State Rep. Randal Gaines: The Impracticability of the Republican Fiscal Agenda
State Rep. Randal L. Gaines (D-LaPlace) is the chair of the Louisiana Legislative Black Caucus and a practicing attorney. He was first elected to the legislature in 2011.
With strong leadership and support from Democratic legislators, Gov. John Bel Edwards has relentlessly attempted to pass progressive legislation that would effectively surmount Louisiana’s pending fiscal crises (also known as “the fiscal cliff”), and consistent efforts by House Democrats have been directed toward proposing and passing legislation that would promote long-term fiscal reform.
For the past ten years, the Republican-controlled Ways and Means Committee and the Republican majority in the House of Representatives have, without justifiable reason, perpetually resisted efforts to implement fiscal policies designed to generate sufficient revenues that would adequately address Louisiana’s short-term budget shortfalls and ensure long-term fiscal recovery and prosperity.
Louisiana’s current fiscal crises resulted from a combination of factors.
During the time period covering 2007-2008, Louisiana was rolling in money. Recovery dollars related to hurricanes Katrina and Rita were pouring into the state. Direct federal aid to the state increased from $6.3 billion in 2005-2006 to $12.8 billion in 2007-2008. Oil and gas revenues were at an all-time high and natural gas and oil prices peaked in 2008, bringing in additional revenues to the state through mineral taxes. Payroll taxes increased as a result of the increase in oil and gas production and hurricane recovery jobs. And the 2002 Stelly Plan was generating approximately $800 million per year in revenues.
Instead of planning for inevitable economic downturns, in 2008, the legislature increased spending, implemented tax cuts, gave additional corporate credits and exemptions, and repealed the highly-effective Stelly Plan, resulting in an estimated $800 million reduction in state revenues.
In addition to the state’s revenue reduction actions, as the country entered into the 2008-2010 recession, oil prices declined, and the decline in oil and gas production resulted in a decrease in high-paying oil and gas production jobs here in Louisiana.
The above actions and factors resulted in the state facing major escalating budget deficits between 2010 and 2016, reaching a staggering $2 billion by January 2016.
The state’s legislative auditor reported that Louisiana granted a staggering 464 exemptions from state taxes, amounting to $7.9 billion in Fiscal Year 2016. We awarded $400 million more in tax exemptions than the $7.5 billion we collected in tax revenue. Even more disturbing, the auditor reported that the state collected $624 million in corporate income and franchise taxes in 2014, while paying out almost $1.7 billion in corporate tax exemptions.
From 2010 to 2015, despite strong protests from Democratic legislators, and despite increasing state budget deficits, former Gov. Jindal and the Republican-led legislature refused to take essential steps to pass revenue-raising legislation to offset the state’s declining revenues.
Gov. Jindal insisted on promoting the ill-conceived and counterproductive “Revenue Neutral” policy which was heavily supported by the majority of our Republican legislators.
He employed band-aid budget gimmicks and fund sweeps as temporary budget solutions. It should be noted that the Grover Norquist “anti-tax” pledge embraced by Republican elected officials was never intended to be adopted by state governments.
The financial structure of most state governments cannot withstand long periods of declining revenue. Properly administered revenue-raising initiatives are necessary to ensure sustained state governmental services.
This particular anti-tax rhetoric, however impractical and unrealistic, was simply developed to help elect Republicans to national office.
In order to avoid taking available steps to reverse the fiscal decline and raise sufficient revenues to provide for critical state services, Republican legislators have continued to insist, without justification, that the state has a spending problem.
Instead of taking proactive steps to develop state fiscal policies that will generate necessary revenues to make much-needed improvements to the state’s infrastructure, ensure adequate healthcare, and enhance the quality of our higher education system, they insist on supporting revenue policies that will limit the state’s ability to generate optimum revenues, promote continued fiscal instability, and further decrease the state’s declining credit rating.
Under the current administration, the state has already made over $230 million in spending cuts.
Ten years ago, Louisiana provided 60% of the funding for higher education. Currently, over 70% of higher education funding falls on Louisiana’s families. During the Jindal administration, funding to higher education was cut at a higher rate than any of the other state in the country.
The Republican fiscal agenda will cause drastic statewide funding cuts to critical state services, including higher education, health care, public safety, and corrections.
Importantly, they have not produced any verified data to demonstrate why these proposed departmental cuts are justified or needed, nor have they demonstrated how the proposed cuts will impact the state’s ability to provide for vital state services.
The legislature has been called into special session on an unprecedented six occasions for the purpose of allowing us the opportunity to correct Louisiana’s fiscal decline.
To date, no long-term fiscal solutions have been supported or passed by the Republican majority legislature.
It’s time to end the political rhetoric and take decisive, proactive action to address the political reality that Louisiana does not have a spending problem, it clearly has a revenue problem.
It is imperative that the Louisiana State Legislature fulfill its responsibility and take steps necessary to effectuate long term fiscal reform that will enable the legislature to charter a progressive course for the great State of Louisiana.