State lawmakers return to Baton Rouge next week for an annual session that by law must focus mostly but not exclusively on fiscal matters. This year’s session, like most in recent memory, seems destined to be marked by partisan squabbles over the state’s taxing and spending policies. If history is any indicator — and it usually is — Louisiana taxpayers should not expect much progress toward the oft-stated but elusive goal of fiscal reform. Kicking the proverbial can down the road always seems to be the Legislature’s default course of action.
Gov. John Bel Edwards has suggested a package of revenue measures designed to raise at least $1.3 billion, anchored by his proposed “commercial activity tax” or CAT, which would tax the gross receipts of most Louisiana businesses. Only a few other states levy such a tax, and several have repealed their versions of it. In fairness, the governor also suggests measures that come straight out of the fiscal reform playbook, but those ideas are overshadowed by his CAT proposal.
On the spending side, Edwards likes one lawmaker’s idea of limiting state spending to 98 percent of officially forecasted revenues, but he does not suggest overall budget cuts or restructuring state spending. Instead, he proposes raising revenue to restore previous funding levels to the TOPS college scholarship program and to boost funding for K-12 education.
“The current tax and budgeting practices simply aren’t working for Louisiana and don’t provide a level playing field for both individuals and businesses,” Edwards said in announcing his fiscal plan. We agree, but the devil is always in the details — and the governor’s plan needs fleshing out.
While the governor focuses on revenues, many Republican lawmakers sing a familiar refrain of cuts, cuts, cuts — but they have yet to offer a specific plan. Louisiana already has cut higher education and health care severely in the past eight years, and no fiscal expert says we can cut our way out of what Moody’s Investors Service calls Louisiana’s “structural deficit.”
Two things have to happen to change the expected outcome of additional gridlock: first, the governor and House Republicans must be willing to compromise and build trust with each other; and second, all must commit to a long-term plan that gets Louisiana on a path of real fiscal reform — which means spending reforms as well as tax reforms.
Since the days of Huey Long, political power in Louisiana has been vested in the state, forcing local governments to beg governors and lawmakers for fiscal crumbs. Real fiscal reform means getting the state out of the business of funding purely local concerns, freeing local governments to raise enough revenue to pay for those concerns, and reducing state taxes while streamlining and simplifying Louisiana’s tax code. That kind of reform represents fundamental change, the kind that upsets the prevailing political order. Those who wield power (and those who keep them in power) rarely give it up voluntarily. If you want real change, you have to demand it.
Or keep kicking the can.