BATON ROUGE — Gov. John Bel Edwards’ efforts to raise more money for next year’s budget took a sizable hit Sunday night, when lawmakers in the House spurned a proposal to reduce deductions for people who itemize on their state income tax forms.
With only four days remaining in the special session, the options for drumming
up more money for the financial year that begins July 1 were dwindling.
The bill by Rep. Malinda White, D-Bogalusa, would have raised $88 million to lessen budget cuts. But with no questions and no debate, 55 House members voted down the proposal. It received 46 votes of support.
The House and Senate have passed about $220 million in taxes in the special session, far below the $600 million sought by Edwards. Without the full amount, the Democratic governor says cuts will be levied across health, education and public safety programs, like the TOPS college tuition program and the safety-net hospitals for the poor. And there’s word from one of the state’s economists that Louisiana might also face a budget deficit leftover from the current fiscal year.
Edwards spokesman Richard Carbo said the governor “is still meeting with legislators to find the best path forward on a plan to stabilize our budget and put Louisiana on a path to prosperity.”
White’s proposal was one of only three viable tax measures remaining that could help lessen cuts. Two others, Senate-approved proposal to shrink property tax breaks for businesses, are scheduled for hearings Monday in the House Ways and Means Committee.
As rewritten on the House floor, White’s bill would have ended people’s ability to use state income taxes and state and local sales taxes among their list of itemized deductions. They still could deduct medical expenses, home mortgage interest payments, charitable contributions and other items.
“We have to fund the vital services that are so important,” White said.
About 23 percent of individual taxpayers would have been affected, most estimated to make $100,000 a year or more.
No one spoke in opposition to the bill. But most Republicans voted against the measure, including House Speaker Taylor Barras and Alexandria Rep. Lance Harris, chairman of the House GOP delegation. House Republican leaders have balked at most tax increases, saying lawmakers in March already agreed to more than $1.2 billion in tax hikes for next year’s budget.
Edwards is pushing two other measures aimed at business tax breaks, though the latest financial estimates show them generating far less money than originally projected, a combined $81 million for next year’s budget.
One, by Sen. Rick Ward, R-Port Allen, would force large manufacturers to choose whether they want to be exempted from paying local property taxes on their manufacturing facilities or from paying property taxes on inventory. Currently, they can get both exemptions. The bill would save the state an estimated $68 million annually.
The other, by Sen. J.P. Morrell, D-New Orleans, would rework the inventory tax credit to lessen its cost to the state, saving the treasury about $13 million a year.
The session must end by Thursday.
One area of compromise reached Sunday night was on the multibillion-dollar state construction budget. While the House tanked a similar bill during the regular legislative session, they voted 94-6 for the Senate’s version of the budget measure this time, sending it to the governor’s desk with none of the drama that marked debate on the bill only a few weeks earlier.