BATON ROUGE — Louisiana House members agreed Monday to raise $70 million more for next year’s budget by lessening business tax breaks, then divvied up all the money raised in the tax special session with a spending plan to give most
of it to education and health care.
The proposal backed by the House in a 75-25 vote would add $284 million to the $26 billion state operating budget for the financial year that begins July 1, accounting for all the tax changes that have won both House and Senate support.
Students who receive awards from the TOPS college tuition program would get about 70 percent of their tuition costs covered. College campuses would be shielded from cuts. And the safety-net hospitals that care for the poor would get the full amount of money sought by Gov. John Bel Edwards’ administration — though less than the hospital operators want.
The LSU medical schools, K-12 public and private schools, the voucher program, prisons, drug courts and a judicial program that provides court-appointed advocates for children all would get more money because of the tax bills.
However, even with the added money, cuts still would fall across a wide array of government programs. Much of the House debate centered on whether to fully fund TOPS at the expense of other health care and education programs.
Rep. Tony Bacala, R-Prairieville, defended TOPS as one of the few programs that benefit “the people who pay the taxes in this state.”
Appropriations Chairman Cameron Henry, R-Metairie, proposed to use $99 million of the money raised by lawmakers to fill gaps in TOPS. But Rep. Walt Leger persuaded the House to lessen that to $68 million and spread more money to colleges and other education programs.
“Giving a student a TOPS scholarship to go to a school that isn’t fully funded makes no sense to me at all,” said Leger, D-New Orleans.
With a 51-49 vote, Leger’s change was approved.
Henry included language in the budget bill to frontload TOPS funding, so students would get full tuition coverage in the fall semester. If the state raises more money than expected from tax hikes, new dollars would be steered to TOPS for the spring semester.
But it’s unclear if the Senate — or the governor — will agree to that idea.
The Senate starts working on its version of the spending plans Tuesday.
Edwards, a Democrat, wanted the special session to raise $600 million for next year’s budget. Senate leaders are seeking $450 million and were still trying to find compromise proposals the House might be willing to consider ahead of session’s end Thursday.
Republicans in the House had blocked anything above the estimated $214 million already passed until Monday, when lawmakers in the chamber agreed to two bills aimed at reducing property tax breaks to businesses. The bills are estimated to raise $70 million next year.
The bills, which return to the Senate for approval of House changes, target the inventory tax credit, which refunds businesses for paying local property taxes on their inventory. Because the tax credit is refundable, the state often pays out more than the taxes a business owes, writing a check to the company.
One proposal by Sen. Rick Ward, R-Port Allen, would place new limits on the inventory tax credit for businesses that also get an exemption from paying local property taxes on their facilities. Those businesses wouldn’t be able to get a rebate check, but instead would only be able to apply the inventory tax credit to their actual tax liabilities. The change would affect large manufacturers, like chemical plants.
The other proposal by Sen. J.P. Morrell, D-New Orleans, would rework the inventory tax credit in a way that favors small businesses, but also lessens its cost to the state.