Our take: A State Capitol flooded with cash, so let’s make the mistakes we’ve made before? | Our views


With the arrival of new money on the shores of State Capitol Lake, it’s time to party again like in 2008?

We fear that will happen, even when there are already warning signs that the 2022 boom is not a permanent situation. As was not the case in 2008, when one year of deep tax cuts and a national recession caused state revenues to collapse, with disastrous long-term effects on the government of the state and the citizens.

Louisiana is part of the national economy, much more so now that oil and gas revenues no longer fuel the state budget as before. And with interest rates rising to fight inflation and stock markets plummeting around the world, Louisiana is not immune to the deflating of a post-pandemic boom.

The generous funding also ignores what economists delicately call “geopolitical risks,” which include a very real war in Europe.

So, while lawmakers are popping champagne corks, we’re looking at the $45 million reveal, with a minus sign in front.

It is the small drop in certain state taxes and fees for the general fund, predicted by economists, even as they and state officials have “recognized” new revenues that are higher overall .

With various deductions and dedications, the fiscal year beginning July 1 will see an additional $350 million in the state’s general fund available for spending. But then there’s the cautionary planned drop — yes, drop — in taxes and fees over the next year.

It’s just a projection, close enough for government work and not a huge deal with about $11 billion in the general fund.

But budget builders understand, or should understand, that big chunks of that total are already talked about. The general fund is the operating engine of the state government, paying for health care, education, and other essentials; it is by far the largest source of federal funding dollars and one-time surpluses coming into state government this year.

While we support some of the governor’s and legislature’s key goals with the new general fund, including a more generous salary increase for teachers, we urge restraint.

One of the mistakes of 2008 was the tax cut fad, eroding the general fund just in time for fiscal disaster to ensue. This year, efforts are being made to reverse a sales tax increase from several years ago, which helped clean up the general fund during this boom.

We don’t like sales taxes in general, but it’s irresponsible to reduce general fund revenues without a realistic plan to replace them. To say that we are going to reduce the budget when the time comes is nonsense, as it was in 2008.

We deplore the cavalier attitude of one of the main authors of the tax cut legislation, Tony Bacala, R-Prairieville, who refused to tell the whole House what might be cut. He’s not just a budget drafting committee veteran, he’s been Deputy Chief of Ascension Parish, so he knows how hard it is to cut budgets — that is, , generally, salaries – at all levels of government.

And Bacala knows that colleges and health care are bearing the brunt of the cuts, as much of the general fund is dedicated and cannot easily be cut. It happened before.

When old members come up with tax cut bills without a coherent plan on how to pay them, new members agree because they don’t know any better. But we think we are reviewing the mistakes of 2008.

Beware of the minus sign in revenue forecasts. It’s a flashing yellow light.


Comments are closed.