State budget woes looming

January 27, 2016
Longtime Vandebilt coach passes away
January 27, 2016
January 27, 2016
Longtime Vandebilt coach passes away
January 27, 2016

Determining how Louisiana will pay its bills for the remainder of the current fiscal year and creating a roadmap for how to accomplish that task in the next is a matter already under study by local lawmakers, as they prepare for initial committee meetings that start this week in advance of a planned Feb. 14 special session.

A Bayou Region state senator – Bret Allain, R-Franklin – is the new vice chair of the Senate Finance Committee, which is scheduled to meet tomorrow to explore budget options. An interim member of the finance committee, due to his appointment as chairman of the Natural Resources Committee, is Sen. Norby Chabert, R-Houma. Although not permitted to vote on the committee, he will still be heavily involved in its direction.

The region’s freshman lawmakers say they are prepared for the challenge once the special session is called, the immediate goal of which will be filling in the $750 million hole in this year’s budget. That shortfall exists in addition to an estimated $1.9 billion for the coming new fiscal year.

A continued drop in oil prices, resulting in less revenue for the state, a slump in corporate income taxes on the books and a slowing in collection of state sales taxes are seen as key factors in the deficits. Legislators already know that many of the solutions under consideration are not popular.

“We are pretty well-briefed at this point,” said Rep. Tanner Magee, R-Houma, one of the Bayou Region’s freshman lawmakers. “We had budget meetings after we got elected, put on by legislative staff and some of the leaders, and then a two-day organizational session … There is not going to be anything pretty coming out of all this.”

Another new face in Baton Rogue, Rep. Beryl Amedee, R-Houma, says she is also prepared for the onerous task. Like Magee, she has been studying various presentations and weighing what options might exist.

“Right now, it is kind of a waiting game,” Amedee said. “We could submit proposals to the staff but even if we do, they would have to be done over once the actual formal call for the special session is announced.”

Gov. John Bel Edwards has discussed an increase to the state’s sales tax as well as proposals for various cuts that will include health care and higher education. The state’s universities have already received notice that they are in the line of fiscal fire.

The governor’s talking points have already been roundly criticized, with state Treasurer John Kennedy leading the charge.

“I don’t envy any public official who walks into office with a $1.9 billion budget hole to fill, but they had better be careful trying to fill it by burdening our citizens with higher taxes,” said Kennedy, who has been working on his own recommendations. “Many of our people are living at the margins right now. It could also tank an already shaky economy. We have 19,000 consulting contracts. Does anyone really believe we need all of them? Does anyone believe these consultants wouldn’t give the governor and the Legislature a 5 percent discount if they asked? Twenty-two percent of all of the managers in the state’s classified service manage one employee. The average manager manages four employees. We have too many generals and not enough foot soldiers.”

A number of sacred cows could be in for goring during the special session, including supplemental pay for police officers. The extra pay is set at a minimum but increases added in prior years could be stripped without legal consequence.

Chabert suggests that the best solutions will come from a willingness in various sectors to accept small cuts so that bigger ones affecting more people can be avoided.

“Everything is on the table,” he said, noting that the quest for solutions to this fiscal year’s problems can mean solutions for next year. Longtime fixes that go beyond mere leak stoppage for this year are what he sees as the desired outcome.

“If this year we come up with $750 million dollars that is from a recurring revenue source, a tax or a fee or if we eliminate an expense, that allows us to use recurring revenue to pay for something else,” Chabert said. “There are things we need to be raising fees on where we are not charging enough to keep up with inflation on the product.”

He made clear that a potential victim of the ax will be the inventory tax rebates given by the state to businesses that have paid those taxes to parish governments. It will be up to the parishes, Chabert said, to find ways to plug up their own budget holes if that step is taken.

Terrebonne Parish President Gordon Dove said he is watching what steps the state will take in terms of potential effects on the parish, and that what he has heard primarily is that a sales tax increase and reintroduction of the Stelly Plan, which includes a shift of taxes from food and other essentials to state income tax rates. The potential of eliminating or reducing tax credits the state provides for taxes the parishes charge on inventory of goods and certain movables is not on his radar at this point, although he is confident that Terrebonne will weather whatever reasonable steps the state might take.

“We will have to see what the state will go after,” Dove said. “They could come after some of these tax credits. What that would cause some companies to do I don’t know. One good thing is that in Terrebonne Parish we have a solid fiscal budget, the parish was left in solid financial shape by the past parish president, Michel Claudet, so we are in financially good shape.”

However Louisiana eventually solves its budget woes, Chabert said, the vital component of the search for those solutions will have to follow a philosophy of fair application to all of the state’s people and institutions.

“We need to equitably find solutions that can benefit all, that will have minimal impact and be equitable,” he said, noting that some parishes are receiving support from the state even though they have income opportunities greater than some of the others. “A lot of these cuts will have to occur at the local level before we begin cutting state services. We will have to allow them to decide where they are going to have to cut their budgets.”

A perennial call from some legislative quarters for more equitable budgeting at the state level has included the potential for broad amendment of the Louisiana Constitution, which contains many dedicated funding items that cannot be touched by budget scalpels.

The onerous prospect of that undertaking, however, has prevented it from happening in the past. Amedee says that while amending the constitution wholesale through a constitutional convention would take far too long to be of use immediately, she would like to further explore specific bills that could result in voter amendment.

But that would not likely occur before the Legislature meets for the general session in March. •

The governor has inherited major budget deficits for both the current and next fiscal year. His recommendations, which include tax hikes, are meeting with resistance.

State Rep. Tanner MageeCOURTESY State Sen. Norby ChabertCOURTESY State Rep. Beryl Amedee