After taking their oath of office Jan. 11, members of the Louisiana House of Representatives spent more than two days getting briefed on the state’s fiscal crisis—a $750 million revenue shortfall for the current fiscal year and an additional $1.2 billion next year.
Later that week, business leaders from around the state gathered for a budget briefing of their own at the Louisiana Association of Business and Industry’s annual meeting. There, several experts—including three former commissioners of administration— explained how the fiscal situation came to be so dire and what solutions are floating about.
It’s not a pretty picture, and while Gov. John Bel Edwards has repeatedly said he wants to work with the business community—indeed, with all constituent groups—to find a solution, many are skeptical.
“There’s a difference between being at the table and being on the table,” LABI President Stephen Waguespack told the membership.
Big business is still smarting from the beating it took during the 2015 session, when lawmakers reduced several key business tax credits, exemptions, exclusions, deductions and rebates.
With blood still fresh in the water, the Edwards administration has made clear it will go after credits and exemptions again as it digs under every rock for available revenue. Given that many of those credits were cut last year, the inventory tax credit, a favorite of business, is particularly vulnerable.
“It there’s funeral music, put it on,” says Robert Travis Scott, president of the Public Affairs Research Council. “There’s a lot of money there, and they’re coming after it.”
LABI says it wants to work with the new administration, but it’s unclear how far the state’s business lobby is willing to go—and it’s still unclear what, specifically, is up for discussion. As of press time, the governor’s office had yet to issue a call for the special legislative session that is expected to begin in mid-February.
“What are we trying to accomplish?” Waguespack says. “Are we trying to balance the budget on the backs of taxpayers? Are we trying to put a healthy mix of budget reforms, spending cuts and tax code reforms? Are we trying to do something different? We don’t know yet.”
Whatever short-term solutions the Legislature concocts next month, consensus is growing on the need for meaningful fiscal reform. Several plans are being circulated. Though they vary in specifics, they agree on the basics—the need to simplify the tax code and make it more fair and competitive.
For business leaders, remaining competitive is of particular concern, and as the legislative sessions approach that will be among their main priorities.
Bill Fenstermaker, who owns a Lafayette-based surveying and engineering company, employs more than 300 workers at locations both in and out of state, including Baton Rouge.
“If we’re not competitive in Louisiana, we have problems,” he says. “We need to encourage people to be here. We need companies who will create good jobs, and right now there is at least a perception that Louisiana is going to be a noncompetitive state so we need to fix that.”
—Stephanie Riegel
