For a state that is not familiar with "end of year surpluses", the news came as an abrupt and pleasant surprise. Yet, Louisiana is facing what is now commonly known as a fiscal cliff for next year’s budget, facing the state, beginning July 1. That cliff is expected to be in the one-billion-dollar range.
So, what can the governor’s office and the state legislature do to raise money or cut the budget to overcome that cliff? Do we wait and hope that the state continues to have incoming revenue increases and that maybe the cliff will disappear? Do we need to call another special session? Should we eliminate a one-cent sales tax we imposed a couple of years ago because of an insurmountable budget hole that threatened vital state services?
Last week, I discussed these and other issues with Stephen Waguespack, President and CEO of the Louisiana Association of Business and Industry as part of a Facebook Live discussion. Waguespack heads LABI, the largest and most powerful business and industry organization in the state.
Here is the transcript of part of what he said about these issues and the video segment:
Only in Louisiana can you have a big surplus, all you want to talk about is a deficit right? I mean it doesn't make sense, but that's kind of the way we work around here I suppose. yeah there was a surplus at the end of the last year and that surplus right now is there's a lot of discussion as to how it's going to be used and some say rainy day, some say pay down debt--you know we'll see how that process plays out.
You know you mentioned we're about five months away from a session and I think that's right--you know the next you know constitutionally scheduled session, the general session, is about five months away, but obviously everyone's kind of on pins and needles waiting to see--well--will we have a special session. And that's gonna be up to the governor to make that decision and so we're wait to see. There's some speculation that there could be a special session early next year to look at revenue we don't know the answer to that yet. And so you know if there isn't a special session, and we're just going to the next regular session, as you know as well as I do, revenue increases are not allowed in a general session next year and so revenue increases would not be germane to that session. And so that would be a session focused more on policy and budget reductions and budget reform--if they call a special--obviously that could be germane to whatever the governor's call sets it for. And the anticipation is--if they call a special session sometimes in the February time frame, it'll be focused on on revenue increases.
SABLUDOWSKY: Right right, obviously we have the one cent sales tax extension or sunset--does LABI have a position on that at this point in time?
Well if you go back to early 2016, with the original proposal that's put forth by the administration, was--it was a five-year, one cent sales tax that would go in raise between 800 to a billion dollars for five years--it's kind of like a bridge to get i guess whatever was after those five years. Through that legislative debate it was crunched to a three year. When that three year was put in place we removed our opposition not because our guys liked it, but you know business pays about 47 percent from our analysis of that sales tax. And that's what they pay as a business. Once they go home as an individual or drive home obviously they pay all of it just like everyone else is probably higher than the 47%. We removed our objection there because all right let's where's building towards so--it would depend on what the proposal would be how long is going to be for, what other reforms come with it and so we're kind of waiting to see, what the governor's gonna propose on that.
Part 2, Tuesday