With an increasingly narrow window for approving revenue-raising measures ahead of a looming budget gap, the Louisiana Legislature's efforts hit the skids on Wednesday as lawmakers quarreled over the best route to take.
Tax legislation seen as critical to avoiding the looming "fiscal cliff" was blocked — at least temporarily — in a House committee Wednesday morning, the fallout of a disagreement between House Republicans, who have been building support around sales tax proposals, and Democrats, who prefer income tax changes.
"Without this bill, this session is over," said Rep. Stephen Dwight, a Lake Charles Republican who authored House Bill 23, which would make permanent a 0.25 percent sales tax hike set to roll off in June and add sales taxes to some items that were previously exempt.
State Rep. Ted James, a Baton Rouge Democrat who is vice chairman of the Legislative Black Caucus, objected to advancing the measure.
He said the Black Caucus won't agree to the proposal without assurance that a Democrat-backed proposal to slash in half a tax break that benefits taxpayers who itemize deductions when they file their income taxes.
Louisiana legislators spent Tuesday diving into possible solutions for shoring up the state's finances ahead of a looming billion-dollar short…
"We continue to do things we don't like, we don't feel comfortable with," James said, noting he doesn't want to "kill the bill" on sales taxes but was looking for room for compromise. He agreed to a procedural move that will allow it to be brought back up for consideration and the income tax bills were put in the same posture to return, though its unclear when the committee will meet again to take any of the proposals up.
"This is the beginning of the process," House GOP Caucus Chairman Lance Harris said of Wednesday's apparent meltdown.
Gov. John Bel Edwards, a Democrat, also spoke positively during his weekly radio show.
"I remain optimistic, but it is difficult. Compromise is hard," Edwards said. "I believe at the end of the day we're gonna get it done."
He again stressed the need for both parties to come together to reach some sort of agreement, echoing a call from his Monday night special session opening speech.
"You can't get a two-thirds vote if you don't have support from both Republicans and Democrats," Edwards said. "There will have to be give and take."
The Republicans are already making gains on several items that were on their wish list to approve any revenue this session. Legislation that will create a new spending cap and set the stage for the creation of a new budget transparency site have already been swiftly ushered to the House floor calendar.
On Thursday, the House Health & Welfare Committee is set to take up several proposals dealing with the Medicaid health care program for the poor. Republicans want work requirements for able-bodied adults on the program, co-pays and premiums charged to recipients and enhanced eligibility checks.
An amendment was added to Dwight's bill that would make its implementation contingent upon approval of those items. Harris said he expects similar amendments to be added to any other big-ticket revenue raisers that might emerge.
But there remains many House GOP members who don't want to touch income tax changes.
"I've had a lot of people say, 'Whatever you do don't touch my personal income tax,'" Ways & Means Committee Vice Chair Jim Morris, R-Oil City, said during an earlier hearing on Tuesday.
The business community has generally opposed the income tax changes that Democrats are pushing, arguing that some small business owners file as individuals and would be impacted.
Harris said he also doesn't support the excess itemized deduction changes. "Especially with the federal changes," he said.
Gov. John Bel Edwards called on Louisiana legislators to come together in the next two weeks of their latest special session to finalize a pla…
State income taxes in Louisiana are linked to federal taxes. After Congress' recent federal tax rewrite, Louisiana will collect more from taxpayers, bolstering the state's coffers by at least $200 million.
The special session must end by March 7. Lawmakers are looking for ways to close a budget gap that will be created when temporary tax measures expire June 30. Edwards has set $994 million as the target amount of that annual revenue to replace during the special session.
Dwight's plan would make permanent one-fourth of a temporary one-penny sales tax hike, as well as remove several exemptions from the sales tax. His bill would bring in about $300 million annually, according to legislative estimates.
Republicans, who have opposed most tax measures, appeared poised to advance the legislation to the full House for consideration and additional changes when James raised his objection.
"We're facing the fiscal cliff and this gets us where we need to be," Dwight said. "Is it a perfect bill? No. It's a work in progress."
The legislation being backed by James and other Democrats, meanwhile, would bring in an estimated $100 million. He said that the sales tax proposal alone isn't enough to close the budget gap.
"We need to get the income tax bills out (of committee)," James said.
James said that the Republican-dominated committee needs Democrats' support for a Republican-authored bill shows the tax panel is "unbalanced" – essentially a revenue committee that is weighted down by Republicans who oppose any tax hikes.
"This is a leadership issue in the House," James said. "There are games continuing to be played."
Harris, who said he didn't expect objections to the sales tax proposal until the beginning of the committee meeting, said he believes it is up to Edwards to ensure support from Democrats in the Legislature and convey their interests.
"He's the head Democrat," Harris said.