Legislature finds money and a compromise on sales taxes

BATON ROUGE (AP) — After a grueling, months-long negotiation over how to balance the budget, Louisiana lawmakers on Sunday completed their third special legislative session this year with a deal that will avert hefty cuts to public colleges, tuition aid and most public safety programs.
Senators gave final passage Sunday afternoon to a sales tax renewal bill that will raise $463 million for the budget that starts in July. A 33-6 vote sent it to Gov. John Bel Edwards, who was eagerly waiting to sign it into law though it was less than he sought.
Later in the evening, the House and Senate reached an agreement on how to spend the new money, voted for it and wrapped up the session three days ahead of the deadline.
Edwards thanked lawmakers who he said “found the courage to compromise and a strong desire to put Louisiana first.”
“Nobody got everything that they were looking for, but everybody got something,” the governor said. “It is going to fund our most critical priorities in a responsible way.”
The more than $29 billion operating budget will shield most agencies from cuts, ending fears that safety-net hospitals would shutter, nursing homes would kick out patients, food stamps would be eliminated and college students would be left scrambling to offset reductions in the TOPS tuition program.
Republican House Appropriations Chairman Cameron Henry called it a “nice amount of compromise made between the House and the Senate.”
Democratic Senate Finance Chairman Eric LaFleur danced on the Senate floor when the budget bill passed and told senators: “Guys, this means we get to go home.”
Sunday’s adjournment ended 15 weeks of work across four legislative sessions this year. Many of those gatherings were contentious amid disputes between the Democratic governor and House GOP leaders.
The three special sessions all were aimed at passing taxes, to partially offset the expiration of $1.4 billion in temporary taxes passed by lawmakers in 2015 and 2016. Increases in other tax types offset part but not all the gap. Talk of rewriting Louisiana’s tax system last year never happened as that effort was blocked in the House.
As the “fiscal cliff” neared, Edwards and House lawmakers bogged down over what tax approach to take.
Initially, Democrats balked at sales taxes, saying they hit the poor too heavily. House Republican leaders refused to consider income taxes. With passage of an expanded income tax break for the working poor, Democrats agreed to a sales tax, only to disagree with Republicans on the amount. Conservative House Republican leaders wanted a smaller sales tax renewal than Democrats, saying government was too large.
The compromise came in a sales tax bill by Baton Rouge Republican Rep. Paula Davis to renew 0.45 percent of an expiring 1 percent sales tax. The state sales tax rate would fall from 5 percent to 4.45 percent on July 1 and stay there until mid-2025. Several sales tax breaks for people and companies, including an exemption from sales taxes on business utilities, also will be scaled back during the period.
Sen. Jack Donahue, the Mandeville Republican who handled the sales tax measure in the Senate, said the tax will avoid cuts “which I think would devastate the state of Louisiana.”
“I’m sorry I have to be the co-author on this bill. I don’t like taxes. I don’t like this bill,” he said. “Nobody likes this bill. But nobody has a better solution.”
The renewal rate — backed by Republican House Speaker Taylor Barras — was a fraction smaller than the 0.5 percent renewal rate that senators previously supported and that House GOP leaders helped block in the final minutes of the second special session.
The final budget-balancing deal will raise about $100 million less than Edwards wanted to close the budget gap. But he considers the agreement a win, because the sales tax will extend through this Legislature’s term and the next, ending short-term budget patches that create new shortfalls each year.
“I’m looking forward to the seven years of stability we’re going to get,” Edwards said.
Not everyone was pleased with the deal.
Rep. Alan Seabaugh, a Shreveport Republican, said Louisiana could fund its priorities without passing new taxes. On Facebook, he highlighted the 32 House GOP lawmakers who voted for the tax and urged: “Please remember this betrayal when they ask for your vote for re-election or when they run for other offices in the future.”
The latest special session, which started on June 18, cost an estimated $50,000 to $60,000 per day.