Tax session tensions

BATON ROUGE — The success of this year’s second special legislative session appears to hang on passage of one major piece of legislation: a sales tax bill that would raise $547 million in fiscal year 2018-19 and $583 million in each of the next four years.

The House Ways and Means Committee, which hears all tax bills, spent most of its time Wednesday grilling two members of Gov. John Bel Edwards’ administration about the road ahead. No tax measures were considered.

Republican members criticized the governor’s veto of a budget that legislators approved in the regular session, which ended last week. Democrats on the committee said Edwards said from the beginning he would veto the budget if it didn’t provide the funds necessary to carry out critical state services.

The proposed $28.5 billion budget for the next fiscal year came up $648 million short of being balanced. House Bill 11 falls $101 million short of that number next year and $65 million short for the next four years. It would keep half-percent of a sales tax increase approved in 2016 and make the resulting 4 1/2 percent state sales tax permanent.

Rep. Terry Landry, D-New Iberia, is sponsoring H.B. 11, which would remove or sunset certain exemptions and exclusions to state sales taxes.

Rep. Walt Leger, D-New Orleans, is author of H.B. 9, which would maintain 100 percent excess federal itemized deductions, but wouldn’t allow the deductions of state income or general sales taxes paid when computing the itemized deductions. A fiscal note says it would raise $25 million annually.

Rep. Neil Abramson, D-New Orleans and chairman of the committee, called the proposed half-percent permanent sales tax increase the primary revenue generator. He said the $648 million needed to balance next year’s budget on July 1 can’t come close without the sales tax measure.

Republicans have insisted they won’t approve income taxes that members of the Legislative Black Caucus have said should be part of the solution. That deadlock derailed this year’s earlier special session.

Although Abramson said the sales tax bill is the most important legislation, Kimberly Robinson, secretary of the state Department of Revenue, asked him not to leave the income tax bill in his committee.

Jay Dardenne, state commissioner of administration and the governor’s budget chief, said he hoped the committee would start voting today on as many bills as possible. He asked its members to avoid a repeat of the first special session by completing this one.

Rep. Jim Morris, R-Oil City and vice chairman of the committee, took issue over comments that the committee bottled up tax legislation. He said 115 bills were sent to the committee in 2016 when temporary tax measures were approved and that 55 got out of the committee. Morris said the committee has taken a lot of unfair hits.

Five bills got out during the first special session, he said, “but the votes weren’t there on the floor.”

“Have you reached out to anyone?” he asked Dardenne. “No one has contacted me.”

The governor’s budget veto was frustrating, Morris said. He added the process has to start all over, but Dardenne said two weeks is enough.

“Yes, there is adequate time, and I hope you’re going to do it,” he said.

Morris said he didn’t think the administration has prioritized spending. He was also critical of the failure to put structural budget reforms in the session call.

“I need to find a place where I can be comfortable, and I’m just not there,” he said. “I’m tired of putting Band-Aids on longtime fractures.”

Dardenne reminded Morris that lawmakers just completed a regular session and that reform measures could have been filed then. He added that reform was supposed to take place in 2017 and didn’t happen.

Rep. Stephen Dwight, RMoss Bluff, asked what has changed since the first special session. He added that Democratic support wasn’t there then.

Dardenne said no bills were linked together this time — which helped kill the earlier session — and that the closeness of the $648 million budget shortfall has created a sense of urgency.

Dwight said he wasn’t convinced the budget problem will be solved at the current session.

“I hope you’re wrong,” Dardenne said.

Rep. Jay Morris, R-Monroe, told Dardenne the administration didn’t lend support to efforts to end funding going to professional sports franchises and gambling revenues going to non-government organizations.

Rep. Ted James, D-Baton Rouge, objected to Republicans blaming the Edwards administration for reform failures when “the governor doesn’t have a single vote in the Legislature.”

The committee could have voted on some revenue bills Wednesday, he said, instead of wasting two hours giving the administration a hard time. A couple of bills could be approved and lawmakers could go home and priorities could be funded, he said.

James said that even Rep. Cameron Henry, R-Metairie and chairman of the House Appropriations Committee, admitted more revenue is needed to balance next year’s budget.

Rep. Major Thibaut, D-New Roads, said legislators need to do something rather than “sit here and lob grenades for another two weeks.” He suggested passing the sales tax bill because people are used to paying it and he got no complaints when it was increased by 1 percent in 2016.

“We need to get to work, solve problems and do something,” Thibaut said.