Editor’s Note: Below is a guest column submitted to USA Today Network Louisiana newspapers by Louisiana House Republican Caucus Chairman Blake Miguez of Erath.
Just like the weather in the Bayou State, the state of Louisiana’s finances can change very quickly. Since my election to the legislature in 2015, I have experienced numerous state budget deficits. On the contrary, things have recently changed and the state has recognized $2 billion in additional revenue for the current and upcoming year. The Legislative Assembly will also decide how to spend an additional $1.4 billion in pandemic relief and $700 million in excess from last year’s budget. Financial terms such as “mid-year budget cuts” have been forgotten with the past and replaced with “expected additional revenue” as revenue is expected to increase further.
Much of this additional revenue directed to state coffers can be attributed to the mountains of cash sent from DC in the form of COVID response, hurricane disaster relief and federal infrastructure spending. All of these dollars flow through our state’s economy and have created an artificial sense of financial security. Lately, it seems like the feds are printing dollars faster than they can spend them. As a result, our country is experiencing record levels of inflation that are hitting the household budgets of hard-working families in Louisiana. In March, the United States recorded an inflation rate of 8.5%, the highest level of inflation since my date of birth 40 years ago. This, coupled with a national labor shortage and supply chain delays, can create a very difficult economic future, especially here in Louisiana.
Seasoned veterans predict the influx of extra revenue won’t last forever, and Louisiana will once again have to rely on its organic economy to balance future budgets. Many Capitol residents are quick to recall the years of unsustainable spending growth after Hurricanes Katrina and Rita, followed by more than a decade of budget problems. Another area of concern is Louisiana’s economy, which ranked near the bottom of the country before the pandemic with a stifling problem of emigration of our young and talented individuals to neighboring states. Many experts point to an outdated tax code in conjunction with poorly managed public spending as the reason Louisiana remains economically uncompetitive.
We now have an opportunity to do better and put Louisiana on the path to prosperity by adopting sound fiscal policy that will stimulate the state’s economy. A good start would be for the Legislature to seriously consider the passage of House Bill 438 by Rep. Bacala, a bill to reduce the “temporary” increase in sales tax that ranked Louisiana as one of the highest combined sales tax in the country. This tax increase was first passed in 2016 to address budget shortfalls, with a portion renewed later in 2018 and now due to expire in 2025. In a surplus revenue environment, the legislature owes taxpayers in the Louisiana to eliminate, reduce and/or phase out this “temporary” sales tax increase.
Another bill that should be considered is Representative Beaullieu’s House Bill 917 which seeks to reduce the Louisiana personal income tax rate. For Louisiana to be competitive with other states, the legislature must take aggressive action to completely eliminate personal income tax. Our neighboring state of Texas has not had a personal income tax for some time, Louisiana should not let Mississippi beat us to the finish line of this important reform effort.
Finally, the Legislative Assembly must never return to the irresponsible days of our past one-time expenditures for recurring expenditures. We should not let our past determine our future, but rather we should learn from it and not repeat the same mistakes.
Otherwise, the conversation in Baton Rouge will once again return to how to fill a budget shortfall with spending cuts or higher taxes. Both are bad options and result from poor budget planning. After all, this is Louisiana, we all know the weather can change at any moment. That is why the legislature must provide for a rainy day.