Much has been said about the recently concluded 2015 legislative session, though not much of it has been positive. The predominant message coming out of this two-month saga is simply "thank goodness it’s over."
The Legislature voted to raise taxes on employers and individuals by more than $700 million this year in 12 different bills that will collectively have a five-year impact of more than $2.2 billion. The governor is expected to sign all 12 bills into law. These new taxes will broadly affect employers of all sizes and industry sectors. Removing dollars of this magnitude out of Louisiana’s economy, with such rapid and broad strokes, in order to fund government will undoubtedly have an impact on the state’s economic growth.
Throughout this session, the chorus emanating from the Capitol from most legislators was that raising taxes was their only choice to fund higher education and health care…that their hands were tied and they had no other available options. In reality, there were many other options on the table, such as making long-needed strategic reductions in government spending, reforming the state’s budget to undedicate the litany of statutory dedicated funds that currently prohibit roughly $1.3 billion from being used for critical services, restructuring the generational high levels of state support for local government that continue to rise every year, giving higher education the same full tuition autonomy enjoyed by its competitors in other states and updating Louisiana’s pension systems to make it more efficient to taxpayers.
The financial decisions made this session to address a budget challenge were simply a taxpayer-funded Band-Aid to hide a larger budget structural disease. Band-Aids don't heal wounds like that, the problem is only going to get worse until aggressive, and targeted treatment is pursued. Let’s hope next year's fiscal special session that every gubernatorial candidate has promised can provide a treatment that prioritizes taxpayers and economic growth over protecting the populist approach of the past that again took hold this session.
Having said all of this, transportation funding thankfully received good news this session.
Every resident in the state is aware of the significant challenges Louisianans face when it comes to transportation. Louisiana receives a “C-“ on the report card for America's Infrastructure, we rank No. 44 in urban interstate conditions, and the state’s road maintenance backlog is roughly $12 billion. This challenge, while annoying for all of us during our daily commute, is even more pressing as we attempt to rebuild and diversify the state’s economy through providing a reliable transportation system to meet the needs of our current employers and also prepare for the growth Louisiana is experiencing in energy, manufacturing, exports and new markets.
The first step for meeting this challenge is better utilizing the dollars we have today for infrastructure.
Since 2005, the state has diverted over $400 million from the Louisiana Transportation Trust Fund (TTF) to the Louisiana State Police (LSP) for the function of traffic control. While this is obviously a noble and necessary service, 71 percent of Louisiana voters approved a gas tax in 1989 for improving transportation infrastructure.
LABI worked very closely this session with Rep. Terry Landry to pass House Bill 208, a bill to ensure taxpayer dollars dedicated to the TTF are utilized for highway maintenance and construction by gradually limiting the amount that may be appropriated to LSP, beginning with a $45 million cap in fiscal year 2016, $20 million in fiscal year 2017 and $10 million in fiscal year and every year going forward. This bill will go a long way to protecting the commitment made to taxpayers that TTF dollars will be used for infrastructure, while separate bills also passed this session to fund state police operations through other sources going forward.
It is estimated that an annual minimum of $70 million is necessary to meet the federal match requirements for a reliable transportation preservation program. This year, Louisiana dedicates approximately $26.7 million to match federal funds under a restructured preservation program focused mainly on interstate highways. House Bill 208 will help set the foundation for having that match requirement in place each and every year.
Other LABI-supported legislation also passed this session.
Senate Bill122 and Senate Bill 221 by Sen. Robert Adley will have the effect of raising the mineral revenue base from $850 million to $950 million before the allocation to the state general fund. Doing so secures up to $100 million beginning in fiscal year 2017-2018 and each year thereafter to transportation infrastructure projects. This measure dedicates the first $70 million of the new total monies into the TTF to be used exclusively for state highway pavement and bridge sustainability projects in accordance with the Louisiana Department of Transportation and Development definitions of projects. The majority of the remaining dollars will be split between highway priority program projects, port investments, and seed funding to the proposed Louisiana State Infrastructure Bank.
This new infrastructure bank was created this session by House Bill 767 and House Bill 618 by Rep. Karen St. Germain and is intended to assist in financing eligible transportation projects.
While our infrastructure needs are great and additional reforms will be needed to build and maintain the system we have long sought, securing the TTF, prioritizing more of our mineral revenues for infrastructure improvements and developing incentives to encourage local stakeholders to invest more of their dollars in infrastructure are critical first steps.