Roughly three years ago, newly minted Gov. John Bel Edwards, a populist Democrat, convinced a Republican-controlled Louisiana Legislature to approve a new one-cent sales tax to pull the state out of a fiscal ditch.
Revenues generated by the new sales tax, along with revenues realized from suspending a host of sales tax exemptions, were necessary to erase a budget deficit that, according to Edwards, totaled some $2 billion.
Armed with a truck load of new money, Edwards, by executive order, plunged Louisiana head long into expanding the state’s Medicaid program, which according to a recent audit is marred by waste and fraud, pumped tens of millions of dollars more into higher education and threw a few dollars here and there toward much needed repairs to state highways and bridges.
Roughly a year ago when the one-cent sales tax was about to sunset, Edwards struck a deal with a Republican-controlled Legislature to renew .45 percent of the penny sales tax. As you might expect, Edwards argued renewing almost one-half of the penny sales tax was absolutely necessary for state government to remain on sound financial footing. A Republican-controlled Legislature bought it hook, line and sinker.
Taxing consumers on their purchases has worked out well as far as the state treasury is concerned.
Earlier this spring, the state Revenue Estimating Conference, otherwise known as the body that determines how much money the state can expect to have at its disposal to spend on whatever, recognized more than $100 million in revenues that it previously had not recognized. That $100 million conveniently surfaced just in time to pay for some $100 million in pay raises Edwards promised school teachers and support personnel.
Meanwhile, it is expected the state will post a $300-million budget surplus when the 2018-2019 fiscal year comes to a close on June 30. That means — depending on whether the REC says the money is recurring revenue or nonrecurring revenue — Edwards and the Legislature have — in the midst of the regular session — tens of millions of dollars to spread around like Santa Claus on Christmas morning. Ironically, this is an election year, and the governor and lawmakers are running for re-election or some other elective office. Some of them are retiring from public service.
Noteworthy or not, the Legislature currently is entertaining the largest budget in the state’s history. The House of Representatives recently signed off on the budget void of much discussion and sent it to the Senate where it awaits final passage.
Yet earlier this week, the tax-writing House Ways & Means Committee advanced legislation to scale back the .45 percent sales tax beginning July 1, 2020. Rep. Lance Harris, R-Alexandria, authored the bill.
Under Harris’ bill, the .45 percent sales tax would drop to .35 percent in 2020, to .25 percent in 2021 and to .15 percent in 2022. The tax would disappear in its entirety on July 1, 2023, or two years before it was originally scheduled to expire.
Almost immediately, Edwards took a swipe at Harris’ bill. According to Edwards, now is not the time to start whittling away at state revenues since, according to Edwards, state government is experiencing financial stability for the first time in many years.
Edwards had a point.
While Edwards most likely wishes the Legislature would refrain from cutting taxes so he can continue to advocate for spending money like any good Democrat would, the Republican-controlled Legislature would be wise to leave the .45 percent sales tax alone until Republicans in the Legislature learn to quit spending money like our Democrat governor.