Louisiana Gov. John Bel Edwards said he’s optimistic a week out from the start of his second special session about addressing what remains as an estimated $600 million shortfall in the state, but he concedes that the whole budget process at this point is still “a bit of a mess.”
Edwards met with The Advocate editorial board on Tuesday — the first time he has spoken out publicly about the most recent version of the spending plan for the budget that begins July 1.
“(Legislators) were always hoping there would be this money that materializes the way it always has in the past,” he said. “We’re in a difficult place, but I’m optimistic by the end of the second special session we’ll be in a better place.”
The Senate Finance Committee on Monday approved the latest iteration of the state’s nearly $26 billion budget set to take effect on July 1. The Senate panel’s version, which is expected to hit the chamber’s floor for consideration Wednesday morning, was a significant departure from the version that passed the Louisiana House.
Nearly every area of the budget would take a hit, with funding for safety net hospitals, higher education and particularly the popular Taylor Opportunity Program for Students getting significant cuts.
“We have a $600 million shortfall, and there are just not the opportunities out there to go and sweep (money from other funds) and that sort of thing you’ve seen in the past,” he said. “It’s a bit of a mess.”
Typically, a budget is hashed out between the leaders of each chamber in the session’s final days — and in some cases hours.
With Edwards’ call in place, legislators could end the session on June 6 without ever reaching consensus — pushing the final work into the two-and-a-half week special session that begins 30 minutes later.
Edwards noted that the differences between the House and Senate budgets are “substantial,” and legislators may not have the appetite to reach an agreement without seeing what other funding sources win approval in the special session.
“Can they wait? Yeah,” Edwards said. “Should they wait? No.”
Legislators raised $1.2 billion in revenue during a special session earlier this year, relying heavily on increases in the state sales tax. Fiscal analysts say the state remains about $600 million shy of being able to fund services at their current levels next year.
Many of the ideas for bridging the budget gap are the same as those put forth earlier that either didn’t find traction in the state House or failed to find approval elsewhere — largely changes that would impact the state’s middle- and upper-income residents.
Edwards said he thinks the process of cobbling together a budget during the regular session has demonstrated to legislators that more money is needed.
“We have now put together a House Bill 1 that I don’t think anybody is happy with,” Edwards said. “That process is an educational process.”
But the Louisiana Republican Party already has taken aim at Edwards over his revenue-generating plans, as have business groups that have opposed efforts to increase taxes or cut some credits.
“We need a governor who runs on a ‘no new tax’ platform to keep his word,” the state GOP’s official Twitter handle blasted out Tuesday night.
House Appropriations Chairman Cameron Henry, defending his own version of the budget, has repeatedly stressed that he believes there is additional room for cuts. He said he believes there is a disconnect between what agencies want and what they need to keep government running.
“We’re spending more than we did last year,” he told the Senate Finance Committee on Monday. “No one wants to be cut.”
Several Senate Republicans have shown interest in perhaps only partially meeting Edwards’ $600 million wish list.
Edwards hasn’t revealed what priorities he would push in such a scenario, though TOPS would be among the first funded, based on details of an arrangement that Senate Finance leaders described Monday.
Edwards said he has offered legislators a “menu of options” to consider during the second special session that adds up to more than the estimated $600 million shortfall.
Among the big-ticket items, Edwards has called on legislators to adjust the state’s income tax brackets, which could bring in an estimated $324 million; reduce the amount of excess itemized deductions, bringing in $130 million; and approve a change in health insurance premium taxes, for $125 million.
The administration has backed a proposal that would lower the threshold on the middle and upper brackets of income taxes, which means middle and upper income residents likely would wind up paying more in taxes. One such proposal failed to pass the House during the first special session.
The excess itemized deduction proposal also likely would make middle- and upper-income taxpayers pay more. It would not affect the 76 percent of the state’s residents who file un-itemized deductions, Edwards noted.
The health insurance premium tax increase already won approval in the first special session, but the plan was rejected by the federal government. Edwards said his administration has been working with private insurers to put that bill in a posture that will pass muster with the federal government.
Those ideas generally are holdovers from the first special session, but Edwards said he’s optimistic lawmakers will be more willing to embrace them.
“I think now that we’ve gone through the process of passing a budget that is $600 million short of standstill you are going to see a very much more receptive group,” Edwards said.
Edwards said he met with House leaders on Tuesday — just hours after the Senate Finance Committee stripped many of the House changes in the budget to make it more closely resemble the original document Edwards had suggested.
“We exchanged some ideas, and I expect we’re going to work well together,” he said. “Raising revenue is tough; making cuts to critical programs is tough. I don’t like what I’m asking for, so I don’t expect that once it gets out of my mouth and into their ears they are going to like what they are hearing.”