ERSPAMER: There Is No Excuse For Not Cutting State Spending

Right now Louisiana state lawmakers are meeting in Baton Rouge – and they’re talking about how and how much to tax you in order to pass a balanced budget. Gov. John Bel Edwards called the legislature into a special session to discuss tax and spending measures in an attempt to avoid a so-called “fiscal cliff” in the state budget.

A balanced state budget must pass by the end of June. So why the rush? The truth is, calling this special session – amid so much uncertainty and lack of consensus – was both unnecessary and unwise.

For example, we’re still waiting to understand how major reform proposals, such as several different efforts to modify the Governor’s decision to expand Medicaid to 450,000 able-bodied adults, will affect the state budget. We also are uncertain about how much revenue the state will take in, though an additional piece of that puzzle filled in this week when the state’s top economist said federal tax reform will generate $302 million, higher than initial estimates. More data will be released later this spring that will add much-needed information on projected state revenues to the debate.

The Governor and his allies in the legislature have often used the word “compromise” as a code word meant to intimidate, threaten, and criticize anyone who doesn’t want to raise taxes yet again in the context of an already-struggling Louisiana economy. The only “compromise” that seems to be on the table is which taxes should be raised and by how much.

So far, we’ve seen several tax proposals introduced, though the Governor made no specific proposals in his speech to open the special session. Among the proposals on the table:

  • Adding a quarter-penny increase in the state sales tax, to replace the expiring, “temporary” one-penny (or 25%) increase instituted in 2016,
  • Reducing “excess itemized deductions,” which would scale back what individuals can deduct from their state tax burden, thereby raising taxes,
  • Compressing income tax brackets so that higher rates of taxes are triggered at lower levels of income,
  • “Cleaning” portions of the existing state sales tax to reduce the number of deductions and exclusions,
  • Expanding the state sales tax to a variety of currently un-taxed services.

Raising taxes is the wrong approach for the people of Louisiana. Working families across Louisiana are tightening their belts, and the government should, too.

Before lawmakers even talk about asking taxpayers for more money (again), they should do all they can to tighten the state’s belt, implement much-needed spending reforms and transparency measures, take a hard look at programs that have grown too large, too quickly, and, yes, make some hard choices about how much government taxpayers want and are willing to pay for.

A number of reform and savings proposals should be considered in the short term:

  • Medicaid reform – in several areas of the massive program – would yield meaningful savings and provide a much better service. While chunks of the savings wouldn’t be realized until later, these reforms are still important and will yield some near-term savings.
  • Despite the fact that he wasn’t serious, Gov. Edwards’ proposal to trim all state budgets is the right approach. Based on how budgets are designed and presented in Louisiana, it’s very challenging for legislators to highlight particular areas of waste or excess in the departmental budgets. We should ask every area of government to find savings of 5%-10%, and leave those decisions up to the individuals entrusted to run those departments.
  • Remove restrictions on statutory dedications – large buckets of non-reviewed, automatic government spending – to apply the same efficiency-seeking cuts to those previously-untouchable buckets.
  • Reprioritize or eliminate nonessential spending items like funding to refurbish museum artifacts or collegiate equine programs. A hard look at these items will produce relatively small (tens of millions of dollars), but important, savings.

This special session was called for one reason alone: To raise taxes.  Tackling a number of the above reforms is hard work, and it requires more than a couple of weeks to get done. But Louisianans deserve a legislature that makes the most out of every second spent in the state Capitol. It’s time for Baton Rouge to batten down the hatches and get serious about reining in government spending and enacting policies that will bring jobs and opportunity back to Louisiana, not punish working families with ever-increasing taxes.

Daniel J. Erspamer is Chief Executive Officer of the Pelican Institute for Public Policy, Louisiana’s free-market think tank. 

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