Monday, 14 March 2016 20:20

Stephen Waguespack: Session for real Louisiana budget cuts, needed reforms

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waguespackWe hear a lot about billions of dollars in tax exemptions, credits and deductions, the Louisiana budget and of course, revenues.

In the first part of my conversation with Stephen Waguespack, President and CEO of the Louisiana Association of Business and Industry, the LABI leader discussed the state’s budget problem, saying Louisiana has a spending, budget structure and revenue problem.  

In this segment, Waguespack said there is about 7.5 billion in exemptions and credits that the legislature has created because of the state’s broken tax code.  He said, the legislature has done this to “mask” over the non-competitive parts of the code.  The business leader said that a smaller portion of the exemptions are corporate-based, most come in from the personal income tax side, with the largest exemption allowing all individuals to deduct their federal income tax on their personal state tax.  The business leader pointed out that Walt Leger, (a Democrat state representative from New Orleans), helped pass a bill that goes to the voters this fall which will remove the federal deductions on businesses state returns in exchange for lowering and flattening the corporate income tax rate and that the state will derive roughly thirty million dollars should the legislation pass.  He feels a similar plan impacting individuals will come up in the next fiscal session which would bring in more revenues but make the tax flatter and more fair. 

At the 3:51 minute mark of the video, I played a part of the interview I had completed last week with Jan Moller of the Louisiana Budget Project, an organization that does research and advocates for the poor and the lower-income sector of the economy.  Moller emphasized the importance of education (an area which funding has been under attack over the past eight years).  In discussing what the LBP’s focus would be in the next Fiscal Session, Moller said the personal income tax side of the revenue needed to be adjusted.  Moller said that one of the reasons we have these budget problems is because we passed income tax cuts benefiting middle and higher income payers, over the past eight years.  Moller emphasized the need to reverse this approach.

In response, Waguespack said that over the past two sessions, the legislature has spent all of its time raising revenues, collectively over the sessions in the amount of about $2 billion dollars and the impact has been upon business.  Waguespack said, we need a “laser-like focus” this regular session, on the spending side, the budget structure-side, the entitlement side, during the regular session and if we are going to have a special session, to follow the regular session, that would be the appropriate time to have that discussion, once the spending side is exhausted. 

At the 8:02 mark, we discussed the reason the focus during the past special session was not on cutting government.  Waguespack said that Governor John Bel Edwards’ call was specific to raising revenues and that cutting expenses were not allowed as it was not germane to the governor’s executive order but that this regular session, will be the time for government reform to be fully discussed since raising new revenues cannot be discussed this session.

What solutions might Waguespack have to stop this now-chronic budget shortfall plaguing the state over the past eight years?

Starting at the 9:42 mark, I asked him to address this issue.  Waguespack said the legislature should focus somewhat on the long-term this session and not just on areas that pay immediate dividends.  He said we should unlock “as many” dedications as we can, so those dollars can be applied to education and healthcare, reduce and consolidate the boards and commissions, eliminate duplications and engage each agency to come up with “measured reductions” plans, be smart on crime

At the 10:26 mark, Waguespack discussed that Louisiana has a chronic deficit problem that we never seem to get out, that we always seem to be raising taxes but that we need to find a permanent way to fix the spending side of the ledger.  He said we should as many dedications as we can so those dollars can be more eligible to re-appropriated things like education and healthcare, that we need to look at every Board and Commission we have and remove duplications and to consolidate.  He also favors giving each agency a “measured reduction number” and force them to submit a plan and to refine the plan, per agency, if necessary.  Waguespack mentioned other reforms needed such as incarceration, Medicaid, and possibly even civil  service reform so Louisiana can drive efficiencies to get us out of the recurring deficit problem that have been “plaguing us since the ‘80’s. 


LABI’s Waguespack interview: Louisiana has spending, budget structure, revenue problem



Last modified on Monday, 14 March 2016 20:33
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