate money to TOPS in the first place. But he hasn’t come out and said he won’t accept that quarter-penny sales tax renewal.
The LBC doesn’t really care about dedicating money to TOPS. What they care about is that this is a replacement of the sales tax Edwards said was going away. And they know Edwards has been flirting with the Republicans on sales taxes, and this week they’ve erupted over it. There was a meeting earlier this week between the governor and the LBC where they let him have it, along the lines of he’s been lying to them and they can’t trust him anymore, and not to count on their help for anything outside of their own agenda in the future.
And Rep. Ted James (D-Baton Rouge), a member of Ways and Means, surprised the committee by coming out against Dwight’s bill, leading a revolt against it. The upshot was that the committee didn’t move any tax bills forward. It will meet again either Friday or Monday, and maybe something will get out – but as of right now it looks like none of these tax bills with any significant fiscal note to them will get anywhere.
In other words as of right now it looks an awful lot like this is a special session in which absolutely nothing of value will happen. It’s a complete $60,000-a-day waste of time and money.
All of which was entirely predictable, and the reason people kept telling Edwards not to bother calling the special session.
But what about the fiscal cliff? you ask.
The thing is, we don’t know how much of a deficit there actually is. The current estimate of the positive effect of federal tax reform on Louisiana’s state income tax collections is $300 million, and at some point the state has to recognize that revenue. Also, oil is forecasted at $51 per barrel in the current revenue projections; it’s traded considerably above that all year (West Texas Intermediate crude closed at $61.90 Wednesday). The rule is for every dollar of oil prices it’s $12 million to the state’s revenues, so if the current price were to hold up all year it’s around $130 million more in state revenue.
So that’s $430 million worth of revenue to fill the $994 billion hole, leaving about half a billion in cuts necessary. Those could have been made in the regular session and probably will, and if there is a need for revenue in June maybe some small replacement of sales tax money could be thrown in to balance the budget in a special session immediately after the regular session ends.
Instead, Edwards has marched the legislature into his Waterloo, it appears, and it’s only a matter of time before voters start realizing the comic deficiency of his leadership has put the state where it is.
Our guess is that’s not an analysis the governor’s pals at the newspapers will admit to. Which is one reason we’re not even going to bother reading their take on what happened in Ways and Means today.