Louisiana- the Ghost of Wisconsin Future

I’ve mentioned the economic disaster that’s hit in the state of Louisiana, and this week featured some of the reckoning that is resulting from that disaster. Democratic Governor John Bel Edwards took office in January and discovered that former Governor Bobby Jindal left the state in a multi-billion dollar budget hole, including a massive gap that had to be closed in the current fiscal year that ends on June 30, and a bigger one for the next two-year budget. Edwards called the GOP-run Legislature into a special session to try to fix the budget mess, and even gave the prospect of having no college football in the state next year if no solution was agreed to, since schools might have had to shut down early.

Well, looks like we won’t have to worry about the LSU-UW game in Lambeau being called off for this year, because there’s a budget deal in place for the next few months on the Bayou. But it’ll cost the state’s residents plenty. Here's how the Baton Rouge Advocate described the results of the frantic action at the Louisiana Capitol on Wednesday night.

The 1-cent sales tax increase will take effect on April 1, and at the insistence of Republicans in the House will last only 27 months. Louisiana will now have the country’s highest average sales tax, when local sales taxes are factored in, according to the Tax Foundation.

“Raising the state sales tax is only a short-term fix to a long-term problem,” John Kay, Louisiana state director for Americans for Prosperity, a (Koch front group) conservative interest group, said in a statement afterward.

To end the state’s biggest budget deficit in nearly 30 years, folks in Louisiana will pay more to smoke, to rent cars, to stay at short-term rentals, to make consumer purchases and to drink beer, wine and liquor. Businesses will pay more for their utilities and will lose a variety of other tax breaks.

Along with the tax hikes, the Legislature and Edwards also plugged $328 million in one-time fixes into the current year budget deficit and cut spending by $170 million – to reach the $30 million shortfall.

The governor’s office, the Legislature, the Department of Health and Hospitals and numerous other state government agencies all will have less money to spend through June 30.

And why has Louisiana been in such a budgetary mess? Think Progress points to reckless policies from a GOP governor who was more interested in kissing up to the Grover Norquists of the world in a (soon-to-fail) run for president, instead of working to install responsible legislation to give stability for the constituents that pay his salary (sound familiar?).

The questions that remain after Wednesday’s deal have a simple answer: Restore income tax rates to the levels Louisiana used prior to Jindal’s reign.

The extreme gap Bel Edwards inherited has a variety of causes, including the collapse in oil prices that’s pushed Louisiana into recession. But the chief driver of the state’s deficits is Jindal’s decision to repeal a voter-approved income tax hike on wealthier residents and businesses. He was adamant on that policy choice, electing to sell off state property and scramble for patchwork accounting maneuvers in the closing years of his term rather than reckoning head-on with the trouble the supply-side tax cuts had caused.

By the way, Louisiana is far from out of the woods on their budget problems, as that state has another $800 million deficit to deal with in the two-year cycle that starts on July 1.

I keep pointing out messes like Louisiana and Kansas and other ALEC states because it’s a good indication of what will happen in Wisconsin over the next 3 years. And make no mistake- Scott Walker and the Wisconsin GOP will have no worries in leaving the same type of FUBARed mess for a Dem governor to have to clean up in 2019 that Bobby Jindal left for John Bel Edwards to clean up in Louisiana in 2016.

Remember that we have over $700 million in unspecified lapses in $1.4 BILLION in unspecified lapses built into the next state budget, and that's the only way the numbers "balance" for now. And if revenue numbers slip after tax season, reflecting Wisconsin's subpar job growth, then even those cuts won't be enough. And after Act 10, massive borrowing for Transportation, and increasing debt payments for the future due to massive refinancing, Wisconsin every bit as out of bullets to fix the budget as Louisiana is today.