Still, I wanted to get an idea how the state's finances are shaping up, so, I called upon my own State Senator Conrad Appel of Metairie, to explain the budgetary issues. He did so Wednesday afternoon, via online video Facebook-Twitter-Youtube Live for our Bayoubuzz audience.
Appel is a Republican. He does not like to raise taxes and appears to be frustrated that the governor, John Bel Edwards, once again, is calling upon the state, to do so.
So, how fragile is Louisiana's fiscal house infrastructure, I wondered? And, what are we doing about it?
Appel said, he has not seen the Governor's tax proposal, uncertain, if it had come out at the time of our discussion. But, he said, "that's kind of hanging in limbo, but it's obviously going to be the probably the singular most important issue of the whole session, so everybody's holding on waiting to see what that's about".
The Senator that a day ago, Commissioner of Administration Jay Dardenne echoed what the economist for the legislature has been saying now for over a year and "that is that basically, Louisiana is in an economic recession brought on by the oil downturn. Appel further said, “We've lost something between 20 and 30 thousand jobs over the last three years, it's only mitigated a little bit by the fact that our refining processes are actually growing is a lot of construction going on in Louisiana especially in Southwest Louisiana dealing with refining and so forth".
And, thank our lucky stars for Southwest Lafayette refinery. Appel said, " if we didn't have that we would be in serious serious trouble nevertheless because of the loss of business taxes and the loss of businesses loss, loss of personal taxes--we're about four hundred million dollars short of where the governor wants us to be going into the new fiscal year which starts in July"
Last year was not a pretty sight for legislators. Nor, the year before. Or the year before that. Each year, the state has had to belly up to the bar, make cuts and raise revenues, although, in the last year of Republican Governor Jindal’s administration, when his focus and priorities was being our next American President, the then governor called a tax, something cute, like SAVE tax credit. Still, not fooling anybody, it was a tax and since then, our taxes have increased significantly.
Prior to when Governor Edwards took the helm, oil revenues continued to free-fall and the budget deficit ballooned. Thus, being a few billion in the whole required major adjustments, more cuts and more revenues. Last year, the legislature and the governor agreed upon a temporary penny sales tax increase and then more adjustments to bring in more revenues. However, these increases have the effect of diminishing returns—as Senator Appel noted, we’re creating an environment that is not friendly for business, especially in a recession.
In fact adding to the fiscal and economic uncertainties, in referring to the penny sales tax, Appel said, "add to that, last year, we imposed a one-cent sales tax that had a 20, I think had a 27-month life, after which it expires so that will be next year, it will expire, however, there's no fiscal sessions between now and then so the issue has arisen to whether we do something about that-- let it expire or let part of it expire, so that'll be an issue as we go forward.
Therein lies the rub. How will the governor and the legislature deal with a roughly four hundred million dollar deficit for next year’s budget plus an expiring eight hundred fifty-million dollar expiration of the penny sales tax? Watch segment 1 of my interview with Senator Appel as he discusses how the legislature is measuring up to the fiscal problems confronting the state?