Thursday, November 03, 2016

Already losing next year's state budget fight

The governor's budget task force released its long awaited recommendations yesterday and they are underwhelming.
"There are no surprises," said Gov.John Bel Edwards when asked about the task force report in an interview Wednesday morning (Nov. 2).

The task force has returned to several concepts and ideas floated previously with little success in the Louisiana Legislature. It suggests eliminating the state federal tax deduction for income taxes or restricting federal itemized deductions on income tax payments.

The task force said the Legislature should also look at phasing out an expensive state business inventory tax and tax credit which benefits local governments. It recommends an automatic sunset on all business incentive programs, and the elimination of those tax credits programs which don't work. It also suggests changes to the state's industrial tax exemption that are similar to those already being implemented by Edwards.

Furthermore, the task force said Louisiana shouldn't retain a sales tax hike it passed last spring, which gives the state the highest sales tax in the nation right now. Instead, it should lower the sales tax rate, but continue to tax a larger range of services that it is currently taxing temporarily  -- such as business utilities and custom software. New services -- such as internet transactions and purchases -- should also be subjected to sales tax, according to the group.
The sales tax ideas seem ok depending on what specific pennies actually stay clean when the legislature gets a hold of this. The income tax stuff depends too much on bank shot proposals that limit federal deductions but also flatten the tax brackets. There's a suggestion that the overall effect is progressive but I'm skeptical.

A better idea would have been to reinstate something  like the Stelly plan which lowered sales taxes on essentials like food and raised upper income tax rates.  But the governor  (who voted to repeal Stelly when he was in the legislature) was never on board with that.

It also looks like a wasted opportunity to gain an advantage on obstructionist Republican lawmakers whose ideas have just been thoroughly discredited.
Louisiana raised over a billion dollars in taxes just last spring in order to prop up the state's shoddy finances, but House Republicans blocked the governor from ginning up even more revenue. At the time, the House Republican leadership said staff had evaluated the new taxes too conservatively -- that more tax revenue would come in than estimates showed.

In the end, the tax estimates didn't end up being conservative enough. Louisiana has less money coming into its coffers than either the Republicans or the governor expected.

"It is sort of an 'I told you so' moment," the governor said, adding: "They could have gotten a jump on the things that the task force is recommending because they are many things that we had before the Legislature at the time."
See when that happens, when you get a new "I told you so moment" where your lying opponents have been proved fucking wrong you're supposed to play that hand. This would mean, at least, that you don't come back to the table with the same conciliatory package they obnoxiously rejected last time.

But that's exactly what the task force is offering now. We were asked to believe during this year's sessions that this was the best we could expect from them in the "emergency" budget gap situation. This task force was supposed to come up with bolder, more long term solutions to the state's fiscal problems. This is a lame attempt at that if it's even an attempt at all. Next year's legislative session is going to be a fight. The Governor looks like he is already trying to lose it.

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