Louisiana sharpens budget ax. Legislature determined to prevent tax increase
Baton Rouge, La.
Louisiana is about to perform a disappearing trick that would cause its deficit -- a hefty one -- to vanish. There's nothing mysterious about the process, though. The Legislature is expected to do it by slashing the state budget. It is resisting raising taxes. And it has rejected the governor's pet solutions, casino gambling and a state lottery.
Plunging oil prices put Louisiana in a sorry economic state. In the wake of the crises, a number of large and intermediate petroleum-related businesses have failed, sparking an exodus of thousands of middle-class residents. Unemployment is at 13.2 percent, the highest in the country. Every dollar decline in oil prices brings Louisiana a potential loss of $30 million in revenue.
In the midst of this, the Legislature seems determined to bring its projected $871 million budget deficit to zero without raising taxes. The Senate has approved the new budget, which whacked spending by $437 million. The rest of the deficit is taken up by the elimination of dozens of state construction projects left over from last year.
This week, the House is also expected to approve the new budget, though it has so far been delayed by fierce lobbying to restore cuts in education, medical, and other human services programs.
``Despite the deficit, the budget for the state is, by everyone's agreement, per capita, one of the highest in the nation and it needed to be reduced,'' says James Michael, the director of the College of Business's research division at Louisiana Tech University, which monitors state tax issues.
``In the future we ought to be like other states. We'll have limited funding just as they do, and through a legislative process of elimination we can dedicate ourselves to the things that are critical in the budget. If we don't do that, Louisiana will not survive economically,'' Dr. Michael says.
Despite Gov. Edwin Edwards's statements that what the state really needs is more dollars coming in, supporters of the budget were encouraged last week when he announced he would not veto it.
The balanced budget, however, has not been without its detractors. Education lobbyists have complained about a $3.9 million cut in aid to private and parochial schools. Environmentalists have urged the legislators to restore $4.3 million to the Department of Environmental Quality. And the mayors of several large and medium-size cities in the state have complained about the loss of more than $34 million in tobacco-tax revenues for local and municipal use.
The balanced-budget measure also calls for a reduction in services in the state's charity-hospital system, which was designed to aid Louisiana's indigent.
``I agree that the bill as proposed cuts too deeply into human services and into education,'' said Rep. Mary Landrieu (D) of New Orleans. ``But hopefully we'll be able to change some things as the House looks over this measure one last time.''
Legislators early in the session expressed opposition toward enacting any new tax measures. Even the state's controversial Homestead Exemption Act, which exempts homeowners whose property is assessed at $75,000 or less from property taxes, went untouched.
Although Representative Landrieu said it is crucial that essential state human services remain intact, she says the Legislature should be congratulated for reducing the deficit as efficiently as it did. ``This is the single greatest deficit facing this state, or probably any state in the union in terms of its proportion,'' Landrieu said. ``And in two months we've practically wiped it out.''
House Speaker John Alario Jr. (D) of Jefferson Parish, says fee increases for permits, licenses, and state services, as well as the repeal of tax breaks given to parents of schoolchildren may help offset much of the $437 million in budget cuts. The revenue measures could be enough to restore cuts in aid to school districts and public television and may help keep state parks and museums open until at least the end of the summer.