SADOW: Louisiana’s Budget Is Awful, But Simple Changes Can Fix It

While in most cases going one-for-two is really good (unless you’re this team, where that’s not much above average), the Republican-led Louisiana House of Representatives really couldn’t afford to miss on this year’s budget.

Last week, the chamber dealt with two significant money bills: the fiscal year 2022 budget that in part depends upon and a supplemental spending bill wholly dependent upon federal government revenues rained down courtesy of borrowing that edges the country closer to financial crisis. Only on the latter did it act wisely, mostly.

HB 642 would take a quarter of an estimated $1.6 billion in largesse to refill belatedly the unemployment trust fund, while $300 million would contribute to fixing local government water woes mostly an artifact of declining population bases and deliberate consumer underpricing. Another $55 million would enhance port infrastructure and $50 million would make up for small business losses. The questionable part of the bundle, $119.5 million, would go to special interests in broadband (most of it, including boosting the Legislature’s technology even though for this purpose a separate $180 million from the federal government already is in the pipeline), logging, and movie theater operations. Sensibly, the remaining $676 million would be parked to await future demonstrated need throughout the year, allocated by the Joint Legislative Committee on the Budget.

This crosses up Democrat Gov. John Bel Edwards, who naturally wanted to blow it all immediately. The main difference came in $400 million to transportation and an extravagant $145 million on tourism promotion, or nearly five times the annual state budget for parks and tourism, with most going to local agencies (even though local governments in the state will see $2 billion separately). With bills circulating that would steer existing tax receipts to roads, the House may not have seen a need to commit so much one-time money so soon to that purpose.

Unfortunately, the largely prudent approach of HB 642 went out the window with HB 1. Although essentially standstill in many ways (which means it incorporates tens of millions of dollars in automatic spending increases such as from personnel actions regarding civil service employees), it foolishly creates ongoing additional spending commitments by eliminating the small amount Taylor Opportunity Program for Students award recipients pay for their own tuition, by giving pay raises to public school employees – something districts could do on their own and rewards for no good reason one of the nation’s worst-performing systems despite spending in the middle of the pack of states – and giving these as well to higher education faculty members instead of paring an overbuilt system and using the savings to accomplish that.

Worse, one-time federal dollars of $720 million will prop up existing and new spending. That amount essentially will grow if any of the various redirection efforts for roads becomes law. Even as state economists think revenues will grow by $420 million next year, successfully finding next year the remaining bucks with the state the hardest hit of all by the Wuhan coronavirus pandemic yet only projected at the mid-point of states in recovery potential doesn’t look encouraging.

Ideally, legislators should erase this gap, and as the Senate now wrestles with the bill enough low-hanging fruit exists to wipe out close to $300 million of it. Eliminate the counterproductive earned income tax credit to save $69 million. Pass the stalled HB 36 by Republican state Rep. Phillip DeVillier to cut $80 million of the wasteful Motion Picture Investor Tax Credit. Drop the pay raises and TOPS increase worth $148 million and it’s just about there.

In recent years, typically good legislation including budget bills left the House only to die or become perverted in the Senate. Hopefully this time the Senate will go against that type, perhaps by pulling the pork from HB 642 for future use and through wringing a sufficient quantity of onetime dollars out of HB 1 to obviate creation of a future fiscal disaster that would encourage resorting to the increasing taxes/decreasing economic viability trap Louisiana has found itself in over the decades.

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