Stephen Waguespack claimed his crystal ball was “hazy,” but the head of the Louisiana Association of Business & Industry said he expects the Legislature to solve its budget problems.
But that’s only a budget.
Waguespack says revising an antiquated tax code, regaining public trust and a possible constitutional convention may be needed for the financial future of Louisiana.
The head of the organization outlined Tuesday what state businesses face in his talk at the Chamber Business Briefing sponsored by the Livingston Parish Chamber of Commerce.
With the Legislature in its second day of special session, Waguespack gave a broad, general description of how he thinks the budget issue will play out.
The Revenue Estimating Conference has put the budget deficit at $994 million, he said, facing the expiration of a temporary 1-cent sales tax in July.
Changes in the federal tax code means Louisiana residents won’t be claiming as much federal taxes paid on their state returns, Waguespack said. This is will bring in an estimated $306 million.
Of the approximate $680 million deficit remaining, the state has $180 million in sales tax collections it did not expect, he said, making the deficit $500 million.
“Now, we’re at $500 million without a vote being taken,” Waguespack said.
Legislators then will look at doing something with the sales tax, a partial return of expiring fifth cent to generate $300 million to $400 million, he said.
At that point, legislators will have to cut $100 million and the deficit is done, he said.
“That 994 number you hear is not what The Building believes in,” he said, referring to the State Capitol.
Waguespack used a projector to show a man standing next to a cliff – his version of the “fiscal cliff” that has been discussed about the expiration of the fifth cent.
“We’re as tired of talking about this stuff as you are to hear about,” he said. “The guy at the edge of the cliff, that’s the taxpayer. He’s confused, frustrated,” Waguespack said. “He doesn’t want to not do his fair share. What I hear is a lot of people have a problem with trust.”
The public wants their needs addressed, he added, “They want to drive on good roads; they want their children to go to good schools.”
“People feel like they’re a piñata. They get whacked with a stick, If they don’t drop candy” -- or taxes-- he said, “They get yelled at.”
“It’s critical for business owners, and taxpayers and employees to understand the issues,” he said. “If you depend on Twitter and only certain articles, you are not getting the full story.”
Waguespack called the state tax code “dysfunctional,” going back to the days of Gov. Huey Long, when, “Everything flowed to the capital and if you knew who to kiss, it might flow back.”
Other states don’t have that, he said. Taxes stay local in a county where it is worked out how it will be spent, he said.
Most of the state budget is locked into dedicated funds, which can’t be cut or moved, Waguespack said.
“Four hundred dedications is a problem,” he said, which is why education and health care – without dedicated funding -- take such a beating in every budget.
“TOPS is not funded in the current budget,” Waguespack said. “I would be shocked if it is not fully funded in the final version,” of the budget.
“Revenue dedicated to TOPS, we support that,” he said.
It may take a constitutional convention to solve some of the problems, Waguespack said.
Two years ago, the suggestion probably would have been dismissed, he said.
“Today we are getting different messages from chamber members,” he said.
“There’s a lack of faith,” in the same public officials who aren’t solving problems being the people running a constitutional convention trying to fix those problems, Waguespack said.
“We need regular people serving as convention delegates,” he said, people willing to spend 90 days seeking solutions.