Analysis: Louisiana Surplus Stirs Disputes Instead Of Cheers
BATON ROUGE, La. (AP) — In the sharply splintered politics of Louisiana, where the Democratic governor and conservative House Republicans seem in a near-perpetual clash over finances, even a surplus can trigger criticism and spark disagreements.
If Louisiana had a budget surplus in the past, that news was cheered as a sign of conservative forecasting and sound money management, giving the state the ability to sock away savings and address a backlog of construction needs.
But in 2018's divisive Louisiana Capitol atmosphere, word the state closed the books for the budget year that ended June 30 with an excess of $300 million-plus in cash is provoking suggestions something's wrong.
Anti-tax advocates and conservative GOP lawmakers who voted against a sales tax renewal earlier this year said the surplus demonstrates over-taxation. They said the excess cash proves Democratic Gov. John Bel Edwards exaggerated the depth of Louisiana's financial problems as he pressed for the tax, which lawmakers enacted for seven years.
"Were we fed fuzzy numbers in order to advance a tax and spend agenda?" Rep. Nancy Landry, a Lafayette Republican, questioned on Facebook.
Baton Rouge Republican Rep. Rick Edmonds issued a statement saying the surplus reaffirmed his position the sales tax — renewing 0.45 percent of an expiring 1 percent sales tax, to raise an estimated $463 million this year — wasn't needed. He said Edwards' administration used "scare tactics to get what it wanted."
Edwards said the suggestion he hid or downplayed rosier financial projections to pass more taxes is hogwash. He said the surplus indicates Louisiana's economy is doing better than predicted.
"I guess they would rather a deficit? They would rather us open a midyear shortfall this year? That doesn't make any sense," Edwards said. "On its face, that is just ridiculous that someone isn't happy with me because the economy is performing better, because more people are working and making more money and our companies are more profitable than the folks who make the forecast believed would be the case."
Legislative leaders and their staff help develop the income forecasts used to build budgets. They don't just come from the governor.
Forecasts are set by the Revenue Estimating Conference, using information provided by two economists, one who works for the Legislature and the other for the Edwards administration. The four-member conference includes the governor's chief budget adviser, the Senate president, the House speaker and an LSU economist. The vote to adopt a forecast must be unanimous.
The final surplus amount from the 2017-18 budget year will be settled next month. It will be the second in a row. Louisiana had a $123 million surplus from the 2016-17 budget year.
Edwards and House Speaker Taylor Barras said the latest surplus stems from better-than-expected income tax collections, but they diverge on the reasons. The governor hailed an economic uptick, while the GOP House speaker said other forces may be at work in a state that still has one of the highest unemployment rates in the nation.
Barras said some higher-than-predicted tax collections likely were tied to federal tax changes and some improved corporate collections could stem from cuts to tax break programs that lawmakers enacted over several years.
But the two leaders agree the surplus figure wasn't expected when the tax debate raged across three special sessions.
"Once we understand what contributed to the surplus, I think people will feel more assured that what happened was the best we knew at the time," said Barras, who supported the partial sales tax renewal. "But we want to see if this establishes a trend as well. If it's a good economic trend, that's really good news."
Even if lawmakers had known about the surplus during the tax debate, the money couldn't have directly bailed out this year's budget. Under Louisiana's constitution, surplus dollars can only be spent on certain one-time expenses, like debt payments, savings account deposits and construction projects, not ongoing agency expenses.
Edwards and lawmakers will craft a spending plan for the money in the 2019 legislative session, in an election year where they still may be debating whether a surplus is good or bad news.
– By MELINDA DESLATTE, AP reporter