At the risk of overkill on budget posts this week, which is a subject which has never really appeared to captivate Louisiana’s voters, it behooves us to note that while Louisiana’s tax-happy governor is increasingly under fire for his lack of honesty on fiscal matters the hits kept on coming Wednesday.
Namely, the Legislative Fiscal Office weighed in on the program of tax increases Edwards has proposed as a replacement of the revenue for the expiring sales taxes his last two budgets have depended upon, and the result was, well, taxing.
If state income taxes aren’t increased, the remaining taxes the governor proposes would total $761 million, according to the legislative fiscal office. That’s $233 million short of what it takes to cover the $994 million shortfall, known as the fiscal cliff.
Neither the governor nor lawmakers have said what state budget reductions would be most likely if only part of the budget shortfall is covered by tax or fee increases and money has to be cut out of the spending plan.
The significance of this is it backs up something LABI president Stephen Waguespack said after Edwards made his budget presentation to the legislature two weeks ago. Contrary to Edwards’ contention that he’s the adult in the room attempting to save a right-sized state government from disaster while the unrealistic conservatives in the legislature are irresponsibly and unreasonably refusing to accept prudent revenue enhancements, the governor’s tax hike proposals wouldn’t fix the problem even in the best of circumstances.
So there goes Edwards’ adult-in-the-room act. Even if you thought his tax hikes constituted sound economic policy – they don’t, as they’re incredibly likely to poison an already uncompetitive economic and business climate in Louisiana – they can’t be sold as the solution to the budget problem because they don’t raise enough revenue.
So the budget is going to have to be cut, as the legislators have been saying from the get-go. Meaning they, not John Bel Edwards, might be the adults in the room.
After all, the legislators aren’t the ones claiming to have cut the budget by $600 million when it’s actually grown by $5 billion – or by $1 billion when you solely count the state-funded share of the spending in it.
The answer, everybody knows, is that the budget is going to be cut to a degree and there are likely going to be some tax increases – temporary tax increases, in all likelihood, so that a new governor will have an opportunity to reset the tax code and budget infrastructure upon taking office in January of 2020. That’s why when House Speaker Taylor Barras, who has been unjustly villified over the past 18 months by the governor and his media lackeys for attempting to rein in spending, delivered a set of the House’s conditions last week he was offering the possibility of tax increases in return.
It’s not hard to see how a deal might be done.
Edwards’ tax hikes won’t fly, because they do too much damage. But some reinstatement of the expiring sales taxes could capture some of the revenue the governor seeks. He’s not going to like that, because his Democrat allies in the legislature can’t stand the idea that those taxes would disproportionately affect their core constituents, sales taxes being regressive and so on. But nobody is calling any of the Republican legislators to complain about those sales taxes; their opposition to them is based on principle rather than politics and if they’re forced to compromise on taxes they’ve already shown they can live with this one.
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And if some of those sales tax dollars end up going away, with budget cuts making up the difference, they’ll count that as a win. Edwards should as well, particularly if he’s going to sell himself as a moderate and a centrist. Which is why it makes so little sense that he’s engaged in so much sophistry surrounding the state budget.
He’s clearly operating on the assumption that he carries a whip hand against the legislature due to polls showing his approval rating at 56 percent or even higher. But the best of the recent numbers, a Southern Media and Opinion Research poll in December which had Edwards at 65 percent, indicates those numbers are a mile wide and an inch deep. From the press release on that poll…
Among Edwards’ own base sales tax hikes don’t particularly sell, and the poll doesn’t help him much on the issue of budget cuts…
The SMOR poll is all the legislators need to kill any new taxes. Those numbers tell them they won’t suffer in 2019 for fighting for those budget cuts, and they’re going to bleed the governor dry in this legislative session if he continues trying to paint them as the bad guys.
And again, he can’t claim that he has the facts on his side. Not when the Fiscal Office says in the best of circumstances his solution is insufficient.
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