As Louisiana faces a projected half-billion-dollar budget shortfall next year, lawmakers are weighing how to make up the difference.
Should they choose not to renew a temporary teacher stipend and other educational funding — an idea unpopular with teacher’s groups — there will be a smaller gap to fill, an expected $340 million, state budget director Ternisa Hutchinson told legislators last week at a meeting of the Joint Legislative Committee of the Budget.
Other possible options include extending a business utilities tax or redirecting the motor vehicle sales tax to the state general fund. Proceeds from the latter tax currently go into a fund for infrastructure improvements.
Much of the shortfall can be attributed to the rolloff of a temporary 0.45 cent sales tax, which lawmakers passed in 2018 amid a budget crisis. House Speaker Phillip DeVillier, R-Eunice, said the House is unlikely to renew the tax.
Legislators are considering other options but haven’t made any decisions, DeVillier said.
“It’s too soon to say what we would do to solve the shortfall,” he said. “I would expect us to continually look at conservative budgeting.”
Senate President Cameron Henry did not return a request for comment.
Also next year, DeVillier expects lawmakers to consider broader changes to the state’s tax system, some of which could deal with the fiscal cliff, he said.
Teacher stipends, business tax
If the state renews temporary teacher stipends — which were approved this year and last — plus pay boosts for select teachers and money for student tutoring, the projected shortfall will be closer to $587 million, Hutchinson told lawmakers. Those imbalances would grow larger in the following two fiscal years.
But Cynthia Posey, legislative director of the Louisiana Federation of Teachers, warned that doing away with the stipend could make it harder to attract and retain teachers.
“For our teachers who have been there in the classrooms every day with our students and who should be credited with (education) gains, we’re sending the wrong message,” she said.
In a statement, state Superintendent Cade Brumley said he hoped lawmakers would maintain the stipend.
“Our legislators have been supportive of education. I’m hopeful we can find a way to continue this investment in teacher pay,” he said. “I look forward to collaborating on ideas to reduce budget demands without impacting teachers or our student-centered tutoring efforts.”
Another possibility is to renew a 2% business utilities tax that will sunset next year. That tax would bring in about $220 million, said Secretary of Revenue Richard Nelson.
Impacts for transportation
The state also could make up about $320 million by moving the vehicle sales tax from a special transportation fund for infrastructure improvements to the state general fund, according to Hutchinson.
Such a move would undo a 2021 law that set aside that tax money for infrastructure improvements.
Former state Rep. Tanner Magee, R-Houma, who was involved in passing that law, said the funds should stay separate.
“To go back to not having enough money to build roads and bridges … the juice isn’t worth the squeeze in my opinion,” he said.
Transportation Secretary Joe Donahue did not return a request for comment about how the change would impact his department.
Jan Moller, executive director of Invest in Louisiana, a progressive policy group in Baton Rouge, said a big reason the state has historically lacked money for infrastructure improvements is because it hasn’t raised its gas tax since 1990.
Redirecting motor vehicle sales tax revenue to the state general fund “would absolutely help fix the problem of the fiscal cliff, but that should be accompanied by a conversation about Louisiana’s gas tax, because we do have a problem of a huge infrastructure backlog,” Moller said.
Asked about concerns that the state could lose money for infrastructure, DeVillier noted that legislators this year dipped into a savings account to help pay for improvements.
Before lawmakers decide how best to allocate tax revenue to infrastructure improvements, DeVillier said they should address any organizational issues at the Department of Transportation & Development, noting the state recently commissioned an external evaluation of that agency.
Tax system on the table
Specific budget proposals aside, Nelson has proposed completely overhauling Louisiana’s tax structure by flattening and lowering the income tax. He has said the state could make up for the revenue loss by eliminating certain sales tax exemptions but has not yet specified which ones.
In a statement, Gov. Jeff Landry endorsed a tax overhaul, calling Louisiana’s tax code “broken” and uncompetitive.
“Secretary Nelson has been engaging with stakeholders and legislators to put together a comprehensive tax reform package that allows Louisiana families to keep more of their paychecks, address the deficit, and restore Louisiana’s position as the economic powerhouse of the South,” he said. “These changes will require bold actions, and I’m confident the legislature and Secretary Nelson will meet the challenge.”
Landry’s office would not say whether the governor supports redirecting the motor vehicle sales tax or renewing the business utilities tax, or where he stands on teacher stipends.
Moller said Nelson’s plan would result in lost income tax revenue the state would still need to replace.
He said higher taxes, not spending cuts, are needed to fill budget gaps.
“We are not raising enough revenue to support the needs of the state,” Moller said, naming the child welfare system, higher education and early childhood education as three areas that need attention.
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Publish date : 2024-08-14 22:00:00
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