[Ed.’s note: This originally appeared in the Jan. 31st print edition of the Bossier Press-Tribune. All local legislators were contacted regarding this topic.]
A billion-dollar budget deficit for the state is set to rear its ugly head thanks to expiring tax revenues.
Ominously called the “fiscal cliff,” the deficit was solved in a special session by passing, mainly, a one-cent sales tax increase and several taxes on businesses. Designed to sunset this year, the question now is what will legislators do to either replace tax revenues set to expire this year or where will they cut the budget to find the missing revenue?
Sean Green with BIZ. Magazine asked local legislators Sen. Barrow Peacock (R-Bossier City and Shreveport) and Rep. Dodie Horton (R-Haughton) what they thought about the impending fiscal cliff, what can be done to solve it, and what the worst-case scenario is.
How did we get into this situation? There were and are a lot of scare tactics used by Gov. John Bel Edwards’ administration to get an income tax increase. I believe the legislature’s decision to pass a temporary one-cent sales tax increase two years ago was with the intention to look at the tax structure and spending side. That hasn’t been done from the administration.
Is the fiscal cliff a scare tactic being used by the governor to raise taxes? The administration is not taking into account some of the anticipated revenue from the new federal tax bill which will allow you to reduce the deduction on your state income tax and should generate $200-plus million for the state. The governor is not saying he’s for a tax increase, but he’s implying that and dancing all around it. I am opposed to that.
What would “falling over” the fiscal cliff look like? I think higher education and TOPS will be funded. I do think healthcare is very important but our healthcare budget has increased substantially from total state effort and the federal side. For us to not try to rein in the cost of healthcare in our state is going to hurt the entire economy. Some of our citizens have gone off private insurance and onto Medicaid thanks to the expansion. And reimbursements are less to medical providers. We need to have a healthcare delivery system that does its job, but we cannot sit by and allow the cost to ramp up. It will eventually take up the entire budget if we don’t rein it in.
What is your solution to the fiscal cliff? The administration has said they are open to cuts but want us in the legislature to be specific. The governor is CEO of the State of Louisiana. He and his administration have frontline knowledge of where cuts can be made. We can see definite areas where the budget has grown so to say, “There is no fat,” is not a true statement. Cuts can be made. His cabinet secretaries should have the best knowledge where efficiencies can be done. There have been agencies that have been cut but to say nothing more can be done, you can always do more.
What would falling over the fiscal cliff look like? It all depends on how the governor decides to cut the budget. He always attacks the programs that are most valuable to the middle class such as TOPS. This is only one of three such programs that the middle class can take advantage of because they make too much money for their children to qualify for grants but far from enough to afford to send their children to college. I always vote to keep TOPS fully funded. The other two programs are the tax free weekends, which were implemented in order to reward the hard working citizens of Louisiana for living and paying taxes in our state.
Is the fiscal cliff a scare tactic being used by the governor to raise taxes? Absolutely! He has stated that he wants the (one-cent sales tax) to sunset, so what is left? He seeks to go after our personal income taxes. He would like to implement the Stelly tax again, which put the bulk of the tax burden on the middle class, which have always been considered the most stable class of tax payers in the state and country. I did not support the fifth penny but one thing is for certain, the only so called ” fair tax” is one that everyone pays and this is why the Governor wants it to end.
What is your solution to avoiding the cliff? The short term fix would to be to budget according to priority. But I know, and history bears this fact out, that Louisiana has a structural problem with its service delivery model, which was installed back in the 1930s. Throwing more taxpayers dollars after an antiquated failed system will not fix our problem, which is self-induced. Administration after administration along with well-intended legislators all end up frustrated because the structural changes that must be made remain unchanged so we go on, and on, and on. Our governor has 30,000 employees at his disposal who he can direct to dissect the current service structure for each department, seek out other like states and adopt best practices. Not only will our state save millions, but hopefully would provide the necessary services to our citizens more effectively and efficiently. There is no doubt in my mind that Louisiana does not have a revenue problem but a structural problem with a resistance to progress.