Lake Area economy leading the way for state

The economic production happening in Lake Charles and surrounding areas is “keeping the rest of the state pulled up by its bootstraps,” Louisiana Association of Business and Industry President and CEO Stephen Waguespack said Tuesday.

Waguespack told dozens of local officials and business leaders gathered at the SEED Center to talk about the progress made so far during the current legislative session, along with the state’s economic picture. He said the lingering mentality of enjoying strong economic times and merely settling when times are bad is “starting to fray at the seams.” He said he is concerned with how the rest of the state will fare once construction slows down on the megaprojects in Southwest Louisiana.

“Here, it feels great, but statewide, our economy is weak,” Waguespack said.

The state’s 4.5 percent unemployment rate is the lowest in 10 years, but Louisiana still ranks in the bottom 10 compared to the rest of the nation.

Even though Louisiana spends the most per capita compared to other states in the Southern region, Waguespack said that hasn’t led to a strong economy or quality infrastructure or schools. 

“Other states in the South that are really winning in the economic growth battle aren’t really spending through the nose to get there,” he said.

The four pillars that are causing the state’s budget deficit include a dysfunctional tax code, spending growth, a broken budget and economic recession.

State budget

Louisiana faces a “fiscal cliff” once $1.28 billion in temporary taxes expire at the end of the current fiscal year, June 30. The amount of the cliff has been reduced to roughly $648 million because of higher budget projections and changes in the federal tax law.

A special session ended March 5 with lawmakers not agreeing on any methods to address the shortfall. Waguespack said the special session failed because lawmakers weren’t pressured to make any decisions since the budget wasn’t part of the equation. The split between political parties caused an impasse, with House Democrats calling solely for income tax increases, and Republicans wanting only a sales tax increase.

The House Appropriations Committee on Monday passed a budget plan that has a $600 million shortfall. Waguespack said the spending plan fully funds the TOPS scholarship program and provides some additional funding for health care and hospitals. 

The full House is expected to consider the budget on Thursday, and Waguespack said it should pass “by tight numbers” before heading to the Senate. Once in the Senate, he said, it will likely be heavily amended or replaced. The final budget should have major cuts, Waguespack said.

Legislators are expected to hold a second special session in the next couple of weeks, this time having the pressure of the budget and the upcoming fiscal year deadline of June 30.

“The discussion will come down once again to income tax or sales tax,” Waguespack said. “And I think sales tax will be the one they will look at there.”

Other items

Waguespack said LABI members are pushing for a convention to review the state’s constitution, something that hasn’t happened since 1973. Meanwhile, the constitution has been amended “more than 180 times,” creating what he called a “constricting document.”

“Our constitution has become a safety deposit box,” he said. “Anytime somebody has an idea they like, they say let’s throw it in the constitution so no one can mess with it ever again.”

A constitutional convention can only be successful with a broad base of “independently elected delegates,” Waguespack said.

“That’s what it’s going to take; people outside the (political) system,” he said.

A potential “game changer” for the state is legislation that would post online every dollar spent on the state and local level, or “Louisiana Checkbook.” He said a similar effort rolled out in Ohio has proven successful.

“It creates in Ohio an army of citizen auditors which hold government responsible,” Waguespack said. “We think that needs to happen in Louisiana.”

A Senate judiciary committee killed a measure on Tuesday that would have removed a gag order where a jury can’t be told if someone was wearing a seat belt. Waguespack said the gag order has caused the state to have the second-highest car insurance rates in the country. One of the bigger reasons for this is bodily injury claims being “through the roof.”

“Either we have the softest tissue in the country because of something in our water, or we give a lot of money to folks for injuries that other states don’t give,” he said. 

“If we don’t start putting some legal reform in place, we have to stop complaining about the cost we pay as citizens,” he said.

Waguespack said LABI supports legislation that seeks to update the pension plan for future rank-and-file state workers, but it may not get through the session.

Along with the fiscal cliff, Waguespack mentioned the looming “political cliff” in 2019, with 64 state legislators reaching the end of their terms. He said those who may be interested in running for political office should consider it.

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