Takeaways From Thursday Night’s Speeches

The Biggest Tax Increase Ever?

Treasurer John Kennedy said in the Republican response tonight that Gov. John Bel Edwards is proposing the “largest tax increase in Louisiana history.”

Asked for comment, Commissioner of Administration Jay Dardenne said, “I don’t know that… It’s certainly one of the most significant. There’s no denying that.”

Edwards said during a Q&A with reporters after his speech that at least half of the $940 million shortfall for the current fiscal year will have to be addressed through new revenue. As far what will be needed for next fiscal year’s more than $2 billion budget gap, the governor said more information will be released on Saturday.

How Much To Cut?

Edwards said he is only willing to cut $160 million in spending from the current fiscal year. If Republicans want more reductions, the governor will oppose them.

He said exactly what his administration is willing to cut will be revealed on Saturday when his budget proposal is presented to the Joint Budget Committee.

The New Deadline

Lawmakers do not have until the end of the fiscal year on June 30 to fill the $940 million gap, according to Edwards. The new deadline is April Fool’s Day (no fooling).

From JBE’s speech:

“As I mentioned earlier, if the legislature fails to act and we are forced to proceed with these cuts, the LSU Ag Center and parish extension offices in every parish, and Pennington Biomedical Research Center will close by April 1st and the LSU main campus in Baton Rouge will run out of money after April 30th, as will the Health Sciences Center in Shreveport and LSU Eunice. There is no money left for payroll after those dates.”

Where To Cut?

While Republicans are pushing for massive spending reforms, Edwards only mentioned two specifically, with the promise to identify more on Saturday. He mentioned a hiring freeze across state government and a reduction in state contracts.

More History-Making

Without new revenue, Edwards said universities will have to absorb the “largest mid-year cut in Louisiana history.”

Why LSU and not other government agencies?

“Just wait until Saturday,” said Dardenne.

A Temporary Penny

The one penny sales tax increase is intended to be temporary, although no other specifics were provided.

JBE: “I am proposing this penny as a bridge that will give us time to stabilize and restructure our state's tax code. When that restructuring is complete, this penny sales tax will be removed.”

Upside Down?

JBE: “In fact, we're paying out more in credits and refunds to corporations this year than we are collecting from them in taxes. This is not sound financial policy.”

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