State Facing $1 Billion Shortfall Says Governor, Offers Tax Plan

In a press release January 14, Governor Edwards told Louisiana Legislators to “Act now to address fiscal cliff.”

“Louisiana is well positioned to enter an era of prosperity the likes of which we have not seen in decades, but we cannot pretend there isn’t a very real threat to the significant progress we’ve made,” said Governor Edwards last month and restated his warning in an editorial in the Advocate.

“Louisiana is facing a nearly $1 billion fiscal cliff, which if not addressed by July 1, will force catastrophic cuts to critically important state programs and services that Louisianans rely on.”

“The fiscal cliff is a problem that has been festering since the Legislature approved temporary revenue measures 27 months ago instead of permanent measures that would have historically reformed our tax code.

While lawmakers committed in 2016 to return to Baton Rouge to implement comprehensive reforms, over the course of six legislative sessions the only things they have approved are temporary revenues that will soon expire. Without action from the Legislature, many of the most important services you rely on that are funded by state government will have to be cut. That’s not a scare tactic. That’s basic math.”

Edwards presented his plan for a balanced budget, saying that this is “… one that will show more than $1 billion in state general fund cuts on top of the nearly $600 million in such cuts I have made since becoming governor. Factoring in federal matching funds, the cuts will exceed $2.8 billion.”

He released notes on his plan which includes: Eliminating the 5th penny of sales tax; Making Permanent Reductions to Tax Credits, Deductions and Rebates (Acts 109, 123, 126 of the 2015 Regular Legislative Session); Compressing Income Tax Brackets & Reduce Excess Itemized Deduction to 50%; Cleaning all Four Pennies of Sales Tax based on Clean Penny Exemptions; Taxing Business Utilities at 4% and Industrial Utilities at 2%; and Expanding Sales Tax to Services.

The Governor wrote in an editorial in the Advocate:

“If the Legislature refuses to work collaboratively to fix this problem before March, there will be dire consequences.

“For example, our state is currently on a negative outlook by two credit rating agencies and in danger of being downgraded once again. This will mean it costs more to service our debt. Others are taking our budget problems seriously, and the Legislature should do the same. We must put Louisiana first.

“We can solve this problem, but it requires House leadership to keep its word and offer a plan of action. The speaker of the House and I agree, Louisiana cannot wait. As students decide which colleges to attend, their families need to know what will happen with higher education and TOPS. Long-term planning for major road projects will come to a screeching halt. Our stable and improving economy will lose momentum if the Legislature does not step up, and we will go backward. My commitment is to remain flexible and work with the Legislature. But lawmakers must be willing to work with me. They can’t continue to say no to every proposed solution and refuse to offer their own solution. Within recent months, I have held more than 30 meetings with hundreds of business owners, local government leaders and Louisianans across the state explaining the “fiscal cliff,” answering their questions and listening to their concerns and ideas for addressing our problems. They are weary of our recurring financial problems and want us to we roll up our sleeves and work together to solve this once and for all. I know that we can. Let’s make the most of this opportunity to make Louisiana better for everyone.


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