Supporters of the state’s colleges and universities came up as big winners Thursday when the House approved a series of changes in the state’s tax laws that would raise $664 million next year.
Thursday events also left clear losers, at least for now: the public health care system, including the state’s hospitals that are now managed by private companies.
In all, lawmakers approved 11 tax measures, and House leaders said afterward that they would direct all of the new money on Monday to the state’s higher education institutions to keep them from having to suffer any of the budget cuts that have been feared for next year.
But because the House failed as planned to raise another $273 million through changes to the state’s tax law, someone will be shortchanged, and that someone will be the state’s public health care system.
To be sure, higher education could get less and the health care system more before the Legislature approves its final version of the budget and adjourns on June 11. State museums and parks, as well as K-12 public schools statewide and other government programs, are also facing cuts.
Over five hours of debate Thursday, the House:
Raised the cigarette tax by 32 cents per pack
Capped the state’s film tax credit at $200 million, which is $26 million less than the amount spent last year
Eliminated a tax credit used for financing solar energy systems through leasing
Pared 25 percent of the tax refunds that businesses get from state government for paying the inventory tax to local governments
Ended the full tax break for drilling horizontal oil and gas wells once prices rise to $70 per barrel
Cut 20 percent of tax breaks and refunds given for everything from theater productions to property taxes paid by certain telephone companies, to employee and dependent health care coverage.
Business lobby groups opposed most of the tax measures.
With the $664 million in hand, the new money for higher education will be allocated Monday when the House Appropriations Committee meets to approve the Legislature’s first draft at balancing the state budget for the upcoming fiscal year that begins on July 1.
“We’ll have amendments to fully fund higher education and spend money as far as we can for health care,” state Rep. Jim Fannin, R-Jonesboro, the committee’s chairman, said after the votes. “I would have liked the full amount.”
He added: “Until today, we hadn’t batted. Now we’re at second base. We still need another hit or two.”
Where those hits will come from is not clear. The House and Senate still have slightly more than a month to raise the extra revenue, but Senate President John Alario, R-Westwego, said he doesn’t yet know.
In an interview after the House’s votes, Alario called the money approved “a start” but added, “We’re obviously short of the goal we need to get to. We hope the House might reconsider and get us some more.”
Or the Senate could try to amend some of the 11 tax bills passed by the House to raise more dollars. The Senate has traditionally been more willing to raise taxes than has the House.
Alario is the only lawmaker in the state’s history who has served two terms as House speaker and now one as Senate president. Within the Capitol, insiders say they expect him to pull the proverbial rabbit out of a hat to solve the budget problem. Asked whether he would do so this time, Alario said, “It’s going to take more than a rabbit with this one.”
Higher education leaders at least left the Capitol carrying a bounty of rabbits.
“The University of Louisiana System applauds the difficult votes that were cast in the House of Representatives today,” Sandra Woodley, president of the University of Louisiana System, said in a written statement.
Thursday’s votes mean that two legislative money trains are moving at the same time as the House and Senate try to raise enough revenue to fully fund higher education, health care and myriad other services that the state provides to businesses and individuals.
One train consists of the tax bills, which now go to the Senate Revenue and Fiscal Affairs Committee, then the Senate Finance Committee and finally the Senate floor.
The other train consists of the state budget, which Fannin said his committee will approve on Monday and send to the full House, where it will be scheduled for approval on May 21. Once approved, it would then go to the Senate for consideration. (The House will have combined the tax and budget bills into a single measure by then, Fannin said.)
In the meantime, House Speaker Chuck Kleckley, R-Lake Charles, was breathing a sigh of relief after the House’s votes on Thursday.
“I’m doing a lot better than seven or eight hours ago,” he said as he settled into a chair along the House chamber. “We passed a lot of measures out. We’ll take what we got. The whole thing could have cratered and burned.”
Rep. John Bel Edwards, D-Amite, who heads the House Democratic Caucus, had warned Kleckley on Wednesday that Democrats would kill the tax measures by voting against them if the measures didn’t get enough support from Republicans, who in recent years have championed tax cuts in Louisiana.
“Today could be like the ending of a Quentin Tarantino movie,” Rep. Joel Robideaux, R-Lafayette, said before the session began, “where we’re all pointing our weapons at each other threatening to pull the trigger. Hopefully that won’t happen.”
It didn’t happen, as Democrats were satisfied with the number of Republicans who voted for the different tax measures. Republicans sponsored five of the 11 tax bills approved Thursday.
One person who wasn’t satisfied with the day’s events was Stephen Waguespack, president of the Louisiana Association of Business and Industry, the state’s most powerful business lobby. He was in the Capitol as the House voted for bill after bill that his group opposed.
“Today is probably the single largest tax increase day in the history of Louisiana,” Waguespack said afterward, adding that limiting the exemptions and credits is nothing more than a tax increase. “There’s no glossing over that.”
Waguespack would have been even less satisfied had lawmakers approved House Bill 768 by state Rep. Jay Morris, R-Monroe.
Legislative leaders yanked Morris’ bill from a planned vote after concluding that they couldn’t get the 70 votes — a two-thirds margin — in the 105-member House. It would raise $231 million by removing tax breaks from 1 cent of the state sales tax.
In the wake of Thursday’s votes, one wild card is Gov. Bobby Jindal because legislators still don’t have a clear idea of the guidelines promulgated by Americans for Tax Reform that the governor is carefully following. Jindal has said he will not support a net tax increase, but how exactly that would apply to the bills approved Thursday was not clear.
“We commend the House on their hard work today,” Jindal said in a written statement Thursday. “This is one more step in the process towards passing a balanced budget that helps protect higher education and health care without raising taxes.”
Jindal has said he would veto the budget if it includes net tax increases.
The possibility of having to seek an override of Jindal later in the session was on the minds Thursday of Edwards and Rep. Sam Jones, R-Franklin, who asked Robideaux and Rep. Chris Broadwater, R-Hammond, who also presented a tax bill, whether they would support a veto override legislative session if it was necessary. Both men said they would. Getting approval to do that would require Republicans to buck their party’s governor for the House to reach the high hurdle of 70 votes.
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