Democratic Gov. John Bel Edwards had made the penny increase in sales taxes the cornerstone of his plan for fixing the state’s drastic budget situation.
Republican legislators decided to bite the bullet after scrubbing the budget and cutting everywhere they could. It was not enough to fulfill the constitutional mandate of a balanced budget.
There is a budget hole of $940 million which must be filled by June 30. Once that’s accomplished, a $2 billion deficit is on tap for the fiscal year which begins July 1.
The passage of the penny tax was a bi-partisan effort. Republicans demanded that the tax sunset in 18 months and insisted on $101 million more in cuts to which Democrats agreed. The governor wanted the tax to span five years.
To reach a balanced budget by June 30 here’s the deal: $200 million from the additional one-cent sales tax, $101 million in additional cuts, $200 million from the BP settlement, and $128 million from the Rainy Day Fund.
With those projected revenues, there is still another $211 million which needs to be found to fill the budget gap and balance the budget by June 30.
Other measures will be needed to completely fill the budget hole. Other taxes are still on the table as well cuts to tax credits provided by the state.
To pass the penny tax increase and send it to the Senate, 70 votes were needed from among the 105 House members. The measure received 76 votes, while 28 voted against, and I member was absent.
How did area representative vote? Voting for the tax increase were Reps. Larry Bagley (R), Thomas Carmody (R), Cedric Glover (D), Sam Jenkins (D), Barbara Norton (D), Gene Reynolds (D), and Alan Seabaugh (R).
Only two area reps voted against – Dodie Horton (R) and Jim Morris (R).
Following the vote, the governor said: “I know it was not easy for anyone to vote to raise revenue – it was not easy for me to propose it – but combining these measures with strategic cuts in my plan will allow us to stabilize our budget both in the short term and going forward.”
The Louisiana state Senate is disagreeing with the House – not about the one-cent increase in in the state sales tax, but about the amount of time it should be on the books.
To get Republicans to support the tax increase in the House, a sunset provision of 18 months was attached to the bill.
However, the Senate Revenue and Fiscal Affairs Committee wasted no time in changing the sunset provision to five years, which is what Gov John Bel Edwards originally proposed.
The committee voted 10-1 for the increase and sent the proposal to the full Senate for consideration.
Senate leaders said the money generated by the tax can’t be used in the state’s operating budget unless it’s available for three years or more, something which the House apparently overlooked.
So a Senate-House conference committee will have to eventually meet to reach a compromise, which could have the tax end up with a three-year sunset provision.
Senate leaders are also complaining that the House didn’t do enough to raise money and that they will be looking for ways to boost revenue higher.
As things stand now, actions taken by the House still leaves the budget with a $150 million to $200 million hole.
The clock is ticking, and legislators still have a lot of work to do. The Special Session ends on March 9.
Bad news again
You know that old saying, “If it weren’t for bad news, there would be no news at all.” Perhaps that saying should become Louisiana’s new state motto.
We know about the budget mess that former Gov. Bobby Jindal left the state and the unpleasant measures that must be taken to stabilize it.
Then there is the news that Louisiana’s credit rating has been downgraded because of years of financial patchwork, which resulted in devastating cuts to higher education and government services.
Moody’s Investors Service decision to drop the state’s credit rating is an unwelcome blow in the midst of a plan by Gov. John Bel Edwards to right the state’s financial ship.
Ratings from the credit agencies help determine interest rates when the state borrows money through bond sales to investors. A credit rating downgrade raises interest costs, making it more expensive to borrow money.
It’s another fine mess that Jindal and lawmakers created over the past several years.
Now comes terrible news for the state which needs all the business it can get. Louisiana is ranked as the second-worst state in the nation for doing business in a study by 24/7 Wall Street. Here is what the report says:
“Louisiana’s population is shrinking. Between 2010 and 2020, the number of people who call the Bayou State Home is projected to have declined by 0.5%. Worse still for state businesses, the working-age population is projected to decline by an even steeper 3.2% over the same period.
“Additionally, workers in Louisiana are less likely than the average American to have a specialized education. Only 7.8% of adults in Louisiana have a graduate or professional degree, a smaller share than the 11.4% national share. A waning working-age population, coupled with relatively low educational attainment, may make it difficult for employers in the state to fill positions with qualified candidates.
“Like most of the worst states for business, Louisiana’s economy is relatively weak. Only it and one other state – Maine – have experienced an annualized GDP decline over the most recent five years. Nearly 20% of the state’s population lives below the poverty line, and 6.4% of workers in the state are out of a job, each a worse rate than the corresponding national figure.”
The 10 worst states for business are West Virginia, Louisiana, Kentucky, Mississippi, New Mexico, Alabama, Hawaii, Oklahoma, Arkansas, and Rhode Island.
The 10 best states for business are Utah, Massachusetts, Colorado, Washington, Minnesota, Wyoming, New Hampshire, Delaware, Texas, and Virginia.
A Supreme battle
The battle lines have been drawn over whether President Barack Obama should select someone to replace the late Justice Antonin Scalia on the U.S. Supreme Court.
Senate Republicans – and GOP presidential candidates – say the appointment should be done by whoever is elected president later this year.
Interestingly, a Fox News poll reveals that a whopping 62% said the president and Senate should act now to fill the vacancy..
Only 34% of Americans believe that Obama should not get to nominate anyone.
Also in the poll, 42% of respondents said they are likely to vote for a Democrat for president, while 39% said they would vote for a Republican.
That revelation prompted some political pundits to suggest that Senate Majority Leader Mitch McConnell might want to rethink his position about not considering anyone the president nominates.
The thinking is Republicans could get a more favorable appointee now rather than later. There is the possibility that a Democrat could be elected president, but the scarier thought is that the Democrats could re-take control of the Senate.
Should that happen, a more liberal nominee would likely be in the cards. It will be interesting to see how all of this plays out and which party will be the winner is such a battle.