How high is Louisiana’s “fiscal cliff”?

Clancy Dubos

Exactly how high is Louisiana’s “fiscal cliff” anyway? It depends on whom you ask. Some say it’s nearly $1.3 billion, while others say it’s more like $994 million, and still others say it’s closer to $692 million — or less.

Interestingly, they’re all looking at the same cliff. It’s all a matter of perspective…

The number most frequently mentioned these days is $994 million. That’s how much recurring revenue the state will lose if the temporary taxes that expire June 30 are not renewed — and so far, everyone at least agrees that that’s how much the temporary taxes produce.

Pessimistic observers use the $1.3 billion figure, however. It includes the expiring taxes plus the cost of inflation and other adjustments such as pay raises (which lawmakers have not granted to state employees in some time). This figure is sometimes used as leverage in tax and budget negotiations, but it is quickly dismissed by conservative anti-tax lawmakers.

Many conservatives, by the way, are already using the $692 million figure. That’s based on official estimates that Louisiana will collect $302 million more in state income taxes next fiscal year as a result of changes in the federal tax code — so they subtract that amount from the $994 figure and use that as the size of the cliff.
All the numbers have some validity. Given that Republicans have a majority in both the House and Senate, the $692 figure has gained currency. It’s a lot lower than $1.3 billion, but it’s still quite a climb for many GOP lawmakers, who are loath to vote for taxes — even if those taxes are being renewed at lower rates, as proposed recently.