By David Specht, [email protected]
Gov. John Bel Edwards will present his budget to a joint session of the legislature Monday, and State Rep. Gene Reynolds, D-Minden, said drastic cuts are expected.
“In this meeting the administration has to present a budget with the current amount of predicted revenue for next year,” Reynold said. “The temporary clean penny and a few other temporary measures will expire on July 1 and that will leave a $1.1 billion decrease in revenue.”
Reynolds said if the legislature does nothing, the Governor’s budget will be the one on which they cast votes during the regular legislative session. But, he said, that’s not their only choice.
“We, the legislature, can replace the revenue or replace part of the revenue or make the cuts to balance the budget,” he said.
Lawmakers have been working on solutions to forthcoming “fiscal cliff” for months, but have yet to come to consensus.
“We have been briefed numerous times about this fiscal cliff, the causes, the solutions, and the bills needed to fix the problem for almost two years and as of today nothing has passed from the House,” Reynolds said. “I have been meeting with Democrats and Republicans for the last 5 months on possible solutions and as of today we still can’t say we have 70 votes [need for passage].”
On the revenue side, Reynolds said the solutions involve sales taxes, corporate taxes, and other income taxes.
“Seventy-two percent of our revenue comes from sales tax and income tax. Corporate tax brings in about eight percent and other sources are less than eight percent,” he said. “Keep in mind we would only replace the revenue that will expire or part of that revenue.”
Some sales tax options that have been discussed and their fiscal impact are:
- Keep the clean temporary penny – $800 million.
- Drop the clean penny and clean the other four cents (sales tax). “This would only bring in around $300 million because of constitutional dedications of sales tax,” Reynolds said.
- Elimination of non-constitutional exemptions. There are over 200 sales tax exemptions.
- Use part of the temporary penny to keep money coming until we see a $200 million projected savings from the federal tax cut in 2019/2020.
“All of these take 70 votes and as of today we can only count on about 58-60,” said Reynolds.
On the cost-saving side, Reynolds said state law limits where cuts can be made, “Since the vast majority of our spending is health care, education, and $6.8 billion in tax exemptions, cuts would mostly come from those areas that are not protected by law,” Reynolds said.
The budget has been a political hot topic, and Reynolds isn’t shying away from the “popular” fixes. “I know this will bring comments about contracts, waste, food stamps ,and salaries but those are political talking points that are not factual,” he said.
“Food stamps are federal, no state money. Contracts are long term and are being reviewed but the savings are small. Salaries for the vast majority of state workers are low and tied to civil service. Waste is being addressed to find savings but here again the number is low.”