Last updated: March 9, 11:38 p.m.
In a last-minute flurry of legislative action Wednesday, state lawmakers ended a 25-day special session by filling nearly all of the immediate budget shortfall, but they left themselves with the prospect of having to make painful cuts later this year in government programs that are popular with the public.
Louisiana legislators will begin considering those cuts – estimated to be $800 million – when they begin the regular session on Monday and have to balance next year’s budget nearly three months later.
The size of that deficit – and the slipshod way they passed bills in the final 15 minutes before the session ended at 6 p.m. – caused Senate President John Alario to tear up in frustration and left Gov. John Bel Edwards expressing a controlled anger immediately afterward.
“We could have done better,” Edwards told reporters at a press conference that was more somber than celebratory, as dozens of Democratic legislators looked on. “This was not our best day. I can’t stress that enough.”
After waiting around during most of the day for their leaders to strike a deal, the members of the Louisiana House and Senate approved sales tax hikes and a cut in spending in the final minutes that bridged all but about $30 million of the $900 million or so gap they had been facing for the current fiscal year.
Edwards said his staff would not know until Thursday exactly where the $30 million of cuts would fall. Those cuts could disrupt universities and colleges to some extent as well as cause some public hospitals to turn away patients temporarily.
The cuts would have been far worse except for the last-minute approval of measures to raise the state sales tax by 1 cent and to eliminate dozens of exemptions currently allowed when state sales taxes are levied.
Monty Sullivan, president of the Louisiana Community and Technical College System, described himself as “grateful” afterward that the cuts weren’t worse.
“Get us to June 30,” he said, describing his goal. “This budget will do that.”
The 1-cent sales tax increase will take effect on April 1, and at the insistence of Republicans in the House will last only 27 months. Louisiana will now have the country’s highest average sales tax, when local sales taxes are factored in, according to the Tax Foundation.
“Raising the state sales tax is only a short-term fix to a long-term problem,” John Kay, Louisiana state director for Americans for Prosperity, a conservative interest group, said in a statement afterward.
To end the state’s biggest budget deficit in nearly 30 years, folks in Louisiana will pay more to smoke, to rent cars, to stay at short-term rentals, to make consumer purchases and to drink beer, wine and liquor. Businesses will pay more for their utilities and will lose a variety of other tax breaks.
Along with the tax hikes, the Legislature and Edwards also plugged $328 million in one-time fixes into the current year budget deficit and cut spending by $170 million – to reach the $30 million shortfall.
The governor’s office, the Legislature, the Department of Health and Hospitals and numerous other state government agencies all will have less money to spend through June 30.
For the past several days, Republicans and Democrats in the House were in a standoff over the Republicans’ demand that lawmakers and Edwards agree to fill the immediate budget gap by going beyond the already-agreed to 1-cent sales tax with an additional 0.25 cents tax or even slightly higher.
Led by the Legislative Black Caucus, Democrats refused, saying that sales taxes hit the poor harder and that Louisiana already has a tax system where the poor pay a higher percentage of their income than do the wealthy.
In turn, Republicans in the House refused to agree to the demand by Edwards and Democrats that they change brackets for individual income taxes that would primarily make upper-income taxpayers pay more.
“Everybody pays sales taxes,” state Sen. Jack Donahue, R-Mandeville, said Wednesday in explaining why Republicans favored raising those taxes and not individual income taxes.
Over the last three days, Edwards held repeated meetings with legislators trying to find a compromise. House and Senate leaders stayed at the Capitol late Tuesday night trying to forge a deal. Alario, R-Westwego but an ally of the governor, huddled repeatedly with House Speaker Taylor Barras, R-New Iberia, on Wednesday.
In the end, neither the Republicans nor the Democrats budged.
That led to Plan B, taking House Bill 61, a bill that would end the exemptions on one of the existing four pennies of the state sales tax and eliminating them on all four. The Senate pushed this plan. But the House resisted it until about 30 minutes before the session was to end on Wednesday.
With the clocking ticking ever closer to 6 p.m., Senate and House aides rushed back and forth across Memorial Hall in the State Capitol to the other chamber to get documents reviewed or signed. At one point, a House aide tripped over a velvet rope in the Senate chamber and nearly took a tumble.
With the agreement reached by House and Senate leaders, lawmakers in each chamber quickly passed HB61. It will eliminate most of the exemptions on all four pennies of the sales tax until the current fiscal year ends on June 30. That will raise about $100 million. Then the exemptions will return on two of the four pennies for the next two years, as a concession to the business lobby.
A final kerfuffle nearly caused the special session to end in spectacular failure.
Democratic political activist Jacques Morial of New Orleans and others texted state Sen. Karen Carter Peterson, D-New Orleans, to warn her that House Bill 62, which was supposed to raise the sales tax by 1 cent, actually called for a 1.25-cent increase – as Republicans favored.
Peterson rushed to the microphone, told her colleagues of the apparent higher-than-agreed-to amount and said she feared that it had been slipped in amidst the final jockeying.
“I pray to God that I’m wrong,” she said, before adding that if she wasn’t, “This place will be blown up.”
Sen. J.P. Morrell, who had been waiting in the front of the chamber to handle the next tax bill, immediately turned around and told the Senate staff, “You have two minutes to clear that up.” It was 5:55 p.m.
Peterson leaned into the Senate microphone and said, “If the House is listening, do not pass HB62.”
Failure to pass the measure would have caused major problems since the 1-cent sales tax increase was meant to raise $210 million. Not having that money likely would have meant the cancelation of classes at LSU and other universities and sharp cutbacks at the state hospitals since the money closed nearly one fourth of the $900 million immediate budget gap.
Senate aides scrambled before someone informed Alario that the 1.25 percent increase was in a summary of the bill, not in the text.
“The president says the digest is wrong,” Morrell reassured his colleagues. They then passed HB61, 33-5. The session adjourned moments later.
“The House Republican Delegation worked to solve this budget deficit with a mixture of cuts, revenue, and some short¬ term budget solutions,” the Republicans said in a statement afterward. “This mixture was created to be a bridge to permanent reform.”
But solving the short-term budget deficit still means that lawmakers during the special session closed only $1.2 billion of the $2 billion gap they are facing during the upcoming regular session. That $800 million gap weighed on Edwards in his comments afterward.
“That is going to be a very difficult number to absorb in cuts, and I will tell you we will be in triage mode on exactly how to allocate those cuts,” he said.
Under the state Constitution, legislators cannot raise taxes during the regular session this year – an even-numbered year – making it likely, Edwards said, that they will have to return for a second special session in June.
The final rush of bills ended with a poignant scene in the state Senate: Alario, who has spent the past 44 years in the House and Senate – and served as the speaker of the House and the president of the Senate an unprecedented two times in each chamber – dabbing his eyes with a handkerchief as left the rostrum after adjournment and walked down the marble steps onto the Senate floor. He is known for his calm.
“This is the worst closing I’ve ever seen,” Alario said as reporters gathered around him. “This is no way to do the people’s business. Games were played.”
He noted that he was slammed with eight different conference reports at once on bills that needed to be passed.
“It was disgusting the way it was handled,” Alario said. “But we had to pass those bills. If not, it would have brought so much disaster to the people of the state.”
Rebekah Allen, Mark Ballard and Will Sentell of The Advocate Capitol news bureau contributed to this report. Follow Tyler Bridges on Twitter @TegBridges. Follow Elizabeth Crisp on Twitter @elizabethcrisp.For more coverage of state government and politics, follow our Politics blog at http://blogs.theadvocate.com/ politicsblog .