Hopes for tax deal to close Louisiana budget gap are fading
BATON ROUGE, La. (AP) — Time is dwindling and hope is fading for the Louisiana House to reach a tax deal to help close a vast budget gap, and negotiations Friday seemed unable to break the impasse.
“Hopefully, they’ll resolve something,” said Senate President John Alario. “The clock is running against us.”
The special session must end by Wednesday, but it could end early if Republicans, Democrats and Gov. John Bel Edwards can’t breach the stalemate. If negotiations collapse, lawmakers will have to craft a budget with deep spending reductions.
A $994 million hole looms July 1, tied to the expiration of temporary taxes. Part of the shortfall will be offset with $302 million estimated from increased state income-tax collections caused by federal tax changes, leaving a hole of $692 million.
House members disagree on what tax types — and what amount of money — should replace the expiring taxes. House Republican leaders favor sales taxes, while Democrats, particularly the Black Caucus, prefer income taxes.
“I think we have some room to get to where we need to be. We can see the goal line,” said Rep. Stephen Dwight, a Lake Charles Republican.
House Speaker Taylor Barras had called Friday’s votes the “do or die” decisions on tax measures.
But the first major tax vote, on a proposal sought by Democrats to lessen the itemized deductions allowed for upper-income taxpayers, narrowly failed. The bill is estimated to raise $79 million next year.
Fifty-one lawmakers voted against it, while 50 voted for it. The measure needed 53 votes to pass. Barras and House GOP leader Lance Harris opposed the bill. Also rejecting the proposal were several members of the Black Caucus who said they were unhappy it was tied to separate bills including efforts to enact work requirements on Medicaid patients.
With that failure, House members gathered in groups for hours to try to see if anyone would change their votes — then adjourned until Sunday evening.
“Many of you don’t feel like there’s an urgency to acting right now. I disagree with that position,” said Rep. Rob Shadoin, a Ruston Republican who voted for the income-tax bill and warned the budget cuts could be damaging.
He added: “This is about the faces of the people in your district.”
Rep. Alan Seabaugh, a Shreveport Republican who opposed the measure, questioned the size of the budget gap, saying the impacts of the federal tax changes and rising oil prices remain unclear. He accused Edwards of being a “bald-faced liar” in his description of the shortfall.
“I don’t think we need to be here right now,” Seabaugh said.
Nearly all tax bills must start in the House, leaving senators little to do but watch the bickering.
Edwards called the special session, asking lawmakers to pass replacement taxes, saying without them, the TOPS free college tuition program, health care services and public safety programs would face deep cuts. Lawmakers will work on crafting next year’s budget in the regular legislative session that begins March 12, with or without the replacement taxes.
“If we’ve got to cut $600 million-plus out of the budget, it’s going to be heart-wrenching, and I’m not sure a budget passes in that scenario,” Alario said.
The highest-dollar tax proposal on the House floor is a sales tax measure that would temporarily renew one quarter of an expiring 1 percent sales tax and temporarily eliminate some sales tax breaks, to raise nearly $300 million annually.
Louisiana’s current state sales tax rate is 5 percent. It drops to 4 percent on July 1. Dwight’s bill would move the rate to 4.25 percent. But 0.25 percent of the tax would again be temporary, with an expiration date in mid-2021.
Only 38 of 105 House members voted for the measure when it came up earlier in the week. It needed 70 votes to pass.
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