Louisiana lawmakers are in their second special session of the year — largely to address the $600 million budget shortfall — but the Legislature also has been tasked with cleaning up mistakes from the first special session.
The Legislature’s regular session ended at 6 p.m. Monday, following a dramatic day that included a battle between the House and Senate over construction spending.
Thirty minutes later, lawmakers began the special session with the goal of passing revenue-raising legislation to try to bridge gaps in the state budget that begins July 1. The second special session ends at midnight June 23.
Twenty-eight of the 48 items on the governor’s special session call won’t help the shortfall. Instead, they aim to correct mistakes and oversights from the first special session, in which legislators raised $1.2 billion in new revenue.
In the last-minute scramble to raise revenue with two sales tax hikes — one stripping existing exemptions and another adding a penny — lawmakers inadvertently stripped exemptions for other items including tickets to high school football games, Girl Scouts cookies, donations to food banks and other transactions by charitable organizations and other exempted groups.
That means since April 1, those groups have been responsible for collecting sales taxes that they had never before collected — “transactions that we clearly never intended for it to apply to,” said Gov. John Bel Edwards, a Democrat who took office Jan. 11.
Similarly, exemptions were removed for sales at Saints and Pelicans games, violating an agreement that could allow the two professional teams to leave New Orleans, though they haven’t raised that possibility yet.
Edwards said he believes the Legislature “can clean up the mess” that has been created.
Legislators have about 2½ weeks to do so. Already, several bills have been filed that would restore those exemptions.
Rep. Jay Morris, a Monroe Republican who sponsored one of the initial sales tax bills, has already filed legislation that could serve to correct those errors.
“A lot of exemptions got stripped out of the law unintentionally,” he said. “We’re not going to lose any significant money by putting these exemptions back in.”
Morris said that late work between the Senate and House versions of the tax legislation created confusion over the exemptions.
“Nothing was done intentionally,” he said. “The good thing is we can always change things, and we have an opportunity now to do that.”
Faced with a dramatic shortfall in the budget that ends June 30, lawmakers in the earlier session turned to exemptions that could be stripped as a way to quickly inject money into the state’s coffers. But the final work on the bills came in a last-minute flurry, leaving many confused about what they contained.
Groups that lost their exemptions have had to collect 5 percent sales tax on memberships, tickets, concessions and other sales. Beginning June 30, they will have to continue to collect 3 percent of that through July 1, 2018, unless corrective legislation makes it through the second special session.
Legislation that would have fixed the problem was circulating but didn’t make it across the finish line by the end of the first special session.
“We can do this in 2½ weeks. We need to do it in 2½ weeks,” Edwards said of the tight timeline for handling the budget, as well as correcting previous mistakes.
Because of the oversight, cultural institutions, including zoos, museums and little theaters, have already had to collect sales taxes the past two months. Nonprofits have had to collect taxes on fees they charge at their gyms and entertainment venues.
YMCA of the Capital Area Baton Rouge CEO Bob Jacobs said the state’s YMCA groups are monitoring the special session for updates.
Louisiana has given tax-exempt status to YMCAs for gym memberships for more than eight decades. After the Legislature passed the sales-tax legislation, the groups had to begin notifying members that the membership fees they pay for those facilities would be subject to sales tax.
“We value (the exemption) and hope it gets restored,” Jacobs said. “We understand it’s difficult times in the state, and they have to explore all options.”
Morris said he understands the hassle that the mistake has created for groups unfamiliar with the tax system.
Last month, the Department of Revenue took part in a series of information sessions to try to get groups up to speed.
“It’s an annoying thing to have to set up to be a dealer and collect sales taxes if an entity has never done that before,” Morris said.
Follow Elizabeth Crisp on Twitter @elizabethcrisp.
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