Sunday, June 23, 2024

Budget battle in Louisiana Legislature heating up

by BIZ Magazine

By Victor Skinner | The Center Square contributor

A coalition of Louisiana organizations calls on lawmakers to “adopt a responsible budget for FY2024” that doesn’t increase the state’s spending cap.

The Pelican Institute, Louisiana Association of Business and Industry, Americans for Prosperity Louisiana, Louisiana Family Forum and several others released a statement Tuesday outlining key principles for a responsible budget that would set the state up “to make a real difference for the future of Louisiana.”

The coalition calls on lawmakers to avoid exceeding the spending limit enshrined in the state constitution and to fully fund the Rainy Day Fund to save toward revenue triggers to lower individual income and corporate franchise taxes.

The groups also suggest legislators pay down long-term debt and ensure surplus and excess funds are spent on “genuinely shovel-ready transportation and infrastructure projects.”

“Ensuring the state has ample financial reserves to weather economic downturns and be fiscally responsible in tackling big, fundamental reform of the state’s tax code is critical,” the coalition argued, noting Louisiana has the 11th lowest Rainy Day Fund balance among states. “A robust Rainy Day Fund gives lawmakers flexibility for reform, is sound fiscal policy, and provides stability and security to the state budget.”

Republicans in the Louisiana House and Senate disagree on how the state should use about $1.9 billion in additional revenue, with the lower chamber passing a budget that would pay off retirement debt that’s not subject to the spending cap.

House Bill 1, sent to the Senate last week, would pay down about $950 million in pension debt, using money Gov. John Bel Edwards proposed in part to go toward $2,000 per year raises for teachers. The House budget would also eliminate $57 million of $114 million in spending increases Edwards proposed for higher education, as well as $52 million in new spending for early learning programs.

HB1 is aimed at reducing the impact of a temporary 0.45% state sales tax that’s set to expire in 2025 while avoiding the two-thirds vote in both chambers necessary to override the spending cap. Paying down pension debt would reportedly result in $200 million in savings to the state.

House Republicans have argued the approach would free money local school systems can use for raises, but Senate leaders and Edwards remain focused on restoring the teacher raises and education funding, and devoting additional revenue to neglected state facilities, and road and bridge projects.

Senate leaders and Edwards are also skeptical local school systems would leverage pension savings to offer raises for educators, which they have argued is important to stem the flow of thousands of Louisiana teachers leaving the profession.

Others have criticized the nearly $45 million in legislator projects in the House spending plan, which could increase following changes in the Senate.

Lawmakers have until June 8 to find a compromise or face the possibility of a special session to finalize a budget.

The Pelican Institute and other coalition members contend lawmakers have the opportunity to “set our state on a path toward a solid fiscal future,” and that requires a continued focus on creating tax relief for businesses and residents.

“Ensuring taxpayers in Louisiana get tax relief through the fulfillment of the final condition necessary to meet the tax rate reduction triggers promised to voters in 2021 is also essential,” according to the coalition, which also includes NFIB, Associated Builders and Contractors Louisiana, and the Louisiana Committee for a Conservative Majority.

“Hitting these triggers will lower income tax rates for every individual and small business taxpayer in our state. Additionally, doing so will reduce our state’s punishing franchise tax,” the coalition wrote. “All of this will yield economic growth and create new jobs and opportunities for Louisiana families.”

You may also like

Update Required Flash plugin