On June 24th, immediately after the conclusion of this year’s record fourth legislative session wherein tax increases well in excess of half a billion dollars were inflicted on the citizens of Louisiana, Governor John Bel Edwards gave a brief speech. He and the adoring but smallish partisan crowd in attendance were all smiles. It was a self-adulatory occasion worthy of Obama himself.
Well almost, but monumental irony lay in an unfortunate detail – the Governor was claiming a victory when the actual events on the ground had proven him disastrously wrong (and duplicitous in the bargain) for the best part of two years running. Nevertheless, the Governor’s rosy demeanor and the frequent applause of the audience belied this unhelpful truth. It was only later, during questions, that apparently uncooperative members of the audience disturbed the blissful ambience in the room with their awkward inquiries. (See Senator Sharon Hewitt’s earlier speech on the Senate floor, etc.)
The Governor opened by crowing that the Legislature had finally found “the courage to compromise,” exclaiming that “the fiscal crisis is over,” and the fiscal cliff was “finally in the rear view mirror.” And then came the evening’s absolute stunner, “Prosperity and stability are straight ahead.” The Governor was obviously basking in the glory of the moment, but the moment must have been positively intoxicating for him to have made this statement while he presided over what is by most accounts the poorest and worst-governed state in the entire Union.
“What a difference a couple of weeks can make, huh?” crooned the Governor, in an unguarded and for him unfortunate comment. Recall that as recently as April of this year the Governor was holding fast to a fiscal cliff number of $994M, admittedly a reduction from his ridiculous 2017 figures of $1.4B, $1.3B, and then $1.1B. (His last known figure was $648M, but at that point who really cared?) Everyone had long known that his deficit numbers were inflated to serve his progressive agenda, but the Governor held fast to these fictions even at the cost of sabotaging several entire legislative sessions and needlessly scaring the H—- out of students, patients, the elderly, and many more.
He went on to say that “they” (presumably he and the Legislature) had just “given $600M in tax reductions to the State of Louisiana.” In truth, the Legislature had been strong-armed in 2016 to raise the sales tax by a full cent for two years in order to get the state through a Jindal-caused $2B deficit. (Actually, the deficit had for the most part been caused by a steep decline in oil prices on which the state collects taxes.) Nevertheless, we were assured that this temporary tax increase would not be needed beyond the prescribed two years as Governor Edwards’ “governmental efficiencies and reforms” took hold. Make no mistake- the state sales tax under the John Bel Edwards’ administration has for all practical purposes been permanently increased by nearly half a cent and remains the highest sales tax in the country. For him to claim that we received a reduction in taxes was “disingenuous” at best, but why use a big word when a three letter one would be more apt?
When unexpectedly cornered by a question on the subject of the long promised structural tax reforms, he responded that “We should certainly continue to work for structural tax reform going forward.” In what must surely have been the second greatest howler of the evening, he exclaimed “It’s been at the top of my priority list,” but in his next sentence the Governor blamed this failure on the legislature while regretting that it was now too late in his administration to accomplish the needed reforms.
We should briefly pause here to remind ourselves that John Bel Edwards has had no less than ten legislative sessions to make a serious attempt at the structural reforms which he repeatedly promised us throughout his campaign in 2015. The fact is that there has been no serious structural reform and there will be none under this Governor, because that would offend the very groups that form the base of the Democratic Party. What we now have two and a half years into the administration of John Bel Edwards, is a ballooning budget (currently $7B higher than when he took over), much higher taxes, a shrinking economy (frankly a disastrous economy in much of the state), a diminishing population, no structural reforms and no real prospect of enacting any, and all this while the rest of the country is experiencing an economic boom and our neighboring states are reducing their taxes!
Having exposed the farce of Governor Edwards’ speech and the unpleasant reality of the present, let us proceed to speculate about the future:
We begin with the fact that taxes were raised by approximately $500M-$550M in the last legislative session. Add to this the $300M+ in increased revenues from the Tax Cuts and Jobs Act passed by Republicans in late 2017. Throw in another $112M (at minimum) to be realized when the state stops underestimating oil severance revenues. Now add in a huge dollop of Internet tax revenues of anywhere from $200M-$1B (a difficult to figure number because the tax has not heretofore been collected) to be derived from the newfound ability of states to tax Internet sales. Total these figures up and even the lower end estimates make it entirely likely that we are heading for a budget surplus next year. But never forget that the mortal enemy of Democrats is a surplus, because surpluses must always be frittered away on some socially progressive agenda in order to justify the need for yet more taxes, in a never ending cycle as the private economy diminishes as a proportion of the total economy.
Thankfully, spending caps were enacted by the Legislature at the last moment of the last session, which caps will at least act as a firewall against the voracious appetites of the Democrats. Surpluses permitting, what should be on next year’s legislative agenda(s), whether put on the call by the Governor or if necessary by legislators themselves, should be consideration of (1) canceling the just-enacted .45 cent sales tax increase to help our economy grow; (2) repealing the corporate income tax and other onerous business taxes to make Louisiana a more attractive place to do business; and (3) eliminating from consideration any “wish list” administration budget increases until the present crisis is past.
Lastly, and irrespective of whether or not we have a budget surplus, we absolutely must (4) enact and implement structural tax reforms, and (5) halt the the out-of-control spending by the Louisiana Department of Health, which is already consuming over forty percent of the state budget and is set to grow without end. (U. S. Senator John Kennedy has recently remarked at length on precisely this point.)
When taxes become rational and systemic reforms are enacted, then and only then can we truly say to the people of Louisiana that “Prosperity and stability are straight ahead.”
Louis Gurvich, Chairman
Republican Party of Louisiana