BATON ROUGE — Louisiana’s state senators Thursday backed a package of bills estimated to raise at least $400 million for next year’s budget, while the House has refused so far to budge beyond about half that amount.
One week remains in the special legislative session, called by Gov. John Bel Edwards and aimed at raising $600 million for the financial year that begins July 1, to stave off what the Democratic governor says will be deep cuts to health and education programs.
Republicans, particularly in the House, have balked at many of the governor’s proposals, saying they can’t support additional taxes after lawmakers passed an earlier round of tax hikes in March. Senators are hamstrung because certain tax bills can only start in the House.
“As things stand right now, we do not have enough money to pay for things,” said Sen. J.P. Morrell, D-New Orleans, as he urged passage of revenue-raising proposals.
Both the House and Senate have agreed to three measures that would raise about $220 million next year. The largest item supported by both chambers has been sent to Edwards’ desk, a tax increase on health organizations known as HMOs, to raise more than $180 million.
The Senate also voted for two proposals to lessen business tax breaks that have yet to be considered by the House.
One bill sponsored by Morrell would rework the tax credit the state gives for local property taxes businesses pay on their inventory. The other by Sen. Rick Ward, R-Port Allen, would force large manufacturing facilities to choose between two property tax breaks they receive, rather than letting them take both.
Critics of Ward’s bill said it could damage the state’s economic competitiveness.
“This sends the wrong message,” said Sen. Barrow Peacock, R-Shreveport.
Ward said proposing the tax break reduction wasn’t easy for him.
“I have industry in my district like a lot of you do. But at some point we have to make a decision as to how much is a little too much,” he said.
It’s unclear if the ideas will gain traction in the House. Ward’s bill has strong opposition from business groups, while the push against Morrell’s proposal is more muted.
Currently stalled in the House is a proposal sought by Edwards to temporarily scale back a tax break for people who itemize on their state income tax forms. The bill’s sponsor, Rep. Malinda White, D-Bogalusa, delayed a vote Thursday, saying she didn’t have enough support. She’ll try again for a vote Sunday night.
Rep. Lance Harris, chairman of the House Republican delegation, has been encouraging colleagues to vote against the bill.
“This is not about saying no. This is about standing up for the middle class,” Harris said.
About 23 percent of individual taxpayers who itemize for things like home mortgage interest payments, charitable contributions and medical costs could be impacted by the bill, most of them estimated to make $100,000 a year or more.
White said the cost to those taxpayers would be modest on average, and she said that’s an acceptable trade-off to keep “vital services funded.”
While the House and Senate haven’t agreed to a deal on taxes, their leaders Thursday broke a logjam over how to handle the budget bill to spend any money they raise.
House leaders had said they didn’t want to craft a plan to spend new tax dollars until the state’s income forecasting panel, the Revenue Estimating Conference, formally recognizes the money as available for spending.
They gave up on that idea amid pushback from the Senate and will hold a Monday hearing on the budget bill. Senate leaders say formal recognition of the tax dollars can happen after the special session ends and before the July 1 start of the budget year.
“Everybody’s working together well,” said House Appropriations Committee Chairman Cameron Henry, R-Metairie. “I don’t expect much drama.”