In the latest step toward approving next year’s budget, the Louisiana Senate Finance Committee on Tuesday night approved eight different tax bills that would raise an estimated $735 million.
Under that estimate, the Senate committee raised an additional $120 million beyond the $615 million the House already had raised in new revenue.
State Sen. Jack Donahue, the committee chairman, said afterward that the Senate wants to raise $250 million more than the House raised, meaning the Senate is about $130 million short to prevent sharp cuts to the state’s public health care system.
The bills approved Tuesday would roll back numerous business tax exemptions by 20 percent or 28 percent, impose a 64-cent increase in the cigarette tax and raise taxes on cigars, smokeless tobacco and electronic cigarettes.
House Bill 549 would begin to scale back the tax exemption for horizontally drilled wells once oil prices reach $70 per barrel or natural gas prices reach $4.50 per million BTUs. Prices are around $60 per barrel now for oil and about $2.70 per million BTUs for natural gas.
Measures that would trim tax subsidies for the solar energy and film industries did not get a hearing as Donahue, R-Mandeville, called it a night at 9 p.m. He said the committee will consider those measures, House Bill 829 and House 779, on Wednesday.
Approval of the eight bills sets up a crucial hearing Wednesday before the House Ways and Means Committee on controversial legislation needed for Gov. Bobby Jindal to accept the revenue-raising measures and not veto next year’s budget.
State Rep. Joel Robideaux, the Ways and Means chairman, called the committee meeting after delaying it two days while he sought answers to 20 questions about the impact of the measure, Senate Bill 284. It would set up the SAVE fund.
House members Tuesday initially rejected authorizing the hearing as Democrats voted in opposition. But after a 20-minute recess, where Robideaux huddled with Democratic leaders, lawmakers reversed themselves with no one objecting. The Democrats were state Rep. Katrina Jackson of Monroe and state Rep. John Bel Edwards of Amite.
“The power of persuasion,” Robideaux, R-Lafayette, said when asked what happened. He would not elaborate.
Jackson, who chairs the Legislative Black Caucus, said its members were angered that the Senate had failed to vote on House-passed bills Tuesday. She said they received assurances the Senate would take up that legislation starting Wednesday.
“That doesn’t mean we’ll vote for SAVE,” Jackson said. “We still have a lot of problems with that bill.”
Earlier, Robideaux had explained why he relented and agreed to schedule it.
“We’ll have a much better deliberation and debate of the bill than we would have had on Monday,” he said.
Higher education leaders have been pushing for the bill because of fears that if it fails, Jindal will veto the budget, the Legislature won’t muster the two-thirds vote needed to override him and their institutions will suffer deep cuts in state aid.
No governor has vetoed the budget bill since the Constitution took effect in 1974 so the possibility of a Jindal veto is creating great uncertainty.
Lawmakers have said they are not sure whether the votes exist in Ways and Means to approve the SAVE fund or, if approved in committee, on the House floor. The Senate had approved it on a 29-10 vote.
Critics have called the SAVE fund “a shell game” and “a ridiculous scheme,” with even supporters acknowledging that its purpose is to create a tax offset so Jindal can accept a good portion of the higher taxes from the measures approved Tuesday. Jindal is strictly following the guidelines from Grover Norquist’s Americans for Tax Reform, an anti-tax lobbying group based in Washington, D.C.
SB284 would impose a fee of perhaps $1,500 per student that would raise $350 million or so on paper. Students wouldn’t actually have to pay the fee because SB284 also would create a tax credit for an equivalent amount. So, essentially, the Legislature would be creating a phantom fee.
But the tax credit would have the effect of creating a $350 million tax offset that Jindal could apply to the hundreds of millions of dollars in new revenue that the Legislature is moving to approve.
The Senate Finance Committee methodically went through the eight tax bills, approving amendments to the bills that the public hadn’t seen beforehand.
The approvals came with senators rarely objecting to the measures, as if they all had agreed to the plan beforehand.
The committee did not hear one measure, House Bill 805, which would shave 25 percent of the tax refunds that companies get for paying the inventory tax. Trimming that tax refund was moved to House Bill 629 and at a higher 28 percent rate.
The bills approved Tuesday now go to the full Senate for consideration. Once approved there, they would need return to the House for final passage.
Lawmakers need the extra revenue to help close a projected $1.6 billion budget deficit for the fiscal year that begins on July 1.
The Legislature adjourns on June 11, so lawmakers have until then to approve the tax bills and the final version of the budget.
The tobacco legislation, House Bill 119, generated the most passionate testimony Tuesday. The bill’s sponsor is state Rep. Harold Ritchie, D-Bogalusa, who began smoking 50 years ago when he was 15 years old.
Dr. Mitchell Lirtzman, a cardiovascular surgeon in Lafayette, beseeched the committee to approve a big tax increase, saying tobacco-related diseases cost the state $1.8 billion per year.
“The tobacco companies need 3,000 kids per year to pick up that first cigarette,” Lirtzman said. “If you smoke for three months straight, they’ve got you until you die.”
Cigarettes, he added, are “highly addictive, more so than crack cocaine or heroin.”
HB119 began the hearing as a 32-cent increase in the existing 36-cent per pack cigarette tax. But the committee amended HB119 to raise the cigarette tax by a total of 64 cents per pack. At the new $1 rate, Louisiana would have the 32nd highest rate. The state currently has the 49th highest rate.
The higher taxes on cigarettes and the other tobacco products would raise $102 million next year.
The committee also approved House Concurrent Resolution 8, by Rep. Jack Montoucet, D-Crowley, which would reinstitute 1 cent of the tax exemption that businesses receive on their utility bills.
His bill would raise $103 million and would be on the books for only 16 months.
Lobbyists for pipeline companies, the Louisiana Association of Business and Industry and the Louisiana Chemical Association, testified against the bill.
“We understand the challenge before you (to raise money) but don’t think this is the right way to address it,” Jim Patterson, LABI’s lobbyist, told the committee members to no avail.
House Bill 624 would raise $194 million by reducing certain income and corporate franchise tax breaks by 20 percent. Rep. Jackson is the sponsor.
Mark Ballard of The Advocate Capital news bureau contributed to this report.