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The recently ended special session of the Legislature that failed to address the state's budget shortfall drew a call Wednesday for a constitutional convention. GNO Inc. CEO Michael Hecht said the state needs to rewrite rules that limit options on Louisiana's taxes and government spending.


One of the major credit ratings agencies has offered a dire assessment of the state's financial outlook, just days after lawmakers abruptly ended a special session with no action toward bridging a looming budget gap.

"In our view, political risk — as evidenced by the legislative gridlock during the special session — has emerged as a credit weakness, which has the potential to stunt what otherwise has been recent positive momentum in the state," analysts from Standard & Poor's wrote in Wednesday's assessment.

S&P is the first of the big three credit-rating agencies, which also include Moody's Investors Service and Fitch Ratings, to weigh in on the state's financial outlook after the collapse of the special session Monday. Lawmakers were attempting to replace some temporary tax measures adopted in 2016 that are set to expire June 30, leaving a hole in the budget that begins July 1.

S&P's analysis doesn't constitute a rating action, which could come later. Ratings downgrades can affect borrowing and lead to higher interest rates for the state.

"While over the short term, we anticipate continued modest improvements in economic and fiscal trends, uncertainty about fiscal 2019 now looms over Louisiana," S&P's analysts wrote. "As the legislature and governor work to find a path forward in crafting the state's next budget, we will continue to assess whether any measures provide for a sustainable framework to maintain long-term structural balance."

One year ago, S&P became the third of the three major ratings agencies to downgrade Louisiana's financial outlook when it shifted the state from AA to AA-. 

The special session that ended Monday was the fifth special session in two years -- all to address budget issues.

The temporary tax measures, including a one-cent sales tax hike, passed in 2016 as a "bridge" to a more permanent budget solution as the state faced a repeated cycle of budget crises.

The breakdown in attempting to pass tax measures during the most recent 15-day special session ultimately came in the House, which repeatedly rejected tax proposals, including a partial extension of the expiring sales tax increase.

Gov. John Bel Edwards, a Democrat, has blamed House Republican leaders for the failure to shore up the state's finances, while House leadership has criticized Edwards and Democrats who opposed the sales tax legislation.

“One of the primary justifications for calling a special session in February was to assure the credit rating agencies that Louisiana would be on more solid fiscal ground and less reliant on temporary revenue," Edwards deputy chief of staff Richard Carbo said via email Wednesday. "With the House leadership unwilling to move measures that stabilized our state, this is a sign of the uncertainty that’s to come over the next few months. Gov. Edwards remains committed as ever to work together to enact a more stable structure for our state that brings in the revenue we need to fund our priorities like health care, higher education and our law enforcement.”

Follow Elizabeth Crisp on Twitter, @elizabethcrisp.