Louisiana legislators are working with Gov. John Bel Edwards (D) to fill a looming $850 million gap between state government spending and revenues.
In February, the Louisiana Joint Legislative Committee on the Budget approved $60 million in spending reductions proposed by Edwards. Additionally, lawmakers in the House of Representatives approved a bill that would increase the per-unit excise tax on cigarettes by 22 cents, raising the tax from 86 cents per package to $1.08.
Kevin Kane, president of the Pelican Institute for Public Policy, says the state’s lawmakers have tough choices to make in 2016.
“The budget is in the neighborhood of $25 billion, so the deficits for fiscal years 2015–16 and 2016–17 are sizable,” Kane said. “Cutting spending is never easy, but it is particularly difficult in Louisiana because much of the budget is protected from cuts by statute or by the state constitution.”
Kane says the state’s spending laws make it difficult to solve the deficit problem without raising taxes.
“The statutory and constitutional blocks to spending cuts force legislators to cut from higher [education] and health care, while other programs may not face cuts,” Kane said. “The $60 million number may appear modest, but, in fairness to legislators, they have been cutting spending for several years now.”
John Kay, director of the Louisiana chapter of Americans for Prosperity, says the state’s deficit crisis has multiple causes.
“The hole can be attributed to several things, including overspending and a bloated budget; the drop in the price of a barrel of oil; and statutory and constitutional dedications that protect many areas of state spending from cuts,” Kay said. “Just this year, it was reported that the Louisiana state government is losing money on the corporate tax code when exemptions, deductions, and the actual rate paid are considered.”
New Ideas Needed
Kay says solving this problem will require lawmakers to think outside the box.
“They have refused to open up statutory dedications for cuts or reform the tax code in the state, choosing instead to raise taxes on the citizens of Louisiana,” Kay said. “The legislature should examine cuts to contracts and statutory dedications, among other things, to patch the immediate hole, while looking to tax reform and budget reforms to fix future holes.”
Dustin Siggins ([email protected]) writes from Washington, DC.