Less than a month after throwing down a fiscal gauntlet to House Republican leaders, Gov. John Bel Edwards has tacked toward Louisiana business leaders in an effort to address the so-called "fiscal cliff" of 2018 — and possibly start a meaningful statewide conversation about long-term tax and budget reform.
That's a significant — and tactical — pivot by the governor. The stakes are high, both fiscally and politically.
The "cliff" is approximately $1.2 billion in temporary taxes set to expire on June 30, 2018. If that money is not replaced, lawmakers (and Edwards) will have to slash the state budget — mostly in higher education and health care, but no services will be immune from cuts. For now, Edwards and House Republican leaders are in a stalemate over how to proceed.
On Tuesday, Aug. 8, Edwards will meet with about two dozen business leaders from across the state to discuss where to go from here. The governor has his sights set on a statewide listening tour, which could make Tuesday's meeting the launch of a campaign for fiscal reform.
"The fiscal cliff is quickly approaching, and since the Legislature failed to consider any options to avoid it, we must start planning early," Edwards said in a statement to Gambit. "Louisiana is climbing out of our economic downturn, and we are making significant progress. The business community can play an important role in this process, and I want to hear their ideas and be a partner with them as we work to solve the problems that have plagued Louisiana for too long."
By engaging directly with business leaders, Edwards is flanking two of his biggest adversaries — House Republicans and Louisiana Association of Business and Industry (LABI) President Stephen Waguespack, who has been a leading critic of Edwards' tax policies.
Waguespack told me he welcomes Edwards' overture to business leaders, but he couldn't resist reminding the governor that real fiscal reform means restructuring how Louisiana spends, not just how it taxes.
"I love the fact that he's meeting with business leaders and job creators," Waguespack said. "I'm assuming they'll tell him what they're hearing in the real world. It's a tough economy out there. Changing tax codes and lawsuits have made things complicated. But most employers want to do what they can to make things better, and I believe that's what they'll tell him. I expect it will be a good back and forth."
Waguespack added that Edwards "can't just send a letter to the Legislature saying, 'Show me a plan.'"
Edwards does have to have a plan at the end of this process — and he needs to have lots of company on the dais when he announces it. If he wants that plan to have a snowball's chance of passage, it must be more than just tax reform. It also must be budget reform — changing the structure of state and local governmental responsibilities — which will have to occur over a period of years.
Louisiana can't sustain Huey Long's model of the state paying for everything. Edwards' biggest challenge won't be convincing business leaders to join him; he also must convince local governments to embrace more autonomy and more responsibility for raising revenue and providing services — as is done in other states.
That kind of reform would be game changing for Louisiana. We'll see if the governor's tactical pivot is the first step toward that kind of change.