You might have seen this editorial by the Baton Rouge Advocate more or less trash-talking the Republicans in the Louisiana legislature over the fact that Louisiana now has a surplus left over from the 2017-18 fiscal year – apparently that surplus is bad news for conservatives and great news for everybody else because Louisiana’s economy is just killing it.
The process has hardly been perfect, but in Edwards’ first fiscal year, there was a small surplus, and a larger one is expected as the books are finally closed on the fiscal year that ended June 30.
Unfortunately, good news is always criticized by Edwards’ political opponents. The line of argument now is that the surplus, perhaps $300 million but no one knows yet for sure, is too much and shows that the tax increases were excessive — even though, as Edwards points out, the state sales tax is now lower that it was last year.
For state Rep. Nancy Landry, R-Lafayette, the “conservative House Republicans were right to question the governor’s claim of a need to raise taxes to cover a purported $400-500m deficit.” This Twitter analysis gets just about everything wrong in 280 characters.
The conservative House Republicans she praises were relentless obstructionists, trashing the nonpartisan tax reform proposals pushed by experts selected by the Legislature itself.
All taxes were anathema, even among those who helped Jindal dig the financial hole that Edwards inherited. They said Edwards was always exaggerating the budget crisis, even though he was still cutting various programs. The state general fund is lower than it would have been if the Jindal tax cuts, particularly in income taxes, had not been made; growth has only made up part of the losses. Our tax system is still one of the worst in the country.
In real life, the predicted surplus — a fraction of the $9 billion general fund — was probably influenced less by specific tax decisions in the last fiscal year than by the gradual economic recovery, particularly in Landry’s own Acadiana, hard-hit by the 2014 collapse of the price of oil.
A surplus of this size means there won’t be a midyear Jindalnomics crisis in agencies and colleges and other state institutions, of the sort Landry and others supported in the blown-up budgets of the past decade.
And under the Louisiana Constitution, surplus money can only be used for specific one-time purposes, such as paying down retirement debts, replenishing the “rainy day” fund, or repairing
We don’t know how big the surplus is going to be, but we’re glad to have it, given the ugly alternatives of the past decade.
News flash for the know-it-alls on the Advocate’s editorial board: Acadiana isn’t exactly back. What economic recovery there is in Louisiana is led by Lake Charles and Baton Rouge, both of which are growing due to the flowering of the state’s industrial expansion the Jindal administration produced. Everywhere else in Louisiana there is no particular recovery to speak of.
Nancy Landry knows this, which is why her messaging has been about how she and her colleagues have fought to keep the amount of economic damage Louisiana’s bloated state government – and yes, it was bloated under Jindal as well, despite the false narrative the Advocate and other left-leaning media outlets in the state crafted to claim state workers were being paid in confederate dollars – does to the state’s private-sector economy to a minimum. For this she is called out and castigated by the editorial staff of a newspaper which has been between the sheets with John Bel Edwards since before he was governor.
Let’s not forget that Edwards, as a member of the Louisiana House of Representatives, voted for no less than six of the eight budgets passed while Bobby Jindal was governor. If you pay attention to the Advocate you’d be excused for forgetting that fact, because nobody at the Advocate is interested in reporting it. Instead, it’s Bash Bobby Jindal And Extol The Virtues Of Our Tax-Raising, Fiscally Responsible Governor.
Nothing in the Advocate’s piece takes note of the fact that in all those midyear cuts the Jindal administration made there were no school or hospital closings, there were no elderly nursing home patients turned out onto the street, the TOPS program survived, there were no mass releases of prisoners…none of the doomsday scenarios we’ve had our fill of since Edwards took office even materialized while Jindal was in office.
That’s not to defend Jindal’s budget practices. His administration was guilty of some funny-money accounting tricks. But the idea that Jindal was a bad guy for practicing fund sweeps to spend surplus cash from dedicated funds, and John Bel Edwards is a good guy for imposing massive tax increases to generate a general fund surplus, is horribly dishonest. It’s the kind of mendacity which calls into question why anybody should ever read the Advocate’s editorial page.
It’s not like these policies don’t have consequences, after all. While Edwards pleasures himself with the idea that Louisiana’s economy is booming the state’s unemployment rate has quietly risen for five straight months.
Wait, what? you say? We didn’t stutter.
Louisiana’s unemployment rate hit 5 percent in August, worsening for the fifth straight month.
The state’s jobless rate rose from 4.9 percent in July and was above August 2017’s level, also 4.9 percent.
For the third month in a row, Louisiana saw the number of people with a job declined faster than a shrinking workforce, pushing the number of unemployed people up to nearly 107,000.
The separate employer payroll survey — many economists’ top labor market indicator — was flat at 1.99 million. Payrolls remain 16,000 above year-ago levels, thanks to gains in early 2018.
Louisiana’s unemployment rate is a full point higher than the national average. And that’s despite the fact Baton Rouge and Lake Charles are both in labor shortages because the construction companies and the plants can’t get enough qualified people. The rest of the markets in the state? Nothing is happening.
That this is happening amid a national economy which is growing at somewhere around 4.5 percent isn’t just a missed opportunity, it’s a recipe for rapid outmigration. When neighboring states are booming and your state is not, your people will move to those prosperous neighboring states. We don’t have the current Census numbers on that question, but it’s a good bet they’ll show more than the 27,000 people who left Louisiana for better lives elsewhere last year.
LABI president Stephen Waguespack, who’s on the phone all day with corporate decision-makers attempting to spark economic growth, has been warning about the negative effects of bad economic policies – including here at the Hayride – for two solid years. For his trouble he got viciously attacked by the insane Sue Lincoln at the Bayou Brief this week, in a screed even dumber than the one at The Advocate.
But the state government has a surplus, so the economy is awesome. So says the Advocate’s editorial board.
Even the state government’s economist doesn’t believe that line.
The Louisiana Legislature‘s chief economist sought Tuesday (Sept. 25) to temper suggestions that an estimated $300 million-plus state surplus is the sign of a booming economy or an indication the state will be awash in extra cash this year.
Greg Albrecht told the state’s top higher education board, the Board of Regents, that Louisiana’s economy has shown “modest improvement,” but that he doesn’t expect economists to recommend a boost to this year’s income forecast by a similar $300 million amount.
“That’s not going to happen,” Albrecht said.
The surplus is excess cash remaining from the budget year that ended June 30, tied to better-than-expected personal income and corporate tax collections and a slight uptick from oil prices. Sales tax came in slightly lower than projected, Albrecht said, lessening the surplus’ size.
Albrecht’s judgement is echoed by state representative Beryl Amedee (R-Houma), who went further in a statement to The Hayride…
The state budget surplus the media is buzzing about could be $300m. It’s from FY2018 that ended June 30.
The bulk is due to “better than expected” revenue from individual income tax withholding and corporate income tax.
Remember, the Louisiana Department of Revenue increased withholding three weeks after the feds passed income tax reform. Remember also that we increased the Earned Income Tax Credit. So this revenue windfall may be offset by a corresponding increase in refunds the state will have to pay out in May 2019 when we all file our state tax returns for this year.
A surplus doesn’t just roll over into the next fiscal year. According to our constitution, the only allowable uses for surplus dollars are:
- Pay down debt
- 10% MUST go to UAL
- 25% MUST go to Rainy Day Fund
- Capital outlay
- Coastal protection
- Match money for federal highway projects
In other words, this surplus isn’t even the good news the Advocate’s editorial staff is touting. It’s a temporary bump. Is it better than a deficit? Even that is arguable; to believe it you’d have to believe money in a government bank account does more good for the economy than it would in the pockets of taxpayers. But most of that $300 million will be gone next year when the state has to pay out tax refunds.
It’s hard to make the case, once that happens, that Edwards’ fiscal management practices are all that much better than Jindal’s. Raping the taxpayers with sales taxes among the highest in the country to go with income taxes that Texas, Florida and Tennessee don’t have, not to mention inventory taxes and lots of other anti-competitive economic policies Louisiana is addicted to, might generate a surplus once in a while but they sure don’t create prosperity.
The fact the Advocate’s editorial writers don’t understand this is a problem. How are you going to inform the public when you’re clueless yourself?