The statehouse brought a glimmer of hope to the special session Thursday when it passed next fiscal year’s main budget plan, following a Senate committee’s advancement of two sales tax bills the night before.
The bills, representing the political war taking place between the Edwards administration and the Legislature, now go before the full Senate.
That places the House in a sit-and-wait position, for a change. Usually, it’s the Senate waiting on the House, where the budget and most tax issues must originate. Many representatives are apprehensive about how much the upper chamber will tweak the budget, HB 1, by Appropriations Chairman Cameron Henry, R-Metairie. They’re already expressing concerns about how the Senate Revenue and Fiscal Affairs Committee handled the sales tax issue in its meeting Wednesday evening.
This is the sixth special session of the term, this one to approve a budget for next fiscal year while addressing a $648 million shortfall. The big picture question is whether lawmakers will send enough new revenue measures to Edwards for consideration.
“It seems that the Senate is going to raise some revenue,” said Rep. Katrina Jackson, D-Monroe. “We don’t know the amount.”
A number of bills are in play, but the most important revenue-raiser is the sales tax vehicle, and there are now two. HB 27 by House GOP Delegation Chairman Lance Harris of Alexandria would replace the state’s expiring fifth penny in sales tax with one-third of a penny, which would have raised $365 million next year.
But a Senate committee amended the bill overnight to remove a handful of existing sales tax breaks for business utilities and certain manufacturing equipment, bringing the fiscal impact to $642 million in year one.
Senators also attached the language from that bill to HB 12 by House Speaker Pro Tem Walt Leger, D-New Orleans, which originally sought to expand the applicability of the state sales tax to certain retailers that operate outside of Louisiana while conducting business here.
“It won’t pass the House,” Harris told senators as the alterations were being made. The business lobby responded in-kind and alerted its members.
“A clear and unfortunate signal has been sent to workers across Louisiana,” wrote Louisiana Association of Business and Industry President Stephen Waguespack to his group’s members. “While GDP is shrinking and personal income is dropping, the Senate Revenue and Fiscal Affairs Committee proposed an unprecedented level of taxes, specifically targeted at those employers who make up the backbone of our fragile economy and provide opportunities for thousands of Louisianans.”
The gist of the back and forth: Conservatives want to pass a budget that reduces the size of government by making incremental spending cuts, with some reliance on new revenue for the next fiscal year, while Democrats and the administration want to fully fund Edwards’ vision of state government, which is currently short $648 million.