Louisiana sales tax sent to governor as session end nears

Posted at 4:53 PM, Jun 24, 2018
and last updated 2018-06-24 17:53:21-04

BATON ROUGE, La. (AP) – Louisiana’s third special legislative session this year neared its end Sunday, 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. That 33-6 vote sent it to Gov. John Bel Edwards, who is eagerly waiting to sign it into law though it was less than he sought.
All that remained was for the Senate and House to work out the spending plans for the new money, with the main dispute about how to account for any money that might come in above the forecast.
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.
Legislative leaders hoped they could complete the budget negotiations and wrap up the session Sunday night, three days ahead of the session deadline.
"Hopefully, it won’t be a full moon and everything will work out," said Republican Senate President John Alario.
That will complete 15 weeks of work across four legislative sessions this year, many of them 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 about what tax approach to take.
Initially, Democrats balked at sales taxes, saying they too heavily hit the poor. 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 would be scaled back during the period.
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."