Focus on state spending cuts, local leaders say

State officials should focus on finding areas to make spending cuts instead of increasing taxes to balance the state’s budget, particularly because of the current economic downturn, some local leaders say.
Gov. John Bel Edwards announced his proposal Tuesday to stabilize the state’s budget ahead of the special legislative session he plans to call in February to address the crisis in Louisiana’s budget for the 2016 and 2017 fiscal years.
The administration inherited an estimated $750 million shortfall in the current fiscal year and a shortfall of up to $1.9 billion in fiscal year 2017, according to a governor’s office news release.
The state fiscal year ends June 30.
St. Mary Chamber of Commerce Chairman Bob Harrison said state leaders need to find another way to fix the budget shortfall than raising taxes because “we’re already hurting down here.”
The community has been hit hard by the economic downturn, Harrison said. The state might need to furlough some employees or delay some projects “but definitely not raise taxes, especially not for the businesses,” Harrison said.
State Sen. Bret Allain, R-Franklin, said of Edwards’ budget proposal, “I was shocked at the size of theask. If he enacted everything, that would be enough money to run a small country.”
Allain called the governor’s proposal “a starting point” from which legislators will have to negotiate, he said.
Edwards’ budget plan does have a couple items in it Allain may be able to support, including requiring retailers to collect a sales tax on internet purchases and raising the cigarette tax from 86 cents to $1.08 per pack, he said.
“The majority (of Edwards’ proposals) I don’t think I could support,” Allain said.
Allain wants Edwards to show legislators where the spending cuts are that go along with the “revenue increases,” he said.
“If all revenues are going to be on the table, then I think every agency in state government needs to be on the table, too. That’s the bottom line. There can’t be any sacred cows,” Allain said.
State Rep. Sam Jones, D-Franklin, said he’s never been “much of a tax person.” However, the budget situation former Gov. Bobby Jindal left the state in is terrible, Jones said.
Jones would only consider voting for temporary new taxes “to get us out of the Jindal mess,” he said.
State officials will have to deal with huge structural problems in the budget immediately, Jones said.
Increasing the state’s sales tax from 4 percent to 5 percent is one thing Edwards wants to try in order to make immediate repairs to the budget, Jones said. Jones hopes the sales tax increase will be temporary “just to get us out of this mess,” he said.
Edwards’ plan is going to be a combination of new revenues and spending cuts, Jones said.
Some state tax credits have been around since the Great Depression and are no longer justified, Jones said. Businesses should have to tell state officials why those companies should still get those tax exemptions, Jones said.
“We have $3 billion of such tax credits that are special interest tax credits, and a lot of those need to go away,” Jones said. “If you and I are paying them, unless there’s a compelling reason, everybody ought to pay them.”
Jones expects Edwards to have to call another special session during the regular session to finish tweaking the budget, he said.
Legislators will have to decide what budget cuts they can live with and which ones they have to find new revenue sources for, Jones said.
St. Mary Industrial Group President Greg Roussel said any state tax increases should benefit the area they’re taxing. For example, if there’s an increase to the tobacco tax, that money should go to pay for medical costs associated with tobacco use, Roussel said.
Edwards’ plans to expand Medicare, increase the minimum wage, increase need-based funding to students and increase funding to higher education will make his plans to stabilize the budget difficult, Roussel said.
Roussel does like some of Edwards’ general ideas to stabilize the budget, including making budget reductions and increasing government efficiency, he said.
“We need funding for higher ed, but we’ve got to find a way to get that money,” Roussel said. State leaders can’t just keep increasing spending and cut just a small amount of expenses if they want to balance the budget, he said.
State Rep. Beryl Amedee, R-Gray, said the state’s budget woes are partly the result of economic uncertainty, such as the price of oil.
“I’m hoping that we can find long-term solutions that don’t include increasing the tax burden on individuals or businesses or even local governments, because with the current economy, nobody’s got extra (money),” Amedee said.
Fixing the budget problems will likely require spending cuts, which means making tough cuts to services. “But we can’t keep spending what we don’t have,” Amedee said.
The Associated Press reported that Edwards’ options for balancing the budget include:
—Increasing Louisiana’s state sales tax from 4 percent to 5 percent, with fewer exemptions allowed for the new tax.
—Increasing the state telecommunications tax charged from 2 percent interstate and 3 percent intrastate to a flat 5 percent rate.
—Increasing the state’s tobacco tax from 86 cents per pack of cigarettes to $1.08 per pack.
—Increasing the state income tax for middle- and upper-income residents who itemize their tax deductions, by cutting the percentage of federal excess itemized deductions those taxpayers can deduct on state income tax forms.
—Increasing taxes on alcohol.
—Eliminating the state tax deduction for federal income taxes in exchange for lower individual and corporate tax rates.
—Charging corporate franchise taxes on more businesses.
—Enacting a state car rental tax.
—Charging a state sales tax on hotel rooms booked through online travel companies.
—Making permanent a recently-passed 28 percent across-the-board cut on many tax break programs and a 20 percent cut on certain business tax rebate programs. The reductions are due to expire on June 30, 2018.
—Repealing the sales tax exemption for business utilities, requiring businesses to pay the 4 percent existing sales tax, but with provisions to lower the tax if natural gas prices rise.
—Reducing the tax credit businesses can receive from the state for paying local property taxes on their inventory.
—Reducing a tax credit that insurance companies receive for payment of insurance premium taxes.
—Providing a method for collecting state sales tax from online retailers.
—Reworking tax loopholes.