Legislators face three choices

Gov. John Bel Edwards’ controversial commercial activity tax is dead, and few — including the governor — are mourning its demise. Now, the ball is in the hands of House Republican leaders, and they have shown some willingness to try and find a better solution for closing a $1.4 billion deficit before July 1, 2018.

The deficit is expected because most of the temporary tax measures approved during last year’s special sessions are going off the books on that date. Edwards gets the blame for those higher taxes, but his critics conveniently ignore the fact that he inherited a $2 billion deficit from the Bobby Jindal administration.

Edwards, legislators and taxpayers in this state definitely want to see a 1 percent sales tax disappear that was approved last year, which has given Louisiana the highest localstate sales tax in the country.

“At this point in time, I’m looking for the House leadership to step up, offer solutions and not just continue to say no,” Edwards said after his CAT proposal was shelved.

Speaker of the House Taylor Barras, R-New Iberia, accepted the governor’s challenge.

“I don’t disagree with that,” Barras said about the ball now being in the GOP’s court. “We have a good bit of work to do, and hopefully, we’ll get some traction.”

Rep. Lance Harris, R-Alexandria and chairman of the House Republican Caucus, echoed the optimism, saying, “There’s 160 bills, I think, that have been filed. So I know there’s going to be some that will be passed out of committee on to the floor. So, naturally, there will be some things that we look at, no question about it.”

Everything on the table will be controversial. Edwards has suggested expanding the sales tax base to new services and products. However, getting two-thirds of the Legislature to go along won’t be an easy sell. And the expansion will only produce about $200 million, far short of $1.4 billion.

Barras explained that broadening the sales tax base sounds easy, but legislators balk when some of the services they want to protect are included.

“That one seems to be hot and cold,” Barras said.

Wiping out tax breaks of all kinds could also produce funding to lower the deficit, but that is also a frustrating experience. Corporate and other interests don’t want to give up tax benefits they currently enjoy.

Legislators are their own worst enemies when it comes to tax breaks. Sen. J.P. Morrell, D-New Orleans, has bills this session aimed at creating a sales tax exemption for the purchase of diapers and tampons and restoration of a sales tax exemption for the purchase of medical devices.

Total cost to the state of Morrell’s three bills is $23.9 million. Yes, those are definitely worthwhile exemptions, but other lawmakers believe theirs are just as worthy. Where does it stop? That is how the state got into its current financial dilemma.

Budget reductions are a third source of revenue. The Republicans reportedly have a budget plan that calls for budgeting only 97.4 percent of the revenue forecast, leaving a cushion for another potential mid-year budget cut. The plan also includes an extra $92 million to fully fund the TOPS scholarship program.

What Republicans are calling a standstill budget for the fiscal year beginning July 1 doesn’t take into account annual cost-of-living increases. Harris asked Joe Rallo, commissioner of higher education, what would happen if colleges and universities were funded at the current level.

“People talk about a standstill budget but the budget we’ve been presented is basically $18 million less for higher education, 30 percent less for TOPS, increased costs in retirement and medical, so it’s really not a standstill budget,” Rallo said. “It would represent a loss.”

A reader of The Advocate in a letter to the editor sounded a note of pessimism and optimism.

“Lots of budget cut solutions have been proposed … by the readers of this paper and other citizens, some good, some impractical, but it is unlikely the Legislature will adopt any of them,” John Pizer, a Baton Rouge professor, said.

Pizer was more upbeat when he talked about Gov. John Kasich of Ohio creating a budget surplus by eliminating all state spending for projects directed only at municipalities and counties in Ohio. In Louisiana, the state spends money to build local public tennis courts, bridges, city halls, police stations, recreation centers and numerous other projects.

Governors have used those grants from the state construction bill in the past to curry favor with legislators who don’t want to see the handouts ended. However, money for those local projects would go a long way towards erasing that expected deficit.

Priscilla Maumus of Metairie, another Advocate reader, listed some forgotten benefits of taxes.

“Taxes pay for good roads, for educational opportunity, for protection from both human harm and natural disasters, for justice for all, for the health and safety of us all (a health and safety that is threatened when we fail to protect the vulnerable),” Maumus said. “Louisiana is currently failing in nearly all of these respects.”

“A ‘stand-still budget’ is a dereliction of duty,” she added.

Whether members of the Legislature rise to the challenges they face remains to be seen. The choices are clear — raise some taxes, eliminate some tax breaks and produce a balanced budget that best serves the citizens they represent.

It’s long past time to bring some stability to the state budget.

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Jim Beam, the retired editor of the American Press, has covered people and politics for more than five decades. Contact him at 337-515-8871 or jbeam@americanpress.com.