The Louisiana Legislature won’t provide a long-term fix for the state’s continuing budget problems before the regular session ends in two weeks because Republicans in the House have balked at raising the needed revenue.
That means the Legislature will have to return for yet another special session at some point in the coming weeks or months, House Speaker Taylor Barras conceded.
“It sounds like that’s where we’re heading,” Barras, R-New Iberia, said in an interview with three reporters after the session ended late Wednesday night. “I don’t see any large revenue-raising bills left,” he added, referring to what remains on the House legislative calendar. “I don’t see the votes for that.”
At issue is how to replace $1.3 billion in temporary taxes that will fall off on July 1, 2018. Inside the State Capitol it’s known as the “fiscal cliff.” Legislators have a year to prevent going over the cliff, but not devising a way to prevent that now will mean a special session since they cannot raise taxes during next year’s regular session.
Barras predicted that legislators will ultimately address the fiscal cliff at least in part with sales taxes.
But for now, Barras said that any plans to generate more revenue face too much resistance from the public.
“Outside this building,” he said, referring to the State Capitol, “no one wants a tax passed,” adding that the resistance “is getting stronger and stronger.” He noted that most local tax measures on the ballot recently were defeated. (Lapolitics reported that voters defeated 80 percent of the ballot initiatives in late April that either renewed, rededicated or increased sales taxes.)
Gov. John Bel Edwards, speaking in a ground floor hallway just after arriving at the Capitol Thursday morning, expressed his disappointment that Barras has given up on trying to stave off the fiscal cliff before the Legislature adjourns on June 8.
“There will not be options before us that are different or better than what we have right now,” Edwards told two reporters. “I guess there are certain people whose toes have to be dangling off the edge of the cliff, and they have to be able to look straight down and see it, before they are motivated to do anything.”
With the legislative session nearing its end, the Republican majority in the state House has…
Senate President John Alario, R-Westwego, in a separate interview, also expressed his frustration.
“I wish we could solve the long-term problems of the state and move forward,” Alario said, adding that a special session will cost taxpayers $20,000 per day. Edwards has already called three special sessions to address the state’s budget problems.
Edwards and the current Legislature inherited a $2 billion budget deficit in January 2016 from Gov. Bobby Jindal and the preceding Legislature. Last year, they cut hundreds of millions of dollars in government spending, but mostly settled on a short-term solution by temporarily approving $1.3 billion in taxes that would last 27 months until July 1, 2018 when the 2018-19 fiscal year begins. The biggest temporary tax was a 1-cent increase in the sales tax that generates about $880 million per year.
Legislators said last year that passing temporary tax hikes would force them to find a way this year to prevent the fiscal cliff from occurring.
Edwards put forth a package of bills that would replace the expiring taxes, centered on a new levy called the commercial activity tax. He proposed allowing the penny increase to drop off.
But the conservatives who dominate the House Ways and Means Committee shot down all of the governor’s tax measures. He then challenged Republicans to offer their own plan to address the fiscal cliff.
Republicans passed a budget for the 2017-18 fiscal year that begins on July 1 that would spend only 97.5 percent of the available money. They said that not spending all of the money would provide a cushion to ensure that the state did not suffer another midyear budget cut. They also said their plan would save the state about $650 million for the following 2018-19 fiscal year, or about half of the fiscal cliff.
In the interview Thursday, Edwards vowed to veto the House’s version of the budget if it remained intact. He also said he would rather fund health care for the poor and disabled with the $80 million that Republicans took to fully fund the TOPS scholarships program. The governor noted that that $80 million would generate a total of $240 million for health care because of rules that attract matching federal dollars.
The Senate is on target to approve a version of the budget next week more to Edwards’ liking. It would spend close to 100 percent of the available funds, Alario said.
In the meantime, the House has not approved any major revenue-raising measures this year. (No one has credibly shown how to solve the fiscal cliff without substantially more revenue.)
Barras said the House was poised last week to raise $173 million per year by renewing legislation approved in 2016 that temporarily eliminated tax exemptions on some 120 different sales tax transactions on two cents of the five-cent state sales tax. The sponsor of House Bill 609 is state Rep. Jay Morris, R-Monroe.
“I had locked up the votes earlier that day,” Barras said.
The House rejected HB609 when Democrats voted against it because they want the Republicans to support a similar measure sponsored by a Democrat.
The state House first eviscerated and then killed the first major revenue-raising bill durin…
The Democrats’ move ended Republicans’ willingness to support the measure, Barras said.
Lawmakers could revive Morris’ bill next week if Democrats will reverse themselves and support it.
Looking ahead to a special session, Barras said he believes that any solution to the fiscal cliff will include a renewal of all or a portion of the temporary 1-cent sales tax increase.
The Advocate reported four weeks ago that more and more lawmakers were concluding that keeping at least a portion of that increase was likely. The extra penny generates about $880 million per year, which would be a big chunk of the money needed to address the $1.3 billion fiscal cliff.
Nobody in the State Capitol says they want to renew a temporary 1-cent increase in the sales…
The news article also reported that the 1-cent increase has generated few complaints from constituents for legislators, even though it gives Louisiana the highest combined local-state sales tax rate at an average 10 percent. “I don’t think you can get around sales taxes,” Barras said Wednesday night.
But to do that, the Republicans will have to convince Democrats to vote for it.
“We think the penny should come off because that’s what we told the people,” state Rep. Gene Reynolds of Minden, the Democratic caucus leader, said in an interview.