Budget 101: Balancing the Stool

Jul 6, 2017

“The best thing you can do for a stable funding for government is to have a well-balanced stool,” says state Representative Julie Stokes, who is also a certified public accountant.

But when your budget – your stool -- doesn’t balance, what do you do?

You can make the seat smaller – in other words, cut spending.

“Cuts are easier for us politically,” Representative Larry Bagley (R-Stonewall) says, candidly.

Louisiana has been aggressively cutting spending, until the seat resembles a perch.

We’ve also tried raising revenue. We made some legs longer, like sales tax; while other legs – like corporate tax – were trimmed down.

“The fact that 80% of the corporations in Louisiana pay no income tax is a real problem,” Governor John Bel Edwards has stated.

This year, the legislature was asked to reform the state tax structure – to, in essence, build a better stool. The Tax Structure Task Force, headed by Revenue Secretary Kimberly Robinson, offered a plan that would have evened out the legs.

“Based upon our existing structure, the Task Force is recommending you’re closer to having 33% from sales tax, 33% from individual tax, and the remaining third of the budget coming from other areas, including mineral revenues,” Robinson explained

But the bulk of the bills to implement the tax reform suggestions never made it past their first hearings, in the House Ways and Means Committee.

Stokes, a Kenner Republican, still thinks the state should look at a 4-legged stool for the greatest stability.

“Your legs are property tax – which we don’t embrace; income tax; corporate tax – which we clearly don’t embrace; and sales tax – which we’re overly reliant on it.”  

And a penny of that sales tax comes off the books next July first, further imbalancing the stool by an estimated $1.2-billion.