Friday, May 24, 2024

PAR: Legislature should ‘plan for brevity and essential business,’ consider tax and budget cuts

by BIZ Magazine

By David Jacobs | The Center Square

The Louisiana Legislature should “plan for brevity and essential business” as it tries to figure out how to handle a regular session cut short by the coronavirus pandemic, the Public Affairs Research Council of Louisiana says in a new paper.

At the same time, PAR argues, lawmakers should be thinking about state budget cuts and tax cuts for businesses that have been forced to stop operating through no fault of their own.

This year’s regular session began March 9 and was suspended March 16 because of the public health concerns associated with the spread of the new coronavirus. Legislators held a brief session Tuesday before adjourning again indefinitely.

The regular session must end June 1. Lawmakers are constitutionally required to approve a new state budget before the fiscal year begins July 1.

“The bottom line: make sure preparations upon reconvening include the possibility of a single short session devoted to indispensable matters, knowing that special sessions can follow later,” PAR says.

While this year’s regular session is non-fiscal, meaning many tax and financial issues are off the table, a special session could have a broader agenda. The governor or a majority of lawmakers can call a special session.

Spending bills covering general state appropriations, capital outlay and other areas are among the “things that have to get done,” PAR says. Failing to update the Minimum Foundation Program for school funding, which Gov. John Bel Edwards wants to increase, would be “less than ideal” but “not the end of the world” since the current MFP would remain in place.

Also, some state agencies are scheduled for “sunset hearings” to allow them to continue to exist, and there may be revenue renewals or other deadlines to consider, PAR says. One way of dealing with certain deadline requirements or temporary problems is by suspending laws, which the legislature can do for one year by concurrent resolution or longer if enacted by law.

In some cases it might make sense for the Legislature to follow through with some decisions after the session ends, “provided it can be done constitutionally and transparently.” For example, the budget committee that includes House and Senate members meets publicly throughout the year and already has considerable authority.

Mitigating the session’s health risks should include coronavirus testing for members and participating staff, PAR says. While all ages can become infected – state Rep. Ted James, the first Louisiana legislator to announce testing positive, is only 37 – older people are at higher risk of serious complications and PAR says 45 legislators are age 60 or older.

“Careful planning will be needed to create a process combining the use of live video, personal distancing, extended periods for voting and the possible suspension of some rules of procedure, all while conducting affairs in view of the public and with the ability to take input from the public,” PAR says.

The Bond Commission has taken live testimony by phone and met Tuesday by video conference. One of Edwards’ executive orders permits public bodies to meet remotely if they can’t otherwise muster a quorum but urges them to include public interaction.

There has been some good fiscal news for the state in recent days. The federal government has committed to spending about $1.8 billion to cover state and local governments’ anti-coronavirus efforts in Louisiana. The federal government also is temporarily boosting its match rate for the Medicaid program.

Louisiana also finished the 2019 fiscal year with a surplus of about $534 million, of which 25 percent must go into the state’s “rainy day” fund (which already contains more than $400 million) and 10 percent must be used to pay down retirement debt.

Though surplus dollars cannot be spent directly on ongoing government operations, the state in the past has found ways to use one-time dollars to substitute for general fund expenditures, thereby freeing operating cash, PAR notes.

But given the extreme economic uncertainty nationwide, the legislature should start looking for budget cuts for next year, PAR says, while also considering regulatory measures or tax cuts that would help small businesses recover.

Tax cuts can reduce state and local government revenue, and tax breaks don’t necessarily lead to a more vibrant economy, PAR notes.

“It is not a great risk to assume that there are plenty of businesses out there ready to be successful again,” PAR says. “A state investment in tax relief, properly executed, would be better than a speculative bet in the coronavirus recovery period.”

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