Thursday, 23 February 2017 08:32
Edwards, Louisiana legislature still on course for budgetary disasters
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john bel edwards loresIt seems that Louisiana has a perennial state budget deficit. Legislators just concluded another special session to deal with a $304 million budget deficit for the current fiscal year ending June 30

After significantly raising taxes the last two sessions, lawmakers were in no mood to consider inflicting more pain on Louisiana taxpayers. Ultimately, a compromise measure was approved that contained a total of $82 million in budget cuts, including $40 million from the Department of Health and Hospitals and $12 million from job vacancies. 

Legislators also approved removing $99 million from the Budget Stabilization Fund, commonly referred to as the Rainy-Day Fund. From an all-time high of over $853 million in 2007, the fund had dropped to a recent low of $359 million. After this latest withdrawal, the Rainy-Day Fund will be reduced to only $260 million. 

The fund was created in 1991 to give the state a budget cushion during lean times. Unfortunately, state lawmakers have been dipping into the fund too aggressively in recent years. Our state politicians have employed the easy tactic of using short term solutions such as raiding the Rainy-Day Fund to fix long-term budget problems. 

In the last 13 years, state lawmakers have made eight different withdrawals from this safety net. The worst offender was Governor Bobby Jindal, who approved four withdrawals; however, his record could be beaten by the Governor John Bel Edwards, who in just 13 months in office has already used Rainy-Day funds twice to address budget problems. 

The harsh reality is that the state of Louisiana has a spending problem, not a revenue problem. Our state government has higher spending per capita and more state employees per capita than the Southern average. We have more colleges and universities and more higher education boards than our Southern neighbors. Dealing with these problems require tough decisions that our politicians have unfortunately been unwilling to make. 

Instead, in the last two sessions, the answer has been to raise taxes and use one-time money to fix budget problems. Louisiana now has the highest sales taxes in the nation, not exactly a calling card for people or businesses to move to the state. 

In fact, a recent report by the website Wall Street 24/7 ranked Louisiana as the worst state in the nation for business. The researchers focused on Louisiana’s low salaries, lack of high paying jobs, anemic economic growth and “shrinking” working-age population. 

The collapse in oil prices has devastated Louisiana’s energy sector, while the legislature’s decision to rescind much of the state’s attractive film industry tax credits effectively sent thousands of high paying jobs to other states such as Georgia and North Carolina. 

It’s sobering, but not surprising, that Wall Street 24/7 found three cities in Louisiana among the top four in the nation for job losses. In the 12-month period ending in October 2016, Lafayette topped the list by losing 8,500 jobs, almost 4.5% of its workforce, Houma-Thibodaux ranked third with 3,400 job losses, approximately 3.74% of its workforce. In fourth place was Shreveport with 4,200 job losses or 2.35% of its workforce. 

These are very alarming statistics that should send shivers down the spine of every Louisiana politician. Unfortunately, Governor Edwards has not offered any innovative proposals to spur economic growth or create more jobs in Louisiana. In contrast, he has focused on expanding government services like food stamps and Medicaid. 

To continue to provide government services for the needy, Louisiana needs to create more taxpayers and businesses. Unfortunately, per S&P Global Ratings, Louisiana was one of six oil producing states in the nation in a recession in 2016. 

While the oil industry may slightly recover, it will never be the engine for economic growth it was in previous decades. It is about time that Louisiana diversified its economy in a major way. There have been some exciting developments in the health care and high tech sectors of the economy in recent years, but the state still lags far behind many of our Southern competitors. 

State legislators and the Governor need to make the state a more attractive destination for businesses. However, raising taxes, expanding state government, using one-time money to solve recurring budget problems is not the answer that is desperately needed at the current time. 

It is time to look at other states that are faring better than Louisiana to see what they are doing well. For example, Florida and Texas do not have state income taxes. This attracts retirees, high net worth executives and businesses to their states. 

The regular legislative session starts in April and it should be a time to deal with the significant economic problems Louisiana is facing. Once again, there will be a budget deficit and calls for more taxes. Hopefully, this shopworn idea will be soundly rejected as the answer for Louisiana is not more taxes, but more taxpayers, both citizens and businesses.

 

 

Jeff Crouere

Jeff Crouere is a native of New Orleans, LA and he is the host of a Louisiana based program, “Ringside Politics,” which airs at 7:30 p.m. Fri. and 10:00 p.m. Sun. on WLAE-TV 32, a PBS station, and 7 till 11 a.m.weekdays on WGSO 990 AM in New Orleans and the Northshore. For more information, visit his web site at Ringside Politics.

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Website: www.ringsidepolitics.com
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