BATON ROUGE — Lawmakers in the Louisiana House agreed Thursday to a short-term state sales tax hike that would raise hundreds of millions of dollars, supporting the centerpiece of Gov. John Bel Edwards’ tax package.
But as the special legislative session reached its midpoint, the majority Republican House gave the sales tax measure an 18-month expiration date. And lawmakers there took no action on several other tax increases sought by the Democratic governor to end the boom-and-bust cycles of the state budget.
The sales tax measure, sponsored by Rep. Katrina Jackson, D-Monroe, would raise Louisiana’s 4-cent state sales tax by another penny on every dollar spent, until Oct. 1, 2017.
The proposal is seen as critical to the budget-balancing effort because it could kick in quickly and raise money immediately. It would begin April 1 on purchases, raising an estimated $200 million-plus for this year’s budget and nearly $900 million for a full year.
The state’s short-term problems are acute: Louisiana has a budget gap estimated at around $900 million that must be closed by June 30. Public colleges, health care programs and social services are threatened with deep reductions if new dollars aren’t plugged into the hole. Next year’s budget shortfall is even worse, estimated to top $2 billion.
Haggling over the vote was conducted largely behind closed doors, with no debate about the sales tax on the House floor. Business groups voiced little opposition to the version of the bill that received support.
Other measures sought by the governor to increase cigarette and alcohol taxes, boost costs on business utilities and scale back tax breaks for companies that pay property taxes on their inventory were stalled as lawmakers continued negotiations behind the scenes. Those measures are scheduled for debate Friday.
The tax bills sent to the Senate so far would not raise enough money to keep the state from making steep cuts.
“With the cuts and revenue measures that have passed thus far, we still have not solved the budget deficit for the current fiscal year,” said Rep. Chris Broadwater, R-Hammond.
Without other tax changes, questions also will continue about how the state will balance its budget over the long-term.
But with the big sales tax vote done, House Speaker Taylor Barras, R-New Iberia, congratulated the House for its work. Edwards sent out a statement thanking the “courageous members” of the House for their votes.
“I know it was not easy for anyone to vote to raise revenue — it wasn’t easy for me to propose it — but combining these measures with the strategic cuts in my plan will allow us to stabilize our budget both in the short term and going forward,” the governor said.
He also noted, “we still have some significant work ahead.”
Both the House and Senate have agreed to use $328 million in short-term fixes from the “rainy day” fund and from oil spill recovery money to spend in this year’s budget, with the House giving final passage to those measures Thursday.
Edwards and lawmakers also have made $60 million in cuts so far. The House also passed a package of $100 million in further reductions that are larger than Edwards sought.
With the tax proposals approved Thursday by the House, gaps would still remain.
Republican lawmakers in the House have been resistant to many of the tax hikes proposed by the governor. They say state government is bloated and in need of restructuring as well, and they want any tax measures coupled with deeper cuts and reform proposals.