Bayou Budget Battle

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With all the hubbub surrounding our national situation, only the most scandalous of local and state level issues are gaining attention. And I get it. The current situation is literally terrifying for many, although I personally think it’s better to be angry than scared. That aside, there are issues in some states that we shouldn’t lose sight of, such as S. Carolina’s bathroom bills and Alabama’s current attempt to ignore the SCOTUS ruling on marriage equality. To that I would like to add the budget disaster that is Louisiana, whose state government already receives more federal aid than any state but Mississippi (yay, we’re #2! /s).

Source: https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/

Reasons for the current situation abound, but include repeatedly overestimated tax revenue on multiple fronts. Businesses claimed tax credits at a higher rate, sales taxes continued to slump as our unemployment rate stayed high (leading to more citizens receiving assistance), and the budget is largely dependent on oil prices, which have stayed largely stable and fairly low over the last couple of years. No matter how we got here, now it’s time to pay the piper. And boy does he want a lot.

The budget was at a shortfall of around $1,000,000,000. That’s a literal billion dollar shortfall. And the ones who will be shouldering the greatest burden, as always, will be those who can least afford it.

An energy boom (not to mention federal disaster aid from hurricanes Katrina and Rita) that lasted well into 2008 led to massive increases in state spending as well as tax cuts and the repeal of one of the few progressive initiatives Louisiana has ever undertaken, the Stelly Plan. The NOLA Times-Picayune explains:

Named for former Lake Charles lawmaker Vic Stelly, the plan raised income taxes on mostly moderate-to-wealthy people and did away with a sales tax on food and utilities that disproportionately affected poor people.
It was passed and supported by Republican Gov. Mike Foster, but it had become a target for conservative talk radio by 2007, when lawmakers and Blanco passed the first portion of the repeal. Lawmakers and Jindal followed up by fully rolling back the Stelly plan the next year.
Albrecht said if Louisiana still had Stelly in place, the state would have about $800 million more in the bank each year. That amount of money would go a long way to addressing Louisiana’s current $940 million shortfall and the $2 billion problem that exists for the next fiscal cycle.

With a population that lives on an average annual income that is $10k/yr less than the national average, Louisiana has an unhealthy reliance on state sales taxes, which disproportionately affect the poor. Sales taxes alone account for around 30% of the state budget. Unfortunately, continued lagging employment combined with low wages has resulted in a statewide recession. We also rank in the bottom 10 states for job creation.

So any idiot could tell you that we need to raise taxes back to pre-2008 levels, but the state legislature is fighting tooth and nail to choose austerity for the people rather than raise taxes on the wealthy. They’ve managed to close the shortfall to a measly $300 million, but at this point there just aren’t any “unnecessary” programs left to eliminate. The only remaining choice is to raise taxes. How incredibly frustrating that they choose to do so almost entirely on the backs of the poor and middle class. Louisiana has the highest sales tax of the 45 states that have one (yay, we’re #1! /s)

Source: http://s.nola.com/AQ2LJ9N

Worse, there is an easy (partial) solution at hand. There is a state income adjustment called the federal deduction, which has been in place since 1974. This deduction benefits the top income brackets at a disproportionate rate, and results in a loss to the state of almost $1 billion. Convenient, no?

Source: http://www.labudget.org/lbp/2016/02/the-federal-deduction-needs-reform/#more-7567

On the good side, the current governor has proposed a tax plan that is surprisingly progressive, providing a tax cut for 95% of households while raising taxes on the wealthiest. The tax breaks would be of greatest benefit to those in the middle 20% (between $36k and 56k), and only incomes over $203k will face an increase. The bill hasn’t even made it past a committee vote yet, and will still face hurdles in both the legislature and the court of public opinion, but hey, at least it’s something.

I’m not saying I have all the answers. I’m just saying that if I, an average person, can see that the answer to the budget issue is raising taxes on those who can afford to pay them, then there’s really no excuse but greed for the lack of action by our state legislature. I can only hope that our upcoming elections next year lead to a wave of progressive (or at least liberal) state representatives, because the current batch is following the same “screw the poor” establishment script that is crushing the entire country. And Louisiana is fighting for #1.