Gov. John Bel Edwards was far short of the $600 million he says the Legislature needs to raise during the special session to prevent deep cuts to critical programs, after the Louisiana House took its first votes on a series of tax measures Thursday.
In all, the bills approved by the House would raise about $222 million next year, or less than half of what the governor wants.
Of the measures approved Thursday, most of the money would come from raising a tax on health maintenance organizations, although it’s quite likely that the HMOs will pass the tax onto consumers.
The House has several other small tax bills it will consider Monday, meaning the governor’s hopes to raise more money likely will depend on the Senate altering the tax measures that the House approved Thursday. The Senate tax committee will begin hearing them Monday.
The Democratic governor ran into a wall of opposition from Republicans in getting his tax bills out of the Ways and Means Committee this week, despite meeting with them repeatedly in recent days. Republicans hold a 12-7 majority on Ways and Means.
That committee bottled up or rejected measures that would eliminate income tax breaks that mostly benefit wealthy taxpayers.
The key vote came Wednesday when Neil Abramson of New Orleans, the Democratic chairman of the committee, cast the tie-breaking vote to defeat House Bill 11, which would limit the deduction on state income taxes that individuals can claim from the itemized deductions they take on their federal tax returns that are in excess of the federal standard deduction.
HB11 would raise $116 million with taxpayers who earn over $100,000 estimated to foot 72 percent of that.
University presidents and representatives from K-12 schools, safety-net hospitals and the sheriffs’ association were spurned in their appeals to committee members to approve this and other income revenue-raising measures.
Edwards had been especially hopeful of winning support from three of the freshman Republicans on the committee — Rep. Paula Davis, of Baton Rouge; Rep. Stephanie Hilferty, of New Orleans; and Rep. Stephen Dwight, of Lake Charles. Only Dwight voted for HB11.
Baton Rouge businessman Lane Grigsby confirmed on Thursday that he met with Davis at the State Capitol on Wednesday to tell her in no uncertain terms that she should reject the tax measures. Grigsby has spent millions of dollars in recent years to push conservative causes in Baton Rouge.
“I pointed out to Paula that her constituents would be hurt most,” Grigsby said. “She’s from a conservative district (in southeast Baton Rouge). I believe I have an obligation to try to use the blessings I’ve received in life to try to make a difference. I try to make everybody accountable, to do things the responsible way.”
Davis confirmed meeting with Grigsby.
“He said if I didn’t fall in with the Republican leadership, he would start a recall,” Davis said. “I just said OK. He got up and walked out.”
She said Grigsby’s comments played no role in her decision to vote no and won’t on future votes.
“I will not raise taxes without comprehensive reform,” Davis said.
In the meantime, Americans for Prosperity, a conservative interest group, sent mailers to the districts of at least four freshman Republicans. It says, in each case, that the legislator voted for the 1-cent increase in sales taxes during the first special session.
“Now, some in Baton Rouge want to raise taxes even more. Louisiana can’t afford to go down that road!”
Of the $222 million in tax measures approved by the House Thursday, $189 million would come from the HMO tax. And of that $189 million, the state Revenue Estimating Conference will have to recognize $34 million that would come from the governor’s new Medicaid expansion plan.
The House also approved House Bill 29, which would limit the interest the state pays to corporations on refunds for tax overpayments. Sponsored by Rep. Ed Price, D-Gonzales, it would raise $16 million.
The House also approved House Bill 25, sponsored by Rep. Rodney Lyons, D-Harvey. It would reduce the tax credit on Citizens Property Insurance from 72 percent to 25 percent. The change would raise $17 million.
The House also approved House Bill 51, which would restore the sales tax break for a couple of dozen nonprofits that lawmakers inadvertently took away during the first special session. It is sponsored by Rep. Jim Morris, R-Oil City.
On Thursday morning, the House Ways and Means Committee approved a measure that would limit the capital gains deduction that almost entirely benefits the wealthy. House Bill 50 originally would have raised $13 million but was amended to produce less money, although the exact figure was not available.
Rep. Katrina Jackson, D-Monroe, chose not to have the committee consider two other measures sponsored by her that would trim corporate tax breaks. Jackson said she figured the committee would defeat both bills, but said she might take another stab at winning approval of them on Monday.
Ways and Means also approved House Bill 5, which would delay by one year the constitutional amendment scheduled for the November ballot. The proposal would give voters the chance to eliminate a tax deduction for businesses while at the same time triggering a reduction in the tax rate that businesses pay.
Follow Tyler Bridges on Twitter, @TegBridges. For more coverage of government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politicsblog/.