Louisiana’s state senators agreed Wednesday to use $328 million in patchwork financing to help fill gaps in this year’s budget, sending the proposals to the House for consideration, while lawmakers in the House sifted through tax hike ideas.
The Senate voted 38-0 for both measures, to tap into $128 million from the “rainy day” fund and to redirect $200 million in Gulf oil spill money to the operating budget that otherwise would be used as part of a legal settlement.
With those votes, Senate President John Alario said the Senate has done all the work it can for now to help rebalance the budget, which has a gap of about $900 million. The hole must be closed by June 30.
“The Senate has taken all the action we are constitutionally allowed to do,” said Alario, R-Westwego.
Tax increases and most budget bills must start in the House, which hasn’t yet voted on legislation sought by Gov. John Bel Edwards for the ongoing special session. The House Ways and Means Committee started hearings Wednesday on individual tax bills but took no votes.
Committee Chairman Neil Abramson, D-New Orleans, said lawmakers wanted to discuss all the tax proposals and get the financial analysis of each before making decisions on which ones to support. He expected the first tax votes later this week or early next week.
The Ways and Means Committee started with proposals that would raise cigarette taxes.
Edwards proposes to boost the cigarette tax from 86 cents per pack to $1.08, starting April 1, to raise an estimated $16 million for this year’s budget and $46 million annually.
Rep. Frank Hoffmann, R-West Monroe, sponsor of one of the cigarette tax bills, said the tax hike would bring Louisiana to the average of its neighboring states, higher than the rate Mississippi charges and lower than the rates charged by Arkansas and Texas.
Rep. Walt Leger, D-New Orleans, said the increase will add more money to state coffers, while also discouraging smoking, which could lessen state health care costs.
“It helps to create a healthier Louisiana,” Leger said.
Members of the committee expressed reticence about raising cigarette taxes again, after lawmakers just boosted the tax last year. Convenience store owners say the increases hit them especially hard and can harm their businesses.
“I have folks in my district who have written me who feel like it’s been heavy-handed upon that industry,” said Rep. Tom Willmott, R-Kenner.
Health advocacy groups said they opposed the current cigarette tax proposal, calling it too little of a price increase to discourage smoking.
Lawmakers on the committee also discussed bills that would provide a method for collecting state sales tax from online retailers, a measure that former Gov. Bobby Jindal vetoed last year. They also talked of the possibility of reinstituting a 3 percent state tax on car rentals that Jindal refused to renew several years ago.
It was unclear what taxes might gain support from the committee. The special session must end by March 9.