Revenue guru

The head of the Louisiana Revenue Estimating Conference, who is serving on a task force dedicated to systemic changes in the state’s tax code, warns that income taxes may have be on the table in 2017 if the Legislature is serious about fiscal reform.
LSU Economics Professor James Richardson, who has advised the state’s fiscal policy for decades, suggested the state move away from reliance on oil and gas collections.
“They have to decide they’re not going to rely on mineral revenues to save the day,” he said. “Right now, (state officials and lawmakers) all go to church every morning and pray that oil prices will go up.”
He said the Legislature’s two main solutions next year, if oil revenues don’t rebound, are eliminating business tax breaks or increasing the income tax. The sales tax, on which the Legislature focused almost solely during the special session to raise quick cash, has been tapped out, he said.
“The sales tax has been beat up — massacred, almost,” he said, calling the tax “much more complicated.”
“Small businesses, they have no idea they’re going to have to pay this.”
The committee he serves on, called the Task Force on Structural Changes in Budget and Tax Policy, was commissioned in the recent special legislative session to report findings on how the state can reform its taxes.
Throughout the special session, State Treasurer John Kennedy, who announced he is running for the U.S. Senate, harped on “waste, fraud and abuse” in state government, calling for reductions in state contracts and stripping away dedicated funds.
Richardson said those are “nice campaign words,” and may save a few million here or there, but will come nowhere near solving the state’s problems.
“It’s not that practical,” Richardson said, adding that if the state will still pay for the vast majority of agencies that are currently dedicated. “It’s dedicated for a purpose. It’s not dedicated to buy watermelons with.”
The task force comes after years of short-term budget fixes, disparaged by nearly everyone in the legislature, which caused recurring deficits and bone-stripping cuts to important state agencies including colleges and universities.
When the state fell on hard times during former Gov. Bobby Jindal’s two terms, he took tax increases off the table. Short on cash, the state took away general fund dollars for colleges and universities and raised tuition to make up part of the difference.
“Jindal was raising taxes well before 2015, he just didn’t call it that,” Richardson said. “He made students taxpayers.”
To solve the problems, some suggest stripping away dedicated money, which automatically goes by law to certain areas. Others say tax giveaways should be on the chopping block. But just about every lawmaker agrees on sweeping changes, which are expected in the next fiscal session in 2017.
“It can’t continue, you can’t keep sending money out the door,” said Senate President John Alario.
“This structure is pitiful,” said former lawmaker Robert Adley, now an aide to Gov. John Bel Edwards.
The special session raised nearly enough to bridge the current-year shortfall, but nowhere near enough to solve next fiscal year’s problem, which still sits at around $750 million. Richardson described the past session as “not very special.”
Because of that, lawmakers may have to convene for yet another special session in June or July.
Contact Samuel Carter Karlin at skarlin2012@gmail.com.