The countdown to the 2017 regular session is in the single digits, with lawmakers set to convene April 10 for a 59-day fiscal session.
The fiscal session will provide legislators the opportunity to overhaul the state’s tax and budget structures to provide greater long-term stability to a system that has been plagued by 15 midyear deficits in the last nine years.
The state Legislature has a fiscal session every two years, but this year’s session carries an increased sense of urgency because of the state’s impending fiscal cliff. In June 2018, the state will be left with a roughly $1.5 billion gap between its revenues and expenditures when temporary tax increases expire at the end of the 2017-2018 fiscal year.
A number of solutions have been proposed to reform the state’s tax and budget structures and produce adequate revenue to fill the gap. In 2016, the Task Force on Structural Changes in Budget and Tax Policy was formed out of the first extraordinary legislative session to recommend changes “to modernize and enhance the efficiency and fairness of the state’s tax policies.”
The 13-member task force proposed limiting deductions and credits for corporate and personal income taxes, lowering the state sales tax while expanding the applicable tax base and adjusting the current income tax bracket structure, among other recommendations. Task force co-chairman James Richardson, a University economics professor, said that though the recommendations are common sense, they’re also political landmines.
People are careful about championing tax issues, he said. Each legislator’s home district will have a different opinion about taxes, and they’re not going to rush out to support policy changes before knowing where their constituents stand, Richardson said.
“They’re testing the waters back home and looking for other ways of doing this or that. Right now, it’s a game of … looking at alternatives,” Richardson said.
Though it’s difficult to predict how constituents in each district feel, statewide residents are concerned by the state’s fiscal challenges.
State budget woes topped the list of residents’ concerns about the state for the second consecutive year, according to the Reilly Center for Media and Public Affairs’ Louisiana Survey. Though people are concerned by recurring budget deficits, they don’t know how to pinpoint an appropriate solution, Louisiana Survey author and mass communication assistant professor Michael Henderson said.
Seventy-one percent of survey respondents said they favored an approach that combined spending cuts with tax increases to improve the state’s financial situation, but when pressed, the majority preferred spending cuts over tax increases. The difficulty is deciding where to cut, Henderson said.
Most people are rubbed the wrong way when lawmakers propose cuts to higher and elementary education, health care or transportation, but those are usually the big budget items, he said. The smaller spending areas where people are willing to cut often won’t produce enough revenue to resolve budget shortfalls, Henderson said.
The general public’s fluid opinions make it difficult for lawmakers to make significant changes while accommodating the public’s shifting sentiments, he said.
“There’s not a clear path for lawmakers,” Henderson said. “There’s not a clear path to say we want to solve the budget problems, we want to reform taxes and spending in such a way that we solve these structural deficits, but we want to do it in a way that’s not going to cut spending to these things that people like.”