The Legislature is facing a choice between two unpopular options to end the budget crisis: raising taxes or potentially forcing LSU to cancel classes, leaving the disabled without state health care and making cuts in hundreds of other services used by Louisiana residents.
The House and Senate are $150 million to $200 million apart in crafting a solution, and the clock is ticking on the special session, which ends March 9.
This is John Alario’s time to step up, with the main tax and spending bills now before the state Senate.
The state Senate president is beginning his 45th year in the Legislature and has spent more time as the speaker of the House and Senate president — a total of 12 years and counting — than any legislator in the state’s history.
Alario, R-Westwego, has served in the Louisiana Legislature longer than some legislative leaders — such as House Appropriations Chairman Cameron Henry — have been alive. He knows every legislative trick in the book.
“The entire Senate is confident that John will lead us in how to solve the problem,” state Sen. J.P. Morrell, D-New Orleans, who was picked by Alario to chair the tax-writing Revenue & Fiscal Affairs Committee. “I honestly feel like — having been here a decade — that John Alario is the voice of reason. He is completely evenhanded with you whether you’re a Democratic or a Republican.”
With Alario watching, Morrell’s committee dealt with one potential problem Sunday by extending the length of time that the proposed 1-cent increase in sales taxes would be in effect.
Under the version passed by the House on Thursday, the penny increase would last 18 months. It would last for five years following a vote approved without objection by the Revenue & Fiscal Affairs Committee during a rare Sunday hearing.
Under the state’s technical rules for the budget, Morrell said, the additional revenue from having the extra penny for 18 months could not be counted against the $900 million shortfall that Gov. John Bel Edwards is asking the Legislature to close by June 30.
Kimberly Robinson, Edwards’ Revenue secretary, concurred in that view, saying that revenue from 18 months would count as one-time money and could be used only for one-time expenses, not for the current year deficit.
“This penny was always envisioned as a bridge to get us to a more stable revenue source,” Robinson told committee members in favoring a five-year period.
Imposing the 1-cent sales tax beginning April 1 would raise $210 million by June 30, so not having that money would make the Legislature’s job extraordinarily difficult because the tax measure is a key component of the governor’s plan to close the $900 million gap. (The state is facing a $2 billion deficit next year; the taxes raised during the special session would help reduce that shortfall.)
After amending the bill to have the sales tax last for five years, the Revenue & Fiscal Affairs Committee approved the measure 10-1 with little discussion.
State Sen. Neil Riser, R-Columbia, cast the lone no vote.
The Republicans who voted for the measure, House Bill 62, were state Sen. Dale Erdey from Livingston; state Sen. Eddie Lambert from Prairieville; and state Sen. John R. Smith from Leesville.
Republicans have a majority in the Senate, but Alario gave Democrats a 7-4 majority on the Revenue & Fiscal Affairs Committee, which makes it easier for the governor to get his tax bills through it.
A key question after the committee’s vote is whether the more conservative House will accept having the sales tax last longer than 18 months. The measure with the 18-month time limit passed the House last week on a 76-27 vote, six votes more than the two-thirds required.
On Sunday, the Revenue & Fiscal Affairs Committee also approved a measure by Rep. Chris Broadwater, R-Hammond, which would raise $75 million by June 30 by requiring retailers to turn over the sales taxes they collect at an earlier date to the state. Broadwater’s House Bill 54 passed the House last week on an 80-18 vote.
The committee also approved House Bill 55, which would attempt to prevent companies from shifting profits out of Louisiana through accounting gimmicks to lower what they owe here. Tax experts believe that large companies with operations outside of Louisiana are barely paying any taxes in the state, if at all.
The three tax measures approved by Revenue & Fiscal Affairs go to the full Senate, where they are likely to be heard on Tuesday.
The Senate Finance Committee also met Sunday to review the $100 million spending cuts approved by the House last week. Of prime concern to senators is the House’s decision to add back $44 million in K-12 funding by taking $44 million from the state Department of Education, which is equivalent to 85 percent of the funds the agency has available until June 30.
During the Finance hearing, several agency heads testified about the impact of potential cuts contained in the spending measure, House Bill 122 by Rep. Henry, R-Metairie.
Department of Health and Hospitals Secretary Dr. Rebekah Gee testified that the cuts contained in the bill could force the layoff of 48 restaurant inspectors, among other issues.
“We are really putting public health in danger, in my opinion,” said state Sen. Regina Barrow, D-Baton Rouge.
Meanwhile, the House has two major taxes before it on Monday that Edwards is pushing. House Bill 14 would increase the tax on cigarettes by 22 cents to $1.08 per pack, to match the average tax in Louisiana’s neighboring states. It would raise $16 million this year.
“I feel like we’re pretty close,” state Rep. Walt Leger, D-New Orleans, the bill’s sponsor, when asked whether he had the necessary 70 votes.
House Bill 27 would raise the tax on beer, wine and liquor from 1 to 4 cents. It would increase tax collections by $6.7 million this year.
During his years as a legislative leader, Alario has always been a close ally of the governor. During the past four years under Gov. Bobby Jindal, he got the Senate to pass budgets that created the big shortfall that Edwards has inherited. Now Alario is helping Edwards, a Democrat, undo that problem.
After the Senate met briefly Sunday, before hurrying off to another meeting, Alario didn’t want to reveal the cards he is planning to play this week to close the budget deficit.
He did say he expects a “grab bag” of tax measures to win approval but added, “I’m sensing that my members would prefer to vote for the least number of instruments possible.”
That’s legislative-speak for saying lawmakers want to vote for as few tax bills as possible to avoid getting a poor post-session scorecard from the Louisiana Association of Business & Industry and other business groups.
Elizabeth Crisp of The Advocate Capitol news bureau contributed to this report.
Follow Tyler Bridges on Twitter, @TegBridges. For more coverage of government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politicsblog/.