Louisiana economist: Trump tax changes driving $500M surplus
BATON ROUGE, La. (AP) — Louisiana’s $500 million budget surplus stems mainly from federal tax changes, the Legislature’s chief economist said Wednesday, contradicting suggestions from Gov. John Bel Edwards’ administration that a booming economy has swollen tax collections.
Greg Albrecht, with the nonpartisan Legislative Fiscal Office, credited the better-than-expected individual income and business tax collections from the financial year that ended June 30 largely to the tax cuts passed by Congress and championed by President Donald Trump.
“It’s really all about personal income tax and corporate tax, which I am attributing almost entirely to the federal tax law changes that went into effect,” Albrecht told Louisiana’s income forecasting panel, the Revenue Estimating Conference.
Louisiana has tied some of its tax deductions to federal income taxes. A drop in federal tax liabilities under the congressional tax code rewrite means Louisiana taxpayers and businesses owe more to the state.
Other states are seeing surges in personal income and corporate tax collections, Albrecht said, “so that tells you it’s federal tax law change at the root of it.”
Edwards, a Democrat running for a second term in a hotly contested governor’s race , has sought to portray the surpluses as a sign of a strengthening economy in Louisiana.
Senate President John Alario, a Republican conference member who regularly backs the governor, said not every state has similar ties to the federal tax code as Louisiana does.
“Some of it’s got to be attributed to economy activity, too, that things are getting better all over the country,” Alario said.
Albrecht agreed that could account for a slice of the higher-than-projected tax collections. But beyond the federal tax cuts, he said repeated legislative tweaking of business tax laws since 2015 also drove a portion of the increased tax collections.
A final surplus figure will be certified later this year.
Some Republicans — including Edwards’ opponents on the Oct. 12 ballot, U.S. Rep. Ralph Abraham and businessman Eddie Rispone — suggest the half-billion-dollar surplus and two prior years of surpluses show that Louisiana residents are overtaxed. They are criticizing Edwards for supporting tax hikes, which passed with support from some GOP lawmakers in the majority-Republican Legislature.
Under Louisiana’s constitution, surplus dollars can only be spent on certain one-time expenses, such as debt payments, road improvements, construction work and coastal projects. At least 10% must pay down retirement debt, and a quarter of a surplus is earmarked for the “rainy day” fund.
Lawmakers will decide how to spend the surplus in the 2020 legislative session.
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