Last week, Louisiana Gov. John Bel Edwards announced $44 million in cuts to planned construction projects across the state, from road upgrades to playgrounds.
It’s a familiar experience for Louisianans, the Houston Chronicle reports.
In a preview for an upcoming story titled “Can Louisiana get it Together?,” the newspaper notes The Bayou State has had to cut back drastically over the past eight years as tax cuts and low oil prices have decimated government cash flows.
In a series of special sessions over the past few months, Gov. John Bel Edwards worked with the Legislature to raise enough revenue to mostly plug a $2 billion hole. But the fiscal problems haven’t been solved, the newspaper says.
The budget was balanced with an increase to the sales tax that sunsets after two years, leaving Louisiana with the highest sales tax in the country. Meanwhile, the corporate income tax is low and collections are even lower, because of the number of exemptions and abatements that companies have enjoyed without having to give much back in return.
The Houston Chronicle writes that Texas presents an additional problem for Louisiana.
While both states have reduced their dependence on oil and gas, Louisiana remains more exposed to the sector. Over the past few decades, Texas has sped past Louisiana in terms of employment and salaries, which are lumped together in something called the Coincident Index. The two economies really started to diverge after Hurricane Katrina hit in 2005, but the gap is getting wider fast.
After the fiscal crises of the past few years, many state leaders are beginning to rethink the role of tax breaks, and how best to compete with surrounding states for business.
“There’s starting to be a broad recognition that we might have given up too much in order to lure business,” says Jan Moller, director of the non-profit Louisiana Budget Project. “Where they went off the rails was making it all about incentives all the time, and almost none of it was about building the community where people want to live.”
The Houston Chronicle has the full story.
