Wise older folks remember the saying, “Don’t count your chickens before they hatch.” Earlier this week, an economist speaking to the Louisiana Board of Regents said essentially the same thing.
According to Melinda DeSlatte of the Associated Press, the Louisiana Legislature’s chief economist Greg Albrecht said that Louisiana’s economy has shown “modest improvement,” but that he doesn’t expect economists to recommend a boost to this year’s income forecast by a similar $300 million reported state surplus.
“That’s not going to happen,” Albrecht said.
The surplus is excess cash remaining from the budget year that ended June 30, tied to better-than-expected personal income and corporate tax collections and a slight uptick from oil prices. Sales tax came in slightly lower than projected, Albrecht said, lessening the surplus’ size.
As stated in an earlier column, creating a budget based on fluid revenue projections is difficult at best, and dangerous at worst. Conservative budgeting is a must, whether it is the federal government, State of Louisiana, Webster Parish, or City of Minden.
Of course, with everything being political these days, this is easier said than done — as evidenced by the reaction to the state surplus.
DeSlatte continued, anti-tax advocates and conservative Republican lawmakers who voted against a sales tax renewal earlier this year said the surplus demonstrates over-taxation. Democratic Gov. John Bel Edwards said the surplus indicates Louisiana’s economy is doing better than predicted.
Albrecht said while the outlook for the state is positive, some of the reasons driving the surplus don’t involve underlying economic trends. The state still has one of the highest unemployment rates in the nation.
“I don’t think I can say that this is all about income and employment growth,” the chief legislative economist said. “It’s really modest growth.”
For example, he said some improved corporate collections likely stem from cuts to tax break programs that lawmakers enacted over the last several years, while another portion stems from broader economic conditions.
“Corporate income and franchise tax, those are driven by the international and national economies. They have nothing to do with the state’s economy,” Albrecht said.
I’ll take Albrecht’s word for it. After all, he is the economist.
In a perfect world, budgets would not be politicized, but they are. We decry budget cuts. We decry surpluses. We take credit for things beyond our control. It’s the world in which we live.
Here is a novel idea: Let’s listen to the economist, and keep tight reins on all our budgets to make sure a trend truly exists. Again, it is easier said than done.
David Specht Jr. is publisher of the Minden Press-Herald.