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Wednesday, 08 November 2017 09:22

LABI's Stephen Waguespack talks Edwards, Fiscal Cliff, Louisiana's "rite of spring"

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Is Louisiana looking at another special session in 2018 to deal with—what seems to be the never-ending budget shortfall?  What is Governor John Bel Edwards doing to fix what appears to be an annual rite of spring—budgetary emergency management? And, just how bad is the budget bleeding going to be given that the state could fall off that proverbial fiscal cliff which near-fall was softened two years ago with a penny sales tax increase and other measures?

In part three of the November 2 interview with Stephen Waguespack, the President, and CEO of the Louisiana Association of Business and Industry, the leader of the largest business organization in the state discussed these and other issues confronting the state, once again.

 

Below is the transcript of the interview with Stephen Sabludowsky, publisher of Bayoubuzz.com:

You know it was interesting after the last session, when there wasn't a final resolution on the fiscal cliff, immediately after the session, the governor essentially sent a letter to the House of Representatives, and said "listen I'm not going to call a special session, until you've all give me a plan".  And then a short while later, he said, “well what I'm going to start doing instead is--I'm gonna start meeting with businesses around the state gathering their input".  He spent the last couple of months meeting with businesses throughout the state from 10 to 20 folks in each meeting.  And look I love the fact anytime a governor wants to meet with taxpayers, individuals or business--I think that's a great thing.  And so those meetings have been taking place.  

Now we're told that the last meeting in Lake Charles last week is going to be the end of that little listening tour.  And so the expectation is, in the next month or so, he will come out with a plan where he will say "ok this is what I'm looking for--maybe it's an extension of the penny, maybe it's a replacement, maybe it's new revenue, maybe it's the mix of cuts-- we don't know what it's going to look like-- and so as far as where we would stand on a second phase of that sales tax, it's hard to really say until he comes out with this plan and proposes what comes with it.

SABLUDOWSKY: Sure that makes a lot of sense, so the budget deficit, that we're looking at is--they call it a fiscal cliff or what it's about a billion dollars-is that a good rough number?

WAGUESPACK: I think that's a rough number.  I think the initial temporary taxes that were passed in early '16 was about .8--1,2, most folks rounded it up, if I recall right--because I think technically is 1.18 in the first session, they came back in a second one, I think at another 90 or so.  So about 1.2 billion was the temporary.  A chunk of that was the sales tax, another chunk of that was kind of rolling back a variety of business credits and exemptions, inventory tax, net operating losses, MM & E, business utilities--those are important business tax code provisions that were all rolled back in those sessions, so there's revenue that also from the business side, and so those are all coming up for an expiration in July of 2018--so that's generally the cliff that folks talk about from the revenue side.  Now the other piece of that though is--the budget has grown since then. And so there's something in Louisiana that's called the continuation budget-you have a budget every year and then you have a continuation budget which is kind of the general growth of government.  And quite frankly over the last couple years, that's been averaging 3, 4, 500 million a clip. 

WAGUESPACK: And so when you're talking about the deficit, you gotta ask specifically--what are you talking about? Are you talking about the temporary taxes that might expire?  Are you talking about VAT plus the continuation growth of government?  If so, you could be looking at one and a half plus, or two billion dollars.   I personally think that type of growth in government has to be curtailed.   Quite frankly, you have a cruise control growth in government in Louisiana that absolutely has to be curtailed.  We cannot afford to keep changing our tax code, every six to eight months, to keep up with the continuation budget.

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