In Pelican Institute CEO Daniel Erspamer’s latest column in The Hayride, he lays out what’s at stake in the coming debate about how to solve Louisiana’s “Fiscal Cliff.”
It starts with getting the facts right.
The problem with all of this is we haven’t really identified the problem. The truth is, given recent events, the actual difference between expected revenue and last year’s budget total is more in the range of $500-$600 million.
- In December, the Revenue Estimating Conference reported some good news: as the economy has shown a little sign of life, tax collections are exceeding initial estimates, and they increased the revenue for the coming fiscal year by $234 million.
- The impact of the recently-passed federal tax reform on Louisiana’s tax collections isn’t entirely clear yet, but most experts expect it to generate at least another $250 million in revenue in the coming year.
- You may have heard something about a “Continuation Budget,” as well. That budget automatically adds $440 million to last year’s total without regard for anything. That’s just crazy. That’s like a family who plans to make $50,000 next year setting their budget at $51,000, just because of “inflation.” We’ve got to make these numbers real.
So, while a $600 million deficit out of a $30 billion total budget is still a lot of money, it’s a very different story than the $1.5 billion deficit the Governor and his allies have been touting. We should act accordingly.
What’s more: the governor and his allies have made the case that raising taxes is really the only way to solve this gap. His “balanced approach” includes about $1 billion in new taxes and exactly $0 of spending cuts.
It’s completely unacceptable for the state to consider asking the taxpayers to contribute more money – once again – just because the state wants to spend more than it’s projected to collect. That’s especially true when the alternatives are taxes that would dampen economic recovery and export even more jobs to our neighboring states.