State projected to have excess money this year

Miles Jordan, [email protected]

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Years of million and billion dollar deficits will come to end for the time being as Louisiana is projected to have an estimated 300 million dollar surplus of money.
The state reached this point through bipartisan compromise over sales tax rates. In June, the Louisiana Legislature extended the sales tax rate, lowering it from five percent to four point forty-five percent.
The rate would have gone all the way down to four percent without action from Governor John Bel Edwards and largely house Democrats.
The four percent would have been potentially disastrous as it would have created a projected 500 million dollars. This would have likely led to cuts for TOPS and other high education amenities.
Beyond just education, health care would have been cut too. Edwards went as far as sending nursing homes letters warning them that they were at risk for budget cuts if the tax did not continue.
Over the last two years, the state implemented the five percent rate as a way of adding additional revenue for the state so to avoid having to make massive budgetary cuts.
“Louisiana first temporarily raised sales taxes in order to avoid a projected 1.5 billion dollar deficit three fiscal years ago,” said Joshua Stockley a political science professor.
The sales tax took the state out of this hole but not without controversy. As many Republicans have accused Edwards of not telling the truth about the hole the state was in.
State Treasurer John Schroder is one of those Republicans who is fearful of the possible repercussions.
“Having a surplus is a good thing, but not on the backs of Louisiana citizens,” Schroder said in a statement. “One of my biggest anxieties is that the surplus will be used as a slush fund for pet projects.”
Governor Edwards has not yet stated what the excess money would go to but said that he would work with state legislative leaders to figure out a plan.
Edwards also said that the revenue comes from economic growth as well as the tax.
“We’ve been able to stabilize the situation in Louisiana,” Edwards said. “I’m excited about it and I hear from people all over the state of Louisiana that they are doing better.”
Louisiana’s chief economist, Greg Albrecht, does not see it as cut and dry, though. Albrecht admits to “modest” growth of the economy but does not anticipate the 300 million to be a constant model.
Furthermore, Albrecht sees a lot of the growth as out of the state’s control. He references corporate tax and franchise tax which are international and national related, not statewide.
Albrecht also points to how low the employment level is for Louisiana as an example of how the surplus does not involve economic trends.
While there are doubts about the continual growth of the economy, Albrecht and others still have a positive outlook on the economy.
Simply put by Governor Edwards, “[A surplus] certainly beats a deficit.”