Sunday, June 23, 2024

Senate committee closes budget gap by eliminating business tax exemptions

by BIZ. Staff
By Tryfon Boukouvidis, LSU Manship School News Service

BATON ROUGE – With the clock ticking down, a Senate committee on Wednesday amended a House Republican bill to sharply increase the revenue that it would raise to $642 million from $365 million to address a looming budget shortfall.

The Senate Revenue and Fiscal Affairs Committee agreed to keep a proposed extension of a third of a penny of sales tax rather than increasing it to a half cent, as many analysts had expected. But the panel was still able to raise so much more revenue by eliminating tax exemptions for various industries.

It also voted to remove a House provision that would have ended the extra third of a cent of sales tax in 2023.

The bill now moves to the Senate floor. Senate passage would set up a showdown with the more conservative House, and a conference committee with members of both chambers would have resolve the differences before the special legislative session expires on Monday.

The Senate bill would raise only $6 million less than Gov. John Bel Edwards has said is needed to  deal with a $648 million budget shortfall and avert major cuts in health care and higher education.     

The original House bill was authored by Rep. Lance Harris, R-Alexandria, the leader of the Legislature’s Republican delegation, who told the Senate committee that he and other House Republicans would not support the changes that the panel made to the bill.

To ensure that Harris could not simply withdraw the amended bill, the Senate committee also voted to create a mirror version of it under the name of Rep. Walt Leger, D-New Orleans, the governor’s floor leader in the House.

That was a final twist in a dramatic hearing in which Harris came under intense questioning by several Democratic senators, who argued that Harris did not present any specific cuts and blamed him for not presenting realistic numbers.

Harris responded by saying that final budget cuts would be debated on the House floor Thursday morning.

After being repeatedly pressed on the nature of cuts he would propose, Harris said “some members do believe there may be some room to have more efficiencies in the government.”

Committee members also accused Harris of unwillingness to compromise. Sen. Jay Luneau, D-Alexandria, told Harris, a boyhood friend, that “when you own the information you can bend it the way you want to.”

“You tell us it’s all or nothing,” he continued. “This is not a compromise.”

“This is compromise,” Harris responded. “I felt it gave the best chance for anything to happen, which has proven to be the case.”

Sen. Gerald Boudreaux, D-Lafayette, agreed with Luneau, saying to Harris “this is your way or the highway.” “This is not compromise at all,” he added, “we had the opportunity to look at a long-term plan and nobody’s presented one.”

So far, Harris’ bill and other measures approved by the Republican-led House would bring around $400 million, which would cover less than two thirds of the total amount the governor says the state needs.    

The House on Thursday will consider two different budget proposals that allocate state funds, one by Republican Rep. Cameron Henry of Metairie, who chairs the House Appropriations Committee, and the other by Leger. The Legislature must approve at least one of the bills to be able to finalize the state budget.   

Henry’s bill accounts for $396 million in new tax revenue, about $30 million over the amount raised by Harris’ bill that the House approved Monday.

Henry’s budget proposal would fund the popular TOPS scholarship at 90 percent but would leave direct appropriations for public universities short of $25 million. Under Henry’s plan, the state Department of Health would receive about $90 million in cuts, which could compromise mental health services and substance abuse treatment for Medicaid recipients.

The bill would also restore the 24.2 percent reduction to state agencies that the Legislature made in an earlier bill that the governor vetoed.

Leger’s bill accounts for $643 million in new taxes to avoid major cuts to state services. The budget proposal would fully fund TOPS and higher education, as well as healthcare. It would also remove the 24.2 percent cuts on state agencies.


The difference in numbers between the two appropriations bills stems from the disagreement between Gov. Edwards and Harris on the amount of the shortfall. The governor suggests the shortfall is $648 million, basing his number on the state revenue board’s official estimates, while Harris bases his number on the existing budget as it was on December.

Commissioner Jay Dardenne with the Department of Administration said that Harris did not take into account $261 million in mandated expenses that the state must fund in the next fiscal year. They include pay increases for civil service workers and registrars of voters, new voting machines and costs associated with changes at a prison and a state mental health hospital.

Also on Wednesday, the House also passed two almost identical bills that would establish a transparency website to provide fiscal information on state expenditures.

Republican Rep. Barry Ivey of Central, who sponsored one of the bills and presented both of them, said the Louisiana Checkbook website is the “cornerstone for positive transformational reform in Louisiana,” adding it will “bring about a new air of fiscal transparency.”

If the Legislature fails to pass a budget by the end of this special session on Monday, Gov. Edwards will have to call another special session to determine the state’s budget before temporary revenue measures expire on July 1. The cost of special sessions ranges between $50,000 and $60,000 per day.

Joby Richard and Paul Braun contributed to this report.

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