Will Broken Budget Process Delay Tax Breaks?

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Both chambers of the Louisiana legislature have passed a spending budget for the spending year — but there remain open questions on an almost $300 million gap between income and revenue. The Senate passed a budget that defers for three years certain income tax reductions.

The Louisiana House, in a surprise move, rubber stamped the Senate’s spending budget — but has not passed a bill deferring the income tax breaks. That has left an estimated $287 million budget deficit. The House’s move skipped over the expected conference committee process, which would have given both houses of the legislature the chance to make tough cuts in spending and otherwise reconcile the deficit.

Over the past several years, as state revenues grew due to upward-spiraling oil prices and post-Katrina federal relief dollars, politicians took the opportunity to spend every penny and grow state programs as if the rapid revenue growth were a given into the future. With those two tax boons left in the dust and the national recession looming, the politicians’ fiscal irresponsibility has come back to haunt them.

The House’s move has given Gov. Jindal the upper hand in deciding what programs to cut. Much anguish has arisen over the prospect of cuts to higher education, where spending has grown rapidly in recent years . Jindal will have to use his line-item veto to eliminate at least 1 percent of the budget sent to him in order to close the budget gap. He has vowed to first target legislators’ pet projects before moving on to higher education and health care. Hopefully Jindal and his team will work to honestly cut the most unnecessary spending first. Whatever he decides to veto, he should do it rapidly, so the legislature has enough time before the session ends to consider what spending to uphold and how to ultimately balance the budget without raising income taxes.

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