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LABI leader says major changes needed or La. financial struggles will remain

March 27, 2017
By Kevin Fambrough
Originally Posted on The Livingston Parish News

DENHAM SPRINGS – Louisiana will continue to struggle with budget deficits, unmet needs and public doubt that government can solve those problems, according to Stephen Waguespack, president/CEO of the Louisiana Association of Business and Industry.

“We’re on a statewide tour of local chambers, looking at the hot issues,” facing the upcoming legislative session, Waguespack said Tuesday at Forrest Grove Plantation. Livingston Parish was the third stop on that tour.

Waguespack said the LABI is taking a wait-and-see approach to a couple of proposals until the details are made public.

Gov. John Bel Edwards has proposed a 20-cent tax to gasoline to address infrastructure needs.

“If it’s a reasonable statewide plan and we know clearly where it is going, not peeling away (the tax) to something else, we’re for it,” Waguespack said.

“We want a specific plan; show us the amount, the process that will be used to spend it and show us it is accountable,” he said. “If the governor is willing to make that case, our members would be willing” to back it.

The LABI also is waiting on details – expected to come out March 27 -- of the proposal to tax gross receipts of businesses.

“As soon as we get it, we will send the details to our members and ask for feedback,” Waguespack said.

But the budget deficit needs to be addressed to break a financial cycle, he added.

Budget deficits lead to tax increases, employers begin struggling leading to economic recessions and lower tax collections creating budget deceits, Waguespack said, “And the cycle goes on and on.”

 “We’ve lived on oil and gas revenue, recovery booms and went to gambling and tax increases,” he said, but those days may be over.

According to Waguespack, the LABI sees four major issues for the state Legislature when it convenes in April.

First is fiscal reform, “And by that, I mean taxes,” Waguespack said.

“Fiscal reform means different things to different people, but this is the biggest challenge this year. We have been living with perennial deficits for too long,” he said.

Criminal justice is another issue, Waguespack said -- Louisiana has the highest incarceration per capital in the county.

“We’re wasting money without good results. We need to work with law enforcement and faith-based groups to move this issue,” he said.

The number of violent offenders the state has in prison is on par with other states, but the nonviolent offender rates are “off the charts,” he said.

“How do we grab them, put them in a drug program, put them in a work program,” to avoid a prison cell, he said. This includes looking at sentencing guidelines.

Louisiana ranks 49th on the national Chamber’s list for having a bad lega climate, Waguespack said, making litigation and legal reform another key issue.

The latest concern is the state aggressively suing oil and gas operators with valid permits years later, he said.

The state also is using contingency fee contracts to bring in lawsuits and prodding parishes to join in the suits, he said.

“Would you want to have a permit from the state and 30 years later the state says ‘We don’t like it, you didn’t do anything wrong, but we’re going to sue you,” Waguespack said.

The last key issue for the Legislature is infrastructure, roads and bridges.

Waguespack said the problem with addressing the state’s infrastructure problems is a “lack of trust in government.”

Road and bridge problems “poll off the chart” in surveys, he said. But when the talk becomes raising the gas tax and giving it to the DOTD, “Folks say don’t go there.”

“That trust has to be rebuilt,” Waguespack said.

Dedicated, or statutory, funds also hurt the state budget, Waguespack said.

 “Every time a dollar is budgeted to schools, part of that dollar goes to overhead,” he said. “Every time a dollar is budgeted to higher education, more goes to overhead.”

Money flows on cruise control to parts of the state budget with no oversight, he said. Over $1 billion is locked in to funds grabbing general fund dollars.

“In 1986, Gov. Buddy Roemer eliminated two-thirds of statutory funds,” he said, and it put those dollars back on the table to be discussed how they would be spent.

But in the past 30 years, many of those statutory funds have been put back in gradually through legislation, he said.

“You can change this with a bill,” Waguespack said.

“There are no simple solutions,” Waguespack said, “The reckoning is coming. People will rise up and say we’re ready to change this.”

“What y’all experienced in the past year, when adversity hits this area, resiliency is the word,’ he said, “People didn’t say I need a handout. We rally, we work and we get the job done.

“Sometimes we fail as a state to recognize adversity is around us now. It’s time to kick in to that mode we use when adversity hits. Tell officials in Baton Rouge we’re ready for change.”