The House Ways and Means Committee spent several hours Tuesday hearing testimony on various tax bills, yet no clear path emerged on how lawmakers will replace some of the $1.4 billion in revenues that expire on June 30. Votes are scheduled for Wednesday morning. The Advocate’s Elizabeth Crisp explains the competing ideas of committee members.
House Republicans have been leaning toward proposals that would allow the state to collect taxes on some items that previously have been exempt, as well as a temporary extension of one-fourth of the 1-cent sales tax hike approved as a temporary measure in 2016. But many Democrats in the Legislature have been pushing back against proposals that rely on sales tax-only solutions. … House Democratic Caucus Chairman Gene Reynolds, D-Minden, said concerns over the sales tax are threatening Democratic support for revenue-raising legislation. “It’s early,” he said. “I’m not going to push the panic button just yet.” Democrats want changes to the income tax to help balance out the burden.
The AP’s Melinda Deslatte explains that some ideas are gaining traction among a majority of members, but even those are running into roadblocks.
Among proposals getting the widest combined interest is legislation to permanently eliminate some sales tax breaks. But even in areas of agreement, lawmakers differ about which tax breaks should be removed, particularly how much of the state’s permanent 4 percent sales tax should be charged on business utilities.
The Advocate’s editorial board, meanwhile, notes that the chronic instability of the state budget is hurting Louisiana’s business climate:
A state budget in chronic crisis during most of two terms under former Gov. Bobby Jindal is now a drag on the state’s future. Businesses around the country and the world have taken note. Wall Street bond houses have reduced the state’s credit outlook. We might agree with some of the governor’s critics on several issues, but what can’t be reasonably argued is that he is wrong about the harmful impact of an unstable state budget. It threatens not only today’s constituents but prospective businesses we want to bring to Louisiana.
Spending controls have unintended consequences
House Speaker Taylor Barras is sponsoring a package of bills that would put arbitrary restrictions on what legislators could spend each year, even if there is revenue available. House Bill 12 cleared the Appropriations Committee despite concerns that it would create onerous work for routine budget measures that are made outside of legislative session. Nola.com-The Times Picayune’s Julia O’Donoghue explains the unintended consequences:
Under Barras’ legislation, the annual spending cap for the budget would be low enough that the state would regularly hit it, Dusse said, and a provision that requires two-thirds of the Legislature’s approval for budget matters would be triggered often, even for routine fiscal matters.The proposal would also give smaller groups of legislators in both the House and the Senate power over state spending. If two-thirds of the Legislature is needed to approve basic budget functions, coalitions that don’t make up the majority of either chamber would have the ability to block state spending until they get what they want.
Barras also introduced another spending control measure that he and his GOP colleagues would like implemented in exchange for raising revenue, a new government transparency website called Louisiana Checkbook. However, the projected costs of building and maintaining the website are adding up.
A legislative fiscal analysis shows that the website will cost between $716,000 and $785,000 over three years just to purchase the software and hire consultants for the work. Ongoing licensing requirements and maintenance would cost between $220,000 and $230,000 annually. There would also be significant, additional expenses to try to get all the state agencies to comply with the reporting requirements laid out in the website legislation, according to the legislative fiscal office. Analysts are still trying to determine how high those expenses might go. The sponsor of the transparency legislation, House Speaker Taylor Barras, R-New Iberia, said the website would also require some additional staff to be hired for its maintenance.
Task force recommends increase in public school funding
A key state advisory panel is recommending a $40 million increase next year in the basic state aid flowing to public schools. If the recommendation is adopted by the full Board of Elementary and Secondary Education and approved by the Legislature, per-pupil spending would grow from $3,961 to $4,000 – an increase of just under 1 percent. That is still less than inflation, and far below the 2.75 percent increase that schools routinely received before state policymakers made a mess of the budget. The Advocate’s Will Sentell reports.
“I know it is a difficult position for the Legislature, but I don’t represent the Legislature,” said Debbie Meaux, president of the Louisiana Association of Educators and chief sponsor of the request. “I represent children and schools, I represent teachers who are in the classrooms and the communities that need the money to educate their children,” Meaux said. … Among those supporting the request was Donald Songy, the governor’s education policy adviser and task force member. Songy said after the meeting that the Edwards administration would love to get behind such a hike if state dollars are available. The motion to boost state aid — it would be a 1 percent increase — was made by Meaux as a substitute for one that recommended another freeze in state assistance.
Constitutional convention gaining momentum
While lawmakers focus their attention on the special session, several groups of policymakers are looking ahead to the three-month regular session and the possibility of opening up the state constitution for a massive rewrite. Jeremy Alford of LaPolitics Now reports in his subscription-only newsletter on one item that politicos are keeping a close eye on, a constitutional convention.
Outside of the rails, a group of heavy-hitting and well-known conservative donors, along with a sprinkling of lawmakers, have teamed up with some government relations pros from business and industry. It’s not clear yet which legislator is going to be carrying this alliance’s flag, but the working group wants a limited convention with a focus on Articles VI (local government), VII (revenue and finance) and VIII (education). While recent legislative efforts have mostly been confined to proposals that limit the subject matter to revenue and finance, this new working group’s aim is notable because it pulls in the education article. The idea of tinkering with the Minimum Foundation Program funding formula gives some folks heartburn, but a restructuring of Article VIII is being discussed in other corners of the Capitol as well.
Number of the Day
6 percent – Maximum growth for expenditure limit proposed in House Bill 12 (Source: House Legislative Services)