Louisiana’s latest special session on finances opens today
BATON ROUGE, La. (AP) — Mired in continued budget troubles, Louisiana lawmakers are opening another acrimonious debate over taxes, returning Monday for their fifth special session about the state’s financial instability since 2016.
The legislative session centers on whether to replace $1 billion in expiring taxes enacted by lawmakers two years ago, or to allow deep cuts to fall across Louisiana’s government-financed programs and services.
Gov. John Bel Edwards hopes to persuade the majority-Republican Legislature to offset the gap with taxes.
Edwards called the 17-day session to begin Monday at 4 p.m. He speaks to the House and Senate at 5 p.m., outlining his tax proposals and pitching them as necessary to avoid damaging health care, public safety and education programs.
The Democratic governor set the session parameters. He’s allowing lawmakers to consider certain proposals involving sales and income taxes and spending control measures sought by Republicans in exchange for tax votes.
Taxes can’t be considered in the regular session that begins in mid-March, so a special session — which costs an estimated $50,000 to $60,000 a day — is required to propose taxes.
The session must end by midnight March 7.
WHAT CAUSED THE BUDGET GAP?
The $1 billion shortfall stems from the expiration of temporary sales taxes passed by lawmakers in 2016, planned as a bridge to a larger rewrite of Louisiana’s tax laws that never happened. The taxes expire with the July 1 start of the new budget year.
House Republican leaders blocked previous tax proposals pushed by Edwards to replace the money, trying unsuccessfully instead to lessen state spending. They also rejected a wide-ranging tax rewrite proposed by a task force of economists, tax experts and policy analysts who said the ideas would stabilize finances, place Louisiana more in line with other states and offer fairness to taxpayers.
The amount of expiring taxes tops $1.3 billion, but rising revenue from other tax types reduced the budget shortfall’s size.
THE GOVERNOR’S PLAN
The governor proposes raising or maintaining higher taxes on businesses and middle- and upper-income earners, largely ideas from the tax task force.
He opposes renewing a 1 percent temporary sales tax that raises $880 million annually, a tax criticized as disproportionately impacting the poor and raising Louisiana’s average sales tax rate to the nation’s highest.
Edwards supports keeping reductions to tax break programs that largely assist businesses. He proposes continuing to charge businesses higher sales taxes for utilities; new sales tax charges on some services such as cable television; and increasing the individual income tax for those who itemize on their personal income tax forms.
The proposal wouldn’t fully close the shortfall. Many of the ideas require a two-thirds vote, a hefty hurdle.
Edwards called the session even though the “agreement in principle” he sought with House GOP leadership wasn’t reached, raising questions about whether he’ll have enough votes to pass taxes.
Republican lawmakers remain split on whether to replace the expiring taxes and what level of government spending is appropriate. Some want to wait until they learn more about recent federal tax changes’ impact on Louisiana tax collections.
But no GOP lawmaker has offered a proposal for closing the $1 billion gap entirely with cuts.
House Speaker Taylor Barras said Edwards’ proposal to charge sales taxes on services is a non-starter with the House GOP, along with adjustments to personal income taxes. Some Republicans are suggesting renewal of all or part of the expiring 1 percent sales tax, a proposal that Democrats say they oppose.
SPENDING CONTROLS SOUGHT
Republicans willing to consider taxes want spending control measures passed in return. Barras said he and a majority of House members require the ideas “to be part of a final solution” or taxes won’t pass in the chamber.
The proposals would tighten limits on annual spending growth, create a new website called Louisiana Checkbook to track state spending and add new cost-share and work requirements for some Medicaid patients.
Edwards hasn’t committed to supporting all the ideas, but included them in the session as tax negotiations continue.