Louisiana’s budget at the beginning of fiscal year 2023 was $47 billion, which is an increase of 63 percent over
the last decade. With a state population of 4.6 million, and shrinking, this is a spending burden of more than
$10,000 per person. While nearly half of the money in the state budget comes from the federal government,
Louisiana’s taxpayers are still on the hook for the total. This growth in state spending is unsustainable given
the lack of growth in the state’s economy and a history of net outmigration. This report offers an overview and
brief history of Louisiana’s operating and capital budgets and outlines how the state can begin to create a more
responsible, sustainable budget over time that remains adaptable to the needs of citizens.

Originally published at Pelican Institute.

Today, I cover:

1. CPI Inflation Report: The Bureau of Labor Statistics recently released its report for the consumer price index (CPI) measure of inflation. The headline is up 5% year-over-year, and core (excluding food and energy) is up 5.6% y/y—both are the highest in 32 years. I cut through the noise to let you know what it means to you and for the housing market, which is slowing across the country and in Texas. 
   
2. State Actions: The Texas Senate recently released its budget for the upcoming 2024-25 budget, which appropriates too much and provides too little in property tax relief. Find out the details in my policy brief on what’s in the budget and how it could be improved. I also discuss how states nationwide are passing school choice, so it’s important that states like Texas and Louisiana don’t fall behind in education. But more importantly, they should empower parents to do what’s best for their kids’ education.
3. CBDC + U.S. Dollar Reserve Status: I was recently on the Wake Up America Show with Austin Peterson (watch my interview at 33:35 at YouTube link below) to discuss the failures of a central bank digital currency and the influence this could have on our lives. I also talk about how global factors are influencing the U.S. dollar’s global reserve status and what this means for us (good article by Peter Earle at AIER here).

​You can watch this episode on YouTube or listen to it on Apple Podcast, Spotify, Google Podcast, or Anchor (please share, subscribe, like, and leave a 5-star rating).

​An Overview

• Texans for Fiscal Responsibility provided a three-step process to eliminate all property taxes over the next decade by simply limiting government spending at the state and local levels of government and returning surplus collected taxpayer dollars to taxpayers.

• Unfortunately, the Texas Senate’s budget appropriates too much taxpayer money. It substantially increases all funds appropriations in the proposed 2024-25 budget above the 2022-23 budget by 16.3% to $308.0 billion and increases state funds appropriations (exclude federal funds) by 25.4% to $208.6 billion. Even excluding property tax relief effort amounts in the 2022-23 and 2024-25 budgets, all funds appropriations increase by 19.4%, and state funds appropriations increase by 20.9%, which are well above the rate of population growth plus inflation over the last two fiscal years of 16%.

• These increases in appropriations would be better allocated to new property tax relief, primarily through compression of school district maintenance and operations property taxes. This is the way to create a path to eliminating these property taxes, thereby giving Texans more of the right to own their property instead of perpetually renting from the government.

Originally published by Texans for Fiscal Responsibility.

​In Let People Prosper episode #39, I talk with Daniel Erspamer, CEO of Pelican Institute in Louisiana, about LA's economic issues, need for tax and budget reforms, and ways that let people prosper.

​Thank you for listening to the Let People Prosper Show podcast and for reading the newsletter for show notes and key economic insights.

On today's episode of the "Let People Prosper" show, which was recorded on March 31, 2023, I'm thankful to be joined by Daniel Erspamer, CEO of the Pelican Institute for Public Policy in Louisiana.

We discuss the Pelican Institute’s “Louisiana’s Comeback Agenda” which includes:

• What are the biggest barriers impeding Louisiana's growth and fueling its net out-migration;
• How the complicated tax code burdens Louisianans and why it needs an overhaul that includes responsible budgeting; and
• How there’s a need to advance school choice, unleash new technologies, and much more to empower individuals, parents, families, and entrepreneurs to reach their full potential and flourish.

​Daniel Erspamer’s bio and other info (here):

• A nationally-recognized free-market leader, Daniel Erspamer has spent his career building and growing effective policy organizations around the country. Over the course of his career, he has mentored hundreds of nonprofit leaders, raised tens of millions of dollars for opportunity policy initiatives, and helped achieve meaningful policy wins across the nation.
• Since being appointed Pelican Institute CEO in 2017, he has built a team and strategy to address Louisiana’s most substantial policy challenges and to create a Louisiana where everyone has the opportunity to flourish. Under Daniel’s leadership, the Institute has generated policy victories in the areas of education reform, criminal justice reform, state spending, innovation policy, occupational licensing, and more. For this work, in 2020 Daniel was recognized with a Buckley Award, given annually by America’s Future to recognize leaders making strides to advance freedom and prosperity.
• Prior to his leadership of Pelican, Daniel served as Vice President for Strategic Partnerships for State Policy Network, and in a variety of leadership and development roles at the national office of Americans for Prosperity. He holds a B.A., with honors, in Political Economy and Communication from Tulane University. Daniel and his wife, Emily, a graduate of Tulane University School of Law, live in New Orleans with their four children, one dog, two birds, two guinea pigs, and many tropical fish.
• Follow him on Twitter @rightwave.

​
Please like this video and subscribe to the channel if you enjoyed this podcast!

​Executive Summary
The U.S. Congress passed and President Biden signed into law the so-called “Inflation Reduction Act” (IRA) in August 2022. The IRA includes many provisions which are now estimated to cost $1.2 trillion over a decade per Goldman Sachs’ more recent analysis compared with the Congressional Budget Office’s (CBO) initial estimate of $391 billion.

Part of this substantially higher estimated cost is because of the new cost estimates for tax credits for electric vehicle (EV) battery cells and modules manufactured in the U.S. Instead of the initially estimated cost of $30.6 billion by the CBO, new estimates based on more precise projections and growth in the EV market indicate that this could be as high as $196.5 billion (540% higher than initially estimated) per the Mercatus Center and Goldman Sachs. This higher estimate appears more accurate than the original CBO estimate given the large increase in the EV market and the expanding use of these tax credits.

Given that the cost of these subsidies passed by Congress and communicated to the public appears to be substantially undervalued, the CBO and other nonpartisan agencies and committees responsible for providing Congress with accurate revenue estimates and sound economic analysis should reexamine their calculations.

​Originally published at Americans for Tax Reform. 

​A new report by Dr. Vance Ginn, senior fellow at The James Madison Institute and president of Ginn Economic Consulting recommends that the state continue to limit the burden of government spending. The Conservative Florida Budget (CFB) sets a maximum threshold in all funds appropriations for FY 2024 of $116.2 billion. This maximum threshold is based on the 5.5% rate of the 3-year average of population growth plus inflation over the last three years from 2020 to 2022, which reasonably represents the average taxpayer’s ability to pay for government spending.  

“Legislators should use the CFB as a guide this session. Given the economic headwinds from the poor fiscal and monetary policies out of D.C. contributing to elevated inflation and risks of a deep recession along with past state budget excesses, the Legislature should pass a budget well below the CFB, similar to the Governor’s budget. Doing so will ensure a conservative budget that will help keep more money in taxpayers’ pockets through larger tax relief, so families and entrepreneurs have the most opportunities to flourish.” — Dr. Vance Ginn, Senior Fellow, The James Madison Institute; President, Ginn Economic Consulting.

Originally published by James Madison Institute.

​In "This Week's Economy" Ep. 3, I note the weaker labor market in the latest U.S. jobs report, the continued banking crisis issues, and state actions in Texas and Louisiana.

​Today, I cover:

1. Jobs Report: The U.S. jobs report for March 2023 and the continued weakness in the labor market when considering the prime-age (25-54 year old) labor force participation rate and employment-population rate compared with the early 2000s along with the 24th consecutive month of declining year-over-year inflation-adjusted average weekly earnings.
2. Banking Crisis: The banking crisis continues to cause some reasons for concern as the federal government continues to bail out depositors and ultimately big banks thereby creating more risk and costlier busts while the Fed adds more fuel to the fire, as I noted in recent interviews on Fox Business and NTD News below; and
3. State Actions: The Texas Senate passed SB 8 which provides many families in Texas with $8,000 in an education savings account, but after multiple states have already provided universal ESAs there is room for much improvement in the Texas bills during the session so parents, teachers, and students in Texas aren’t left behind. Also, the Texas House passed a $303 billion budget for the next two years (2024-25) which is above the rate of population growth plus inflation when you exclude tax relief efforts and is a massive increase in appropriations of 21.5% above prior appropriations thereby leaving too little of $12 billion in new property tax relief of the $33 billion available surplus. And finally, Louisiana may have the third most dependency on the federal government with 44% of its budget from federal funds, the path forward is to support increased prosperity by getting the government out of the way (see Pelican Institute’s Comeback Agenda) so more people can get a well-paid job rather than just surviving on safety nets, which can be done in their session that starts on April 10, 2023.

​You can watch this episode on YouTube or listen to it on Apple Podcast, Spotify, Google Podcast, or Anchor (please share, subscribe, like, and leave a 5-star rating).

​Louisiana’s state government is the third most dependent state on federal funding. This is according to a report recently released by WalletHub that shows state rankings, with Alaska and Wyoming coming in at first and second. This follows another report release by the Tax Foundation that also ranks Louisiana as the third most dependent on federal funds, with only Montana and Wyoming ahead.

This trend doesn’t appear to be getting any better. In 2014, federal funding comprised just 36% of the state’s total budget, whereas today, that percentage rises to 44%.

The substantial increase in Louisiana’s use of federal funds from 2016 to 2017 is primarily due to Medicaid expansion. This program expanded the number of individuals eligible to receive Medicaid, and therefore increased the amount of money in the state’s general fund needed to match the additional federal funding. The match rate ranges from 30% to 40% per year based on personal income in the state. Disaster-related recovery has also contributed to the increased use of federal funds. Beginning in 2020 and 2021, Congress sent a large amount of federal funds due mostly to the COVID-19 pandemic response. There were also two major hurricanes, Laura and Ida, and numerous smaller hurricanes that also occurred in those fiscal years, which prompted an additional influx of federal funding from FEMA, HUD, and other agencies.

Every program that is either partially or fully funded by the federal government comes with restrictions on its use – the “strings attached.”

The substantial increase in Louisiana’s use of federal funds from 2016 to 2017 is primarily due to Medicaid expansion. This program expanded the number of individuals eligible to receive Medicaid, and therefore increased the amount of money in the state’s general fund needed to match the additional federal funding. The match rate ranges from 30% to 40% per year based on personal income in the state. Disaster-related recovery has also contributed to the increased use of federal funds. Beginning in 2020 and 2021, Congress sent a large amount of federal funds due mostly to the COVID-19 pandemic response. There were also two major hurricanes, Laura and Ida, and numerous smaller hurricanes that also occurred in those fiscal years, which prompted an additional influx of federal funding from FEMA, HUD, and other agencies
​
Every program that is either partially or fully funded by the federal government comes with restrictions on its use – the “strings attached.”

​Most of the federal funding is used for social safety-net programs. Louisiana has the highest poverty rate in the nation, with nearly 20% of the population in poverty and even more on at least one safety-net program. State and local spending on these programs create an annual burden of nearly $3,000 per person.

To reduce the state’s dependence on federal funds for large line-items such as social safety net programs, the state must empower more individuals to realize their own self-sufficiency and ability to flourish. Work must once again become a priority.

WalletHub’s report also compared states using their gross domestic product, or GDP, per capita compared to the amount of federal funds flowing into each state. Louisiana is placed in the “high dependency, low GDP” category, with a GDP ranking of 40th in the nation.

Louisiana’s economy is not growing as fast as the rest of the country. With the highest poverty rate in the country, lawmakers need to pursue reforms that will make the state more economically competitive and increase opportunity for all Louisianans. Research has shown that more responsible state budgeting and spending, tax relief, and removing barriers for employers to start businesses and workers to work help reduce the number of people in poverty and reduce the dependency on the federal government by individuals and the state.

According to WalletHub and the Tax Foundation, Utah is one of the least dependent states on federal funding. This is because the state reformed its social safety-net system decades ago, linking assistance with employment opportunities. This made Utah the state with the fastest economic and job recovery post pandemic.

Louisiana should take a page out of Utah’s playbook and achieve the same. It’s time to reduce the state’s and individuals’ dependence on Congress and the national debt, which exceeds $31 trillion and is shared by all states including our own. And it’s time to get Louisiana off the top of another bad list and into a comeback story that we know is achievable.

Originally published at Pelican Institute.

​In Let People Prosper episode #38, I talk with Annie Spilman, Texas State Director of NFIB-Texas, about regulatory consistency and tax reforms which will help businesses thrive and let people prosper.

On today's episode of the "Let People Prosper" show, which was recorded on March 31, 2023, I'm thankful to be joined by Annie Spilman, Texas State Director at the National Federation of Independent Business (NFIB) in Austin, Texas.

We discuss:

• Which policies help businesses to thrive in Texas and beyond;
• Regulations that are impeding businesses from prospering more, and the benefits of the Texas Regulatory Consistency Act (HB 2127 in 2023); and
• Why Texas must reduce burdensome local spending and property taxes.

​Annie Spilman’s bio and other info (here):

• Annie Spilman became Texas state director in August 2018. She previously served as state legislative director, representing NFIB in the Texas State Capitol on important issues such as tax reform and regulatory relief.
  As state director, Spilman will be NFIB’s primary advocate in the Legislature and will guide and direct member engagement and political involvement throughout the state.
• A graduate of Southwest Texas State University, Spilman joined NFIB in 2014 after working as governmental affairs manager for the Independent Insurance Agents of Texas. Prior to that, she was a legislative consultant with Steve Bresnen & Associates in Austin. Spilman was chief clerk for the Texas House Human Services Committee and was a legislative aide to several House members.
• Follow her on Twitter here.

You can watch this interview on YouTube or listen to it on Apple Podcast, Spotify, Google Podcast, or Anchor (please share, subscribe, like, and leave a 5-star rating).