Louisiana House agrees to raise another $70M for next year; both bills must return to Senate _lowres

Advocate Photo by TYLER BRIDGES -- Robert Adley, an advisor to Gov. John Bel Edwards, from left to right, Sen. Rick Ward III, R-Port Allen, and Rep. Neil Abramson, D-New Orleans, meet Monday after a House Ways & Means Committee hearing. Ward sponsored legislation that would place new limits on the inventory tax credit for businesses that also get an exemption from paying local property taxes on their facilities. It was one of the last two measures that could raise revenues for the state budget.

The Louisiana Legislature is on a path to approve about $285 million in new taxes during the special session that ends on Thursday night, or just under half of the $600 million sought by Gov. John Bel Edwards,

The House passed two measures Monday that would raise an estimated $70 million in the fiscal year that begins July 1 by trimming business tax breaks. The Legislature already has approved measures that would produce an additional $214 million, not $222 million as previously estimated.

“It’s better than where we were,” Senate President John Alario, R-Westwego, said in an interview. “But we’re still short.”

The opportunities to raise more taxes are quickly dwindling.

The $285 million would be enough to fund the TOPS scholarships at 70 percent of the current level and would also leave shortfalls for K-12 schools, the state’s public colleges and universities, sheriffs’ departments, school voucher programs and the state’s medical schools. The state’s safety-net hospitals would get the full $50 million that Edwards has sought, although that’s $30 million less than the private hospital companies say they need.

Whatever programs are short on July 1 will suffer budget cuts as Louisiana enters a new fiscal year. Edwards called the Legislature into the special session to avoid those cuts by asking legislators to raise the $600 million.

Alario said that he hasn’t given up hope on amending bills before the Senate to raise more money.

“But we can’t do it by ourselves,” Alario said, meaning the tax-resistant House would have to go along with any moves by the Senate.

Left unaddressed was whether to set aside money now for a projected $200 million deficit during the fiscal year that ends on June 30. State officials won’t know the exact size of the deficit for several months.

Both bills approved by the House on Monday, Senate Bill 10 and Senate Bill 6, must return to the Senate for approval, which seems likely, to become law.

When the special session began on June 6, the Edwards administration asked legislators to cut tax breaks for businesses and individuals.

Conservatives in the House have resisted Edwards’ efforts to cover the shortfall by taking away tax breaks enjoyed by individuals, especially those who earn over $100,000.

Of the $70 million in new taxes approved Monday, $57 million of that would come from SB10 by state Sen. Rick Ward III, R-Port Allen. It would require companies to choose between claiming the Industrial Tax Exemption or the Inventory Tax Credit, if they receive both.

Ward’s bill had faced strong opposition from powerful business lobbies — the Louisiana Chemical Association, the Louisiana Oil and Gas Association and the Louisiana Association of Business and Industry, among others — but he agreed to an amendment offered Monday before the House Ways and Means Committee that ended the business opposition.

The bill passed the committee and then won overwhelming approval on the House floor, 78-21.

Under the bill’s amended version, companies would still have to choose between the two tax breaks, but those that choose the Industrial Tax Exemption, which is far more lucrative, would lose only the refunds they get from the state when their Inventory Tax Credit is greater than their income tax bill. The companies would have the opportunity to apply that lost refund to reduce taxes in any of the next five years.

As originally written, Ward’s bill was projected to raise $146 million for the new fiscal year. Now it would raise only the estimated $57 million, and the decision by lobbyists to withdraw their opposition suggests the companies that employ them will find ways to game the new law and pay even less in taxes than expected.

“The companies have a fiduciary responsibility to save money where they can,” Robert Baumann, one business lobbyist, said afterward, noting that the inventory tax is calculated on the final day of each month. “If you can move around inventory on the last day (to another state), you’ll do it.”

With the business opposition gone, Ward’s bill appears likely to sail through the Senate, which already approved the more-onerous version.

First, Ways and Means and then the full House also approved SB6, which also would generate much less money than originally expected. SB6 would no longer allow big companies to get refunds from the state for the inventory tax while also making the tax credit a bit more generous for smaller companies. With those changes, it would raise $13 million, down from $50 million. The House approved the bill on a 78-18 vote.

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Follow Tyler Bridges on Twitter @TegBridges. For more coverage of government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politicsblog/