The Louisiana budget fight reaches a crescendo in the final days of the session
(AP photo by Melinda Deslatte; From left to right: Senate President John Alario, R-Westwego; Senate Finance Committee Chairman Jack Donahue, R-Mandeville; Rep. Harold Ritchie, D-Bogalusa; and Rep. Bryan Adams, R-Gretna.)
The final days of the 2015 legislative session promise to be packed with drama as lawmakers and Gov. Bobby Jindal’s administration work to broker a budget deal before the June 11 session close.
The Legislature has been moving steadily toward approving a package of revenue-raising bills to plug part of the state’s $1.6 billion budget shortfall and avoid deep cuts to higher education and health care, but the threat of a Jindal veto looms large if lawmakers fail to pass corresponding offsets to make the budget revenue neutral.
The House last month passed a series of tax credit rollbacks to generate new funds for the state and help close the higher ed gaps, and the Senate has since expanded some of those revenue-raising measures in hopes of softening cuts to health care.
The package of bills nearing the end of the legislative process at press time included a higher tax on cigarettes, a cap on the state’s tax credit for movie productions and a partial rollback of the state’s inventory tax credit, although the inventory tax blow was softened on the Senate side. Other revenue-raising measures include a temporary suspension of the 1-cent sales tax exemption on business utilities and a reduction of the solar energy tax credit.
The end result has been one of the most difficult sessions for the state’s business sector in recent history. The Louisiana Association of Business and Industry estimated that businesses could pay an additional $3.5 billion in taxes over the next five years.
“That will definitely be an impact on the economy when that happens,” says LABI President Stephen Waguespack.
Whether those tax increases can survive the final days of the legislative session and escape Jindal’s veto pen is the question on the mind of every lawmaker this week as the legislative session comes to a close.
A Jindal-approved budget deal seemed to be in jeopardy June 3 after the House Ways and Means Committee narrowly rejected the governor’s tax-credit plan to boost higher education.
The SAVE tax credit program was a key piece of Jindal’s plan to increase funding and prevent deep cuts to higher education without violating his pledge not to raise taxes without corresponding offsets. The bill would assess a new fee on college students, give those students an immediate tax credit for that fee, then send that money to the Board of Regents to dole out to schools. The end result would be a $350 million revenue boost for higher education that would still be revenue-neutral in the eyes of the Jindal administration.
The bill was deferred after Republican and Democratic House members said the plan was an unnecessary fiscal sleight-of-hand designed to placate anti-tax advocacy group Americans for Tax Reform, to which Jindal has pledged not to raise taxes without corresponding offsets. But the SAVE measure was later revived and tacked on to multiple bills on the Senate side, and it appeared that a showdown between the House and Senate would ultimately decide its fate.
Jindal has threatened to veto the entire budget if it includes a net increase in taxes, and state Revenue Secretary Tim Barfield said a vote against the SAVE act would make such an outcome “more likely.” Administration officials later urged patience, saying there was still time before the June 11 session end to broker a new budget deal that was palatable to both lawmakers and the administration.
“The budget deal is still baking,” Jindal Chief of Staff Kyle Plotkin says in a statement. “There’s still time to get a budget done that is balanced, protects higher education and health care, and doesn’t raise taxes.”
Some legislators were less optimistic.
“I expect that the governor is going to keep his word and he’s going to veto the bills that do raise revenue,” says Rep. Regina Barrow, D-Baton Rouge. “And I suspect we’re going to have to make a decision whether or not we’re going to override the governor.”