“Once more unto the breach, dear friends, once more,” in the words of William Shakespeare’s Henry V, as the Louisiana Legislature charges into its sixth special session to cover the gap between promised services and the money available.
This time around legislators have “pretend budgets” that detail staggering cuts in health care, child protection, law enforcement, TOPS, and higher education. But the fundamental policy fight hasn’t evolved a minute in the 26 months since the first special session.
Back in March 2016, House Democrats, led by the Legislative Black Caucus, argued that sales taxes hit lower-income people harder leading to the poor having to pay the lion’s share of their income to fund state government.
House Republicans counter that higher income people contribute more overall dollars to the budget and changes to the income tax code leads upper-income taxpayers to paying more than their fair share.
That was the fight then and it is the fight now.
The one-cent increase in the four-cent state sales tax, passed in 2016, was supposed to be a temporary bridge while legislators reformed a fiscal structure. That fix never happened, so legislators are now looking at making part of that penny increase permanent.
The idea of “retaining” — the preferred nom du guerre for "tax hike" — half a cent of the penny increase is the one being talked about the most in the State Capitol.
Democratic Gov. John Bel Edwards is OK with the half-cent retention idea.
That should raise about $436 million, according to a cheat sheet of “potential options for the second special session” that is circulating among legislators.
That’s well short of the $648 million that Edwards, the Democrats and the state budget bill passed last week contend is necessary to balance the budget.
Option 1 also includes removing some of the exemptions to the sales taxes, called "cleaning" the penny in budget-making parlance, which would raise about $70 million.
So that means something is needed from the income tax side.
Off the table, Republican House members say, is compressing income tax brackets. That would have the effect of increasing annual bills a few hundred dollars for taxpayers and raise about $543 million for the state budget.
More politically viable is reducing excess itemized deductions to raise about $79 million. Only about half of Louisiana’s taxpayers use the ability to write off their federal deductions in excess of the standard federal deduction on their state returns.
There’s a possibility that Republicans also might go along with permanently suspending a credit once allowed on income tax returns for taxes paid to other states. That would raise about $35 million.
So, that gets the total to about $615 million. The rest can be made up in spending cuts.
But a lot of Republicans, like Rep. Rick Edmonds, argue that the actual number is a moving target, it keeps getting smaller. He’s not sure his constituents in the conservative East Baton Rouge Parish neighborhoods will go along with the need to raise taxes when the amount said to be needed keeps changing.
Edwards says the actual amount of the shortfall hasn’t fundamentally changed. The taxes and suspended tax breaks applied — some in the last days of the Jindal administration, but mostly on Edwards' watch — expire June 30 and accounts for $1.4 billion in revenues. The recent federal tax changes will save the state about $390 million and the $400 million in spending cuts that everyone agreed. That puts the gap at $648 million to balance the budget.
Prairieville Republican Rep. Tony Bacala says it’d be hard for him to persuade his Ascension Parish constituents that raising taxes is good idea given what he sees as the lack of will to fix the bureaucratic procedures that allow for overspending in some government programs.
Republican Rep. Jean-Paul Coussan’s Lafayette district includes a public hospital that sent out “prepare yourself for layoffs” notices to 800 employees. He also represents a lot of University of Louisiana in Lafayette personnel who are equally dependent on what legislators put in the state general fund.
But his constituents are very conservative, leaving him to determine whether the losses in revenue are such that taxes need to be raised.
“It’s a fluid process, but we may not get to the full $648 million,” Coussan said.
For Rep. Randal Gaines, the LaPlace Democrat who heads the Legislative Black Caucus, that’s coded language for cutting health care and education for the half of the state that don’t make enough money to buy those services.
His fear is that Democrats will vote for retaining the half-cent, enough to fund GOP priorities, while the Republicans won’t reciprocate, and Democratic priorities get cut.
“The process has to be structured to a complete solution,” Gaines said. “I’m hoping that the special session isn’t as polarizing endeavor as the last sessions have been.”