Louisiana state senators are pushing to halt pay raises for state workers and to use millions in unclaimed property to pay for tax breaks for businesses, as they work to finalize the state’s budget plans in the final days of the special session.
The Senate Finance Committee on Wednesday advanced the state’s budget bills with language that temporarily bans pay raises for state workers until October, a move that would save about $60 million.
If the economy improves, Finance Chairman Bodi White, R-Central, said the Legislature will return the money to the various agencies to move forward with the raises. If not, it will be used to plug holes in the budget. The Legislature is expected to return to Baton Rouge for another special session in October.
“During the time of this pandemic when so many people lost their jobs, they don’t have any income, and we’re showing state employees getting a raise ... that’s the reason we did that,” White said.
The move, made without objection during the committee hearing Wednesday afternoon, was met with opposition from Democratic Gov. John Bel Edwards, who said he disagrees with the approach.
“I know there’s some talk about not doing it or maybe delaying them for some period of time in order to achieve some savings that could be put in the budget,” Edwards said. “I don’t believe that is necessary and that we should do that at this time.”
White said negotiations have been ongoing between lawmakers and the governor over budget issues. Edwards, at a press conference, sounded somewhat more amenable to plans to pass tax breaks for businesses. The governor has largely panned the idea of handing out tax giveaways, pointing to the state’s precarious financial position.
Republicans have pushed the tax breaks as a way to help the state’s economy recover from the coronavirus. White said lawmakers want to get businesses help, and that they will ultimately pass out between $20 million and $25 million in new tax breaks, which will be offset by unclaimed property funds. Those funds are available because of a deal struck between Edwards and Republican Treasurer John Schroder, who have been battling in court over whether the funding is available to spend in the budget. The deal makes tens of millions of dollars available in the upcoming year.
Edwards said if the Legislature is “selective” about which tax breaks they approve, he can get on board, but said “the devil is in the details.”
The Legislature is poised to use more than $1 billion in federal coronavirus aid to plug holes in the budget. About half was used in the regular session that ended June 30 to fix the current fiscal year’s budget, and more than $500 million is being injected into the budget for the upcoming fiscal year.
The move to halt pay raises could run into trouble with the State Civil Service Commission, which testified that it would need to approve some of the moves. Byron Decoteau, the commission’s director, said the body would likely try to negotiate an emergency rule surrounding the effort.
The freeze on pay raises, if approved by the full Legislature, would also apply to legislative and judicial branch employees.
“I think everyone agrees we’ll probably be back in here in October to reassess,” White said. “There’s rumors there will be more federal money by then.”
White said the full Senate will take up the budget Friday.