Edwards: Louisiana surplus driven by income tax collections
BATON ROUGE, La. (AP) — Gov. John Bel Edwards hailed news that Louisiana has an estimated $300 million surplus from the last budget year, saying Thursday the money stems from better-than-expected income personal and business tax collections and demonstrates an improving economy.
“We have more jobs, people brought home better paychecks and businesses were more profitable, and obviously, it should go without saying, this is the kind of progress we want to see,” the Democratic governor said.
Republican House Speaker Taylor Barras was more reserved in his excitement when asked about the surplus. Barras said he’s pleased both the personal and corporate income tax categories are improving, but he questioned whether the higher-than-predicted collections were driven entirely by economic conditions.
The New Iberia lawmaker said some tax collections likely were tied to federal tax changes, and he suggested some of the improved corporate collections could stem from cuts to tax break programs that lawmakers enacted over the last several years.
“I’m guessing we’ll see a combination of better economics and some of the corporate changes we did, limiting credits and exemptions ... are finally showing up in these returns,” Barras said.
Louisiana continues to have one of the highest unemployment rates in the country at 4.9 percent, according to the latest available figures, above the national average of 3.9 percent.
Lawmakers earlier this year renewed part of an expiring state sales tax for seven years, amid concerns without the money they’d have to make deep cuts across state services. Some conservative Republican lawmakers have suggested the surplus shows Edwards exaggerated the need for taxes to plug budget gaps.
The governor called that criticism ridiculous, saying Louisiana’s income estimates are moving targets and noting the state can’t use surpluses from a prior year to pay for ongoing expenses.
“Having a surplus is a good thing. It’s not a bad thing. The only alternative to a surplus is a deficit,” Edwards said.
The final surplus amount will be settled next month, but the treasury and budget analysts know the ballpark figure because the state recently closed the books on the 2017-18 budget year that ended June 30 with a cash balance.
Under Louisiana’s constitution, surplus dollars can only be spent on certain one-time expenses, like debt payments, construction work and coastal projects, not ongoing agency expenses and continuing programs. At least 10 percent of any surplus is supposed to pay down retirement debt, and a quarter of a surplus is earmarked for the state’s “rainy day” fund.
Edwards and lawmakers will decide the spending plan for the remaining money in the 2019 legislative session.
The governor said he doesn’t have a priority list yet, but he pointed to a $14 billion backlog in road and bridge work and a multibillion-dollar list of deferred maintenance projects on state buildings and college campuses.
“There’s no shortage of needs, and it’s a great day when you can satisfy some of those needs with cash rather than having to borrow money to do that,” Edwards said.
Barras said he favors using the money to pay down state debts, a move he said would impress national credit rating agencies.
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