HB 62 by state Rep. Katrina Jackson in normal times would be regarded as a detestable standalone tax increase. But with a budgetary gap in the neighborhood of $900 million needing closing prior to the end of June, these abnormal times sanitize it for swallowing. Understand that it only exacerbates the problem of state government overspending in Louisiana, as the state ranks 18th highest among them in that per capita spending (using estimated 2015 expenditures)
Ideally, Louisiana would adjust down its level of spending, as well as allocate revenues so that they more likely get to priority areas, in response to stagnant revenues and escalating expenditures as a means to right-size bloated government. The short term makes this impractical for the remainder of the fiscal year, but entirely realistic for the longer term. Thus, any tax hikes now proposed must last as brief a time as possible – apparently through Jun. 30, 2018 given the need to use the funds for recurring expenses while adhering to statute and the Constitution.
But the Senate took the HB 62 18-month House deadline and turned it into 60 months. Despite its having a Republican majority, too many of the Senate GOP accommodate themselves to bigger government, meshing with the desires of Democrat Gov. John Bel Edwards to grow government. And, like Edwards, they want expiration to occur after the next elections in 2019, so that their love of big government and taking more of the people’s money to finance it does not become exposed not much prior to reelection possibilities by going on the record in support of continuing the higher level of taxation.
As a sop to try to convince the House to go along, the Senate inserted a clause that reduces the increase in quarter increments for a fiscal year if the Revenue Estimating Conference certifies prior to each regular session that revenues from other sources have made up a quarter or more of the estimated proceeds from the hike from this year’s baseline total of forecast general fund revenues. But this sleight of hand does nothing to reduce the size of government; it deems current expenditure levels acceptable and does not eliminate the possibility that other kinds of tax increases can substitute in to keep spending higher than appropriate.
Therefore, the House must reject this red herring and insist upon a 26-month deadline, keeping the de-escalation clause if it likes. It has the leverage to do so, in that it has sent forward a bill that would make deeper cuts to spending that Edwards wants and it holds three other revenue-raising bills that would raise about a fifth of the HB 62 total. It could promise not to act further on the cuts bill and pass the others in exchange for limiting HB 62’s effective period.
And it does hold all of the cards here. Assuming HB 62’s passage in its current form, the state still lacks around $200 million to close the gap. As the regular session disallows considering almost all tax measures and timing would permit little time to call another special session before fiscal year’s end, the only options left would be cuts made by the Legislature and Edwards. Do the Senate and Edwards really want to enforce such cuts just because they hold out to keep a tax going longer? Voters almost certainly will blame them before House members that tried to hold the line on taxes, and to rub salt in their wounds they will have failed partially in their plan to retain bigger government than necessary.
Usually when two of three of the governor, Senate, and House come into conflict with the one other, the united pair wins. However, given the dynamics of this situation, if the House (essentially, House Republicans) stands firm, they can prevent higher taxes from sticking around longer than needed and in the process begin the process of trimming Louisiana government to an appropriate level; if not immediately because of the extreme times, at least in the near future.