Despite the advances made by Louisiana lawmakers during the first six months of 2016 in terms of the state budget, several questions still loom on the horizon, the Public Affairs Research Council says in a post-session wrap-up.
Gov. John Bel Edwards inherited a fiscal quagmire when he took office in January and immediately began to try to fix the budget situation.
“Although the new governor did not achieve all his goals, he took significant steps in the direction of his preferred policies by raising state revenue and expanding Medicaid,” PAR Policy Director Steven Procopio writes in the commentary. “The state budget placed less emphasis on one-time resources than in recent years and both the operational and construction budgets were built with a more transparent process.”
But a fiscal cliff remains visible on the horizon, coming in two years when some of the temporary revenue streams created by lawmakers disappear, including the extra sales tax penny, Procopio writes. That looming fiscal cliff could spur lawmakers to make fiscal reform.
Among those problems that need to be addressed in the coming months are potential near-term shortfalls, crafting a clearer regulatory and tax regime to provide a more stable outlook for business, and whether property taxes would be a more stable way to support local governments instead of sales taxes.
“How will the governor and the Legislature handle this situation?” Procopio asks. “They could wait for the cliff and make drastic cuts in state services, but this outcome is unlikely. They could extend or remove the sunset provisions, keeping the same tax system in place.
“As a third option, the governor and the Legislature could work together to reform the tax code, and that is what leaders are saying they will try to do,” he adds.
Read the full commentary.
