La., third straight year of no sales tax growth

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Legislature's chief economist paints bleak picture of La. finances

Greg Albrecht, chief economist for the Legislative Fiscal Office, delivered a downbeat assessment of state finances to the Rotary Club of Baton Rouge today. "We are facing the third year of essentially zero sales tax growth," Albrecht said, and the revenues needed to fill the yawning $1.2 billion predicted shortfall in the state budget this coming year will require another round of raiding "ad hoc" funds from sources that are not sustainable and were never intended to be in the general fund. "I get asked all the time, 'Why can't we live with the budget we had in 2005?' My answer is simple: We can. Just give me the tax base we had in 2005," before the repeal of the so-called Stelly Plan at the height of the recession in 2009. The Stelly Plan was a constitutional amendment that was repealed under pressure from middle-class voters who chafed at paying higher income taxes without feeling a corresponding offset in sales tax payments. Current methods of making both ends meet require fanciful bookkeeping and sweeping of funds—sometimes funds that haven't yet accrued, Albrecht said. Acknowledging that the public seems to suffer a disconnect between the happy talk about economic expansion and the actual numbers he crunches every day, Albrecht attributed it at least in part to the "announcement effect." "We hear about all these billions of dollars of investment, but until we start moving dirt and pouring concrete and putting up steel, there is no effect" on the economy, he said. Albrecht said he also appreciates that Louisiana "has been doing it like this for a number of years. The question is, how long can you keep doing it?" —David Dodson

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