All of the focus on solving this year’s budget crisis during the special legislative session has obscured perhaps an even bigger problem — solving next year’s budget gap as well.
State lawmakers are $150 million to $200 million short of the $900 million needed to close this year’s deficit by June 30. They have to find a solution through a combination of tax increases and spending cuts by 6 p.m. Wednesday when the special session ends.
Five days later, legislators will begin a regular session that will have to fill a $2 billion gap by the time the session ends on June 6. The measures taken during the special session have taken a big bite out of next fiscal year’s deficit, but they are still about $940 million short there, according to an estimate prepared for House Republicans.
“We have a dual crisis,” state Sen. J.P. Morrell, D-New Orleans, said in an interview.
On Wednesday, for the second day in a row, the Legislature made little progress in addressing either shortfall because of a continuing stalemate between the House and the Senate.
Republicans in the House refused again to vote for any major tax increases until the Senate Finance Committee settles on the exact amount of House-approved cuts it is willing to accept.
Senators have delayed action on the cuts until the House passes more tax bills.
Gov. John Bel Edwards met separately with the House Republican and Democratic caucuses Wednesday morning and reiterated what he has been saying publicly and privately for several weeks — that they need to approve tax hikes to avoid deep cuts in government programs.
“With a week to go, we’re still far short of where we need to be, and I encouraged them to pick up the pace and give serious consideration to some instruments on the revenue side,” Edwards told reporters after the meeting, according to The Associated Press.
The standoff seems likely to end on Thursday since Senate President John Alario said the Finance Committee will settle on its spending cuts then.
In an interview, Alario, R-Westwego, said he expects “some revisions” to the $100 million in cuts approved last week by the House. The $100 million contained in House Bill 122 includes $44 million that would eliminate nearly all of the money available to the state Department of Education until June 30 — which includes money to administer college admissions tests and to pay for the voucher private school program.
“We can’t destroy the Department of Education,” Alario said.
The money that the Senate Finance Committee reduces in spending cuts would have to be made up through higher taxes as part of any plan for the Legislature to close this year’s $900 million shortfall.
Health care for the disabled and funding for the state’s public hospital system and Louisiana’s public colleges and universities are all on the chopping block if the Legislature doesn’t find the money.
“That’s the bottom line,” said state Rep. Gene Reynolds, D-Minden, who heads the House Democratic Caucus.
The Edwards administration wanted the House on Wednesday to approve one major tax measure, House Bill 14, which would increase the cigarette tax by 22 cents to $1.08 per pack. It would raise $16 million for this year and $46 million next year. The tobacco industry is neutral on the measure, to avoid bigger tax increases in the future by Edwards.
But the bill was pulled when Republicans said they wanted the Finance Committee to act first on HB122, the spending cut bill. The cigarette tax needs bipartisan support because it requires at least 70 votes — a two-thirds vote — in the 105-member House.
“Seventy votes is a tough hurdle,” said state Rep. Sam Jones, D-Franklin. “You need Republicans and Democrats to get there.”
The impasse between the House and the Senate seems to happen every year, regardless of which party is in power. As it is, Republicans hold a majority in both chambers, but the Senate under Alario is willing to give Edwards much of what he wants while the more conservative House is more resistant.
Despite the philosophical differences, Republicans and Democrats in each chamber are working closely together to try to fashion a solution.
Meanwhile, the Senate on Wednesday unanimously passed a measure that state officials hope will lead online retail companies to begin imposing an 8 percent tax on their transactions in Louisiana. The measure, House Bill 30, has to return to the House for concurrence with the amendments approved by the Senate.
Civic Economics, a Tulsa-based firm, believes that the measure could generate $48 million in tax revenue for state and local governments in Louisiana from Amazon.com alone. Octavia Books in New Orleans sought the analysis.
The Senate also approved a bill that would impose a 4 percent state tax on short-term rentals, such as Airbnb. How much the measure, House Bill 59, would raise is not clear. This bill also must return to the House for approval.
In all, Edwards is seeking to close this year’s $900 million shortfall with $160 million in spending cuts, $328 million in one-time spending and about $350 million in tax increases.
The problem that legislators face during the regular session is that they can raise taxes only in odd years, which means that lawmakers could only cut the deficit they will face beginning March 14.
“We’ll be looking at it,” said state Rep. Lance Harris, R-Alexandria, the Republican caucus leader. “But I’m worried about what is happening now” in the special session.
Many lawmakers privately believe that the cuts required to balance the budget during the regular session will be more than they can stomach. That would force them to meet in a second special session following the regular session when they could again raise taxes.
State Sen. Jim Fannin said the dilemma that lawmakers face reminds him of an exchange with an old man who testified several years ago before the House Appropriations Committee when Fannin was the chairman, and the committee was facing another seemingly intractable problem.
“Well, you all asked for the job, right?” the old man asked Fannin, R-Jonesboro.
“Yes, sir,” Fannin replied.
“Well, then just do it,” the old man said.
He was right, Fannin said Wednesday. “We all asked for this thing. Now we need to do it.”
Follow Tyler Bridges on Twitter, @TegBridges. For more coverage of government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politicsblog/.