We’ve had a good bit of coverage of the special session on tax reform that ended on Friday, and I wanted to let folks digest the posts from Conrad Appel and Blake Miguez and others before I weighed in.

And I don’t have anything much to say that our regular readers wouldn’t anticipate.

House Speaker Phillip Devillier put out this graphic after the session ended…

Big day for moving Louisiana forward! #lalege pic.twitter.com/xIMOf24IBb

— Phillip DeVillier (@SpkrDeVillier) November 22, 2024

And everything on that list is great but the last part.

We really, really don’t like adding back John Bel Edwards’ full penny of sales tax increases until 2029. We would much, much rather have left that out of what passed and gone into the regular session next year with a deficit.

And here’s why – that full penny, when Edwards forced it out of the Legislature in 2016 because there was supposedly a “fiscal cliff” which necessitated the largest tax increase in state history, produced so much revenue that it created gigantic surpluses for the first two years of his term even after he pumped the state’s budget up above $30 billion.

They’re already projecting a surplus with this sales tax increase, even with the elimination of those stupid business taxes and a flattening of personal and corporate income taxes.

Which points out something that we’ve been irritated with for a long time, which is that the people who make these fiscal notes are less than reliable and yet the Legislature doesn’t seem willing to insist on better.

They don’t do dynamic scoring on anything over there. Essentially it’s a bunch of people throwing numbers into a Microsoft Excel spreadsheet. Cut taxes and they’ll give you a fiscal note which says a $100 million tax cut will cost the state $100 million in revenue, without any economic growth resulting in tax revenue in the projection.

When everyone knows that when you tax something you get less of it (and the reverse is true).

But it’s worse even than that.

Thursday night I was talking to one of the legislators who was set to vote on the package the next day, and he was beyond irritated with the numbers being given to the members. For example, the projected revenues on applying the sales tax to digital goods – we’re talking about taxing things like your Netflix subscription here – ranged from $40 million a year to $200 million.

That’s some range, don’t you think? It’s going to be either this number, or some other number 5 times this one. Now go and try to balance the budget.

I can almost guarantee, now that they’ve passed that full penny, that the state is going to have hundreds of millions of dollars in a surplus.

I can also guarantee, that everybody at the capitol will congratulate themselves on having the state in the black.

As though there isn’t any cost to that.

Running a big budget surplus based on a tax increase means that you’ve stolen money from the state’s citizens that you didn’t need.

John Bel Edwards spent eight years relishing this kind of smash-and-grab fiscal policy while the U-Haul trucks filled up and carried our friends and relatives off to Texas, Florida, Tennessee and other places less interested in pillaging their wallets. That was supposed to change with Landry replacing Edwards.

And don’t get me wrong, it did change. There’s a lot of good which came out of this thing, and the constitutional amendment going in front of the voters in March definitely ought to pass.

What does that do?

The proposed amendment would replace a one-time $2,000 pay increase for teachers last year with a permanent $2,000 pay raise next year – by paying off $2 billion of the teacher retirement system debt. School support personnel also would see the one-time $1,000 pay hike they received last year replaced with a permanent $1,000 pay increase next year.

The proposed amendment would also give parishes the option of repealing the property tax on business inventory, take most property tax exemptions out of the constitution and put their fate in the hands of legislators, impose a cap on annual spending and make it harder to create more tax breaks in the future.

The proposed constitutional amendment also would merge two state savings accounts, and, if passed, allow Landry to use some of that money to pay parishes to drop the inventory tax program.

It also would double the standard deduction for seniors on their income taxes.

There will be parishes which refuse the inventory tax repeal, but this puts that policy in the proper posture – which is that if your parish wants to tax inventory and the parish next door decides not to, before long you’ll find that the parish next door has a hell of a lot more jobs and capital flowing through it than you do, and you’ll either learn from your mistakes or get covered in blight and poverty.

That competition works really, really well in Texas. Running everything through the state capitol in Louisiana and trying to standardize the economies of all these not-so-well-run municipal governments? Less so.

What we’ve heard is that Landry is promising the Legislature a billion dollars in state budget cuts over the next two years, and last week he asked Devillier and Senate President Cameron Henry to join him in an Elon Musk/DOGE-style initiative to go through the state budget and find every efficiency they can.

I really wish that you’d have that DOGE effort with the added urgency of a budget deficit to close. Typically you get more results with that kind of urgency, better than if you don’t actually need to make the cuts.

So overall it’s a small win. It isn’t really what we need.

Moon Griffon laments the “step in the right direction” legislative wins, because he says you can’t get off the bottom with incremental changes. He’s generally right about that. The hope here is that what happened last week is the beginning of a strong momentum toward smaller government and a culture change inside that building. We would have liked to see far more of that by now, but we’ll take what we can get.