With the legislative session nearing its end, the Republican majority in the state House has yet to find a way to raise the money necessary to fill a huge budget gap looming in 2018 — or to indicate a willingness to do so.
That makes it likely Gov. John Bel Edwards will have to order this Legislature to return to Baton Rouge in the coming weeks or months for its fourth special session, in yet another attempt to solve the state’s budget woes.
At issue during the final two weeks of the regular session is how to replace $1.3 billion in temporary taxes authorized by the Legislature last year that will vanish on July 1, 2018. It’s known at the State Capitol as the “fiscal cliff.”
The most that Republicans in the House have done so far is to pass a budget for the next fiscal year that limits spending. That, they say, would roughly halve the fiscal cliff.
Many of them want to put off dealing with the rest of the shortfall immediately.
“Later this year or early next year, we’ll be in a better position to see what the fiscal cliff actually is and address it,” said state Rep. Jay Morris, R-Monroe, offering the hope that oil prices will rise in the coming months, which would both improve Louisiana’s economy and generate more tax revenue.
In the meantime, House Republicans have yet to coalesce behind tax measures that would provide the other $650 million to $700 million, although the Republican leaders are said to be searching for possible answers.
“Unless they do something in a hurry, they’re not going to address the cliff,” Edwards said in an interview Thursday. “We’ll be back in a special session, which is unnecessary.”
Republicans — and Democrats — are confronted daily by outside groups demanding "no” votes on income tax measures and business lobbies pressuring them not to touch their tax breaks.
And it’s unclear whether the House can count on the savings from the spending cuts it passed. The governor and Senate President John Alario, R-Westwego, say the House’s version of the budget is unacceptable because it would cut too deeply into health care programs that serve the poor and disabled.
Whatever budget the Legislature eventually adopts will take effect July 1 when the new fiscal year begins.
Trying to figure out how to fund state services in the coming year isn't the only budget dis…
Failure to find common ground to approve that budget before the regular session ends June 8 would cause an immediate special session —apart from the fiscal cliff issue — because of the need to have the budget approved by July 1.
The Senate Finance Committee is drafting the Senate’s version of the budget.
The House’s version limited spending to 97.5 percent of projected dollars as of July 1, to ensure, its Republican leaders say, the state doesn’t ultimately overspend, a development that has happened repeatedly in recent years. The House is proposing to cut the state’s investment into health care programs by about $225 million, but the ultimate reduction to the budget would be some $700 million because of the added loss of matching federal dollars.
Edwards noted archly that the House’s budget did not spell out which programs the Republicans think are ineffective and ought to be cut.
“The House members who insisted on large cuts did not have the courage to specify where they’d go,” he said.
In its budget, Alario said, he expects the Senate will want to spend closer to the full 100 percent of the money available, an extra $200 million or so.
“There are some real big needs in children and family services,” he said. “If we don’t fund them, there will be abused children.”
After the Senate approves its version of the budget, the two chambers will have to settle on a final version by June 8 — or else trigger the immediate special session.
House Speaker Taylor Barras, R-New Iberia, on Friday did not return a phone call or respond to a text from The Advocate.
Edwards and Alario are still hoping — unrealistically, perhaps — that the House will approve revenue measures that would address the related but separate issue of the fiscal cliff.
The governor and Senate president can’t do much because the House is in the driver’s seat, for two reasons. One is that major revenue-raising bills have to originate in the House. The other is that, in his biggest failure so far as governor, Edwards couldn’t get the House to approve his choice for speaker, state Rep. Walt Leger III, D-New Orleans. Instead, the House elected Barras.
As a result, Barras answers first and foremost to House Republicans, not to the governor —unlike past speakers who were generally allied with the governor. Barras has had trouble corralling the fractious Republican caucus.
They thought they had a deal.
As The Advocate has reported, Edwards also has less leverage than some of his predecessors because he has fewer dollars to spend on state construction projects. Governors have traditionally pledged repairs to roads, courthouses and sewage systems in the districts of legislators in return for votes on key issues.
As far back as anyone can remember, governors have rewarded and punished state legislators b…
The governor’s weak hand in the House has meant the Ways and Means Committee, stacked with conservatives by Barras, has shot down all of Edwards’ proposals to raise tax revenue.
“We’re hearing it from our constituents not to vote on more taxes,” said state Rep. Jim Morris, R-Oil City, the committee’s vice chairman.
Business interests flexed their political muscle Tuesday before the House tax panel, which r…
The House still has several measures in play that lawmakers could amend to eliminate sales-tax exemptions — which would both raise revenue and adopt one of the recommendations of a task force that spent 2016 studying the state’s tax system and declared it “broken.” Lawmakers also could try to amend one of these bills to reauthorize all or part of the 1-cent sales tax increase approved last year that is due to expire in mid-2018.
On Wednesday, the House passed a small tax measure. House Bill 651 would raise $12.5 million per year by permanently removing 28 percent of certain corporate income tax exemptions. But passage of the measure on a 55-34 vote showed the difficulty of passing taxes in the House. HB651 needed only 53 votes, but most other tax measures would need at least 70, a super-majority in the 105-member House.
Barras and another key Republican, state Rep. Lance Harris, of Alexandria, who heads the GOP House caucus, voted for it, but several chairmen of committees voted no, including state Rep. Cameron Henry, R-Metairie, state Rep. Kirk Talbot, R-River Ridge, and state Rep. Sherman Mack, R-Albany. Another key committee chairman, state Rep. Neil Abramson, D-New Orleans, missed the vote.
Getting only 55 votes led the bill’s sponsor, state Rep. Chris Broadwater, R-Hammond, to abandon plans to follow with another tax measure, House Bill 653, that would have raised another $16 million by eliminating tax breaks. That measure needed 70 votes.
In an interview afterward, Broadwater said he is hearing from colleagues that they would be more willing to vote for tax measures if the governor and the Senate would accept the House’s budget.
The difficulty in getting House members to raise more revenue was also on full display Wednesday when the lower chamber considered House Bill 609 by Jay Morris. It would have raised $173 million per year by permanently eliminating tax exemptions on 2 cents of the state sales tax.
First, though, state Rep. Mike Danahay, D-Lake Charles, offered an amendment sought by the Louisiana Association of Business and Industry that would exempt manufacturers from sales tax on their utility bills. The House overwhelmingly approved Danahay’s amendment, which knocked out $100 million from Morris’ bill. The House then soundly rejected the bill anyway 20-81.
The state House first eviscerated and then killed the first major revenue-raising bill durin…
Nearly all Democrats voted against Morris’ bill because they instead want the House to pass a similar measure, House Bill 411, by state Rep. Ted James, D-Baton Rouge. In an interview, James said he will present his bill Tuesday, but Danahay said he would return with his popular revenue-gutting amendment. Either way, it seems unlikely that many Republicans would reverse their vote from Wednesday to help Democrats pass their bill.
The vote on Morris’ bill led him to say afterward that Democrats can’t pin the entire blame for not addressing the fiscal cliff on Republicans.
Also still waiting its fate is House Bill 355, which would rewrite the income tax system by imposing flat corporate and individual rates, eliminating the corporate franchise tax, ending many tax breaks and granting a more generous break for the working poor. The bill’s sponsor, state Rep. Barry Ivey, R-Central, spent hundreds of hours to master the tax system well enough to propose the revamp.
But neither the Edwards administration nor Ivey’s GOP colleagues have gotten behind the bill. Ivey said he hasn’t been able to get even a sit-down with the governor, despite asking since November.
Ivey had to pull back from having the House hear the bill Wednesday in the face of questions about its cost by colleagues.
“I’m disappointed in the lack of leadership, from the first floor to the fourth floor,” Ivey said afterward. “Thus far, it appears as though it’s more about the politics than it is the people. That’s speaking about both sides of the aisle.”