The Legislature’s effort to raise enough money to prevent potentially draconian cuts to Louisiana’s colleges and universities continued its rocky path Monday when the House tax panel rejected a measure to eliminate $100 million of business tax breaks only to reverse itself 90 minutes later and narrowly approve taking them away.
It took behind-the-scenes cajoling by House Speaker Chuck Kleckley, R-Lake Charles, and Gov. Bobby Jindal’s chief of staff, Kyle Plotkin, to keep the $100 million measure alive and send it to the House floor for consideration.
State Rep. Bryan Adams, R-Terrytown, the sponsor of House Bill 805, said he was disappointed that it would raise only $100 million per year, not the $450 million as he originally sought.
“But it’s $100 million more than what we had,” Adams said in an interview.
State Rep. Joel Robideaux, R-Lafayette, took an optimistic view of Monday’s events, saying the final favorable vote by the Ways and Means Committee gives the full House yet another tax bill to consider as the Legislature tries to plug a projected budget shortfall of $1.6 billion for next year that threatens state aid to Louisiana’s public colleges and universities and public health care for the poor.
With the passage of HB805 Monday, Ways and Means has sent about 20 different measures to the full House, including several that contradict each other. Robideaux, who chairs the committee, said he expects the full House will consider all of the tax bills on a single day sometime soon.
Ways and Means is scheduled to hear another 26 bills on Tuesday, including measures that would raise taxes on gas and on cigarettes and other forms of tobacco and that would eliminate other business tax breaks.
“We want as many of these bills on the floor so we can let the entire body consider everything,” Robideaux said in an interview.
He provided good news for those trying to raise more money. He said the threshold for passing many of the tax bills will be lower than expected, only a simple majority vote, not the two-thirds vote normally required to raise taxes and fees.
Robideaux cited a 1993 opinion by then-Attorney General Richard Ieyoub for measures that would temporarily end a tax break or erase part of a tax break.
While the bar could be lower, Monday’s developments before Ways and Means showed the difficult task the Legislature faces in winning approval of enough tax measures to raise the $1 billion or so that legislators say is needed — along with budget cuts — to balance the budget.
As it began the day, HB805 sought to end the refunds that companies claim on their state taxes for paying a tax to local governments on their inventory. It would have raised $455 million in its second year. Jindal has pushed the bill as a way for the state to save money by not paying out the refunds, which he has labeled as “corporate welfare.”
Testifying against it were some of the state’s biggest business lobbies, including the Louisiana Association of Business & Industry, the Louisiana Chemical Association and the Louisiana Oil and Gas Association.
Stephen Waguespack, LABI’s president, said businesses would move inventory to other states if the Legislature took away the tax refunds they get for paying the inventory tax.
Business had sway with the committee. It approved a business-friendly amendment by state Rep. Chris Broadwater, R-Hammond, that would take away only 25 cents of every $1 that business claim in refunds from the state.
Still, the committee rejected the bill on a 7-9 vote.
“I was surprised,” Robideaux said later.
He then began to huddle in a side room with committee members who had voted no to urge them to reconsider. Kleckley and Plotkin joined in the effort.
When the committee took a second vote, two Republicans from north Louisiana switched in favor, but the bill was still deadlocked 8-8 and was facing defeat when state Rep. Major Thibaut, D-New Roads, rushed into the room and cast the decisive ninth yes vote while taking his seat. Thibaut said he was in the hallway outside when he heard the clerk begin to poll committee members on the vote.
The two who switched to yes were state Rep. Henry Burns, R-Haughton, and state Rep. Richard Burford, R-Stonewall.
“Everyone has to make a sacrifice to get us out of the pickle we’re in,” Burns said after the vote.
“It was a vehicle much needed on the floor to get the goal they’re shooting for, to close the $1.6 billion shortfall,” Burford said.
Another factor swaying their vote Monday was the promise by Adams not to seek to amend it on the House floor to take away 50 percent or higher of the inventory tax refund.
If approved by the House, HB805 would head to the Senate. Asked in an interview if the Senate might take away more of the tax break, Adams replied, “I don’t control the Senate.”
Ultimately, Capitol insiders expect Senate President John Alario, R-Westwego, to play the key role in deciding which tax breaks will be targeted in a final budget-balancing vote by the Legislature before the session ends on June 11.
“I like the concept of everybody taking a haircut,” Alario said in an interview Monday. “Everybody should join in the sacrifice.”
He added, “It will be difficult to put it together, however. The special interests are trying to derail matters of concern to them.”