Recent editorials from Louisiana newspapers:
The Advocate, Baton Rouge, Louisiana, on a drained tax base:
After a season of religious commemorations and holy days, it’s fair enough for an expert to point to a case of Original Sin - in the form of Gov. Bobby Jindal’s big mistake in the state budget, six years ago.
It was, of course, members of the reckless 2008 Legislature who shared in the error of repealing income tax hikes enacted in 2002 by the voter-approved “Stelly Plan,” eliminating sales taxes on groceries and residential utilities. To make up the revenues, income taxes increased in 2003, but that hurt the higher-income taxpayers with the most influence on Jindal and on new, more conservative lawmakers.
Their repeal of the Stelly income tax hikes devastated the state’s tax base. The timing was horrible, as the recession hurt the state’s economy immediately after the Legislature went home.
Since then, the state budget has been a mess, even as the state’s economy has improved: The Original Sin took away huge portions of the state’s income tax base, and revenues have never really recovered. Tragic cuts to higher education, vital to the state’s future growth, have followed from the Original Sin.
The Legislature’s chief economist, Greg Albrecht, noted the problem last month in a talk to the Press Club of Baton Rouge. Lawmakers ask where the money is, as Jindal goes around the state cutting ribbons on new businesses. The answer is that the state’s tax structure was cut at its base, basically a billion dollars every year from general fund revenues.
Albrecht noted the enormous distortions in the state’s economy by hurricanes Katrina and Rita in 2005, saying that everyone who works with the data is still adjusting for those effects. Overall, though, “our tax system does not seem as responsive to the economy pre-storm.”
While there has been much attention paid to the drop in oil prices, the mainstays of state revenues are income and sales taxes. Revenues are not growing very much at all - up only 0.7 percent in the last fiscal year, with sales tax revenues basically flat for three years in a row, Albrecht said. Many tax breaks have been larded into the system as well, as outlined in The Advocate’s special reports on “Giving Away Louisiana.”
The Stelly income tax cuts gave breaks to higher-income taxpayers. “That’s where the growth is,” Albrecht said, an observation that is widely noted in the national economic analysis - middle-class incomes stalled, higher incomes have grown.
The governor is term-limited, so his successor, and a new Legislature to be elected this fall, will have to pick up the pieces.
But like the Original Sin in theology, the loss to the state’s tax base will continue to haunt the new governor and lawmakers for years to come.
American Press, Lake Charles, Louisiana, on Entergy customers seeing a bill increase:
It should be no surprise for residents that the multibillion-dollar industrial projects are going to bring with them some challenges. And one of those could affect how much the 1 million Entergy Corp.’s Louisiana customers pay on their monthly bills.
The Advocate reported that Entergy has to generate more power before the end of 2016 and come up with more by the end of 2019. It’s expected that new power plants will be built, and that each one costs about $1 billion. And that’s where Entergy customers could be affected because they would have to pay for them.
While Entergy has taken some steps to provide more electricity for the state, Phillip May, head of Entergy’s Louisiana operations, said, “Ultimately we’re going to need to build new generation.”
“It has to be new steel in the ground to meet all of this new load,” he said. “We’re on the front end of a pretty steep curve in growth.”
While new plants may be needed to keep up with the industrial expansion projects here and around the state, the question lies in whether there are other ways to come up with the electricity that wouldn’t affect customers’ bills as much.
Some officials don’t support what Entergy wants to do with increasing its power. Jennifer Vosburg, head of Louisiana’s units of NRG Inc., told The Advocate that cogeneration should be considered because it would allow industries to make the electricity they need by loosening regulations.
Casey DeMoss Roberts is head of the Alliance for Affordable Energy, a New Orleans-based consumer advocacy group. He said it isn’t fair “that residential and commercial customers should have to foot the bill (for power) that will be needed primarily by the large industrial sector.”
May said that customers won’t see a big change in their monthly rates because Entergy is “adding a lot of new customers.” To come up with the rates, they take the cost of making and distributing electricity and divide that by how many customers use it.
May also said that Entergy has to figure out whether to “maintain the old plant, build a new plant or enter into a contract to buy power.” Some of those contracts are almost done, and Louisiana’s existing plants are about 35 years old on average.
Because it takes three years to build a new power plant, there’s no time to waste. And Louisiana Public Service Commissioners, including Clyde Holloway, said they are keeping a close eye on when a decision will be made.
There are some options to consider before deciding that building new power plants is the best move in bringing more power to meet the demand from these industrial projects. Hopefully, the final move will provide enough power while having the least impact to Entergy customers as possible.
The News-Star, Monroe, Louisiana, on Congress’ new faces:
The 114th Congress convened featuring two new faces representing northeastern Louisiana.
Bill Cassidy, who has served in the House, will move over to the Senate side to replace Mary Landrieu as the state’s junior senator.
To represent the 5th Congressional District in the house, Ralph Abraham replaces Vance McAllister, R-Swartz, who couldn’t overcome the kissing congressman scandal and finished fourth in the primary. Abraham defeated Monroe Mayor Jamie Mayo in the runoff election.
Coincidentally, both Cassidy and Abraham are physicians, and both are well aware of the issues facing northeastern Louisiana with its high poverty rate and a populace with serious health and education concerns.
We encourage both men to return to the 5th Congressional District often, to communicate regularly with our leadership and to stay in touch with the needs of this constituency. It’s easy to forget the needs of the Delta when you’re inside the glamour of the Beltway.
Those regular visits to the area are something we’ve missed in recent years, particularly on the Senate side. We’d like to see Cassidy and Abraham accessible and on a first-name basis with our captains of industry, university administrators, mayors, chamber executives and economic developers.
We thank both men for agreeing to the work and sacrifice of servant leadership.
And we wish them success in this new journey. Their successful representation means that northeastern Louisiana benefits.
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