…which is encouraging.
First, here’s video of the governor’s post-session press conference, which gets going about two minutes into the clip…
He’s complaining because he didn’t get all the tax increases he asked for and he’s likely going to demand another special session in June AFTER the coming regular session is over.
And he’s talking about doing this because (1) the legislature couldn’t close the entire mid-year budget deficit, leaving about $30 million unfunded that the governor and his staff are going to have to find in the budget, and (2) there is somewhere between a $500 million and $800 million deficit for next year’s budget and Edwards can’t just raise taxes to fix that – the regular session that starts next week is not a fiscal session and taxes can’t be raised in the fiscal session.
So what did the legislature do today?
The most important item which passed in the closing moments of the session was a “cleaning of the pennies,” or a stripping of nearly 200 exemptions from the state sales tax. As a result, on a sizable number of business transactions there will be an effective four cent sales tax for the rest of this fiscal year which expires June 30. For two years beyond this fiscal year, two of the four cents of the state sales tax will will remain “clean” of exemptions, and after that point the exemptions are set to return.
Beyond that 27-month “cleaning of the pennies” is a one-cent increase on the state sales tax for the same duration. That is set to create $210 million of revenue for this year to go with $100 million the “cleaning of the pennies” will produce; for the next fiscal year the two measures are expected to produce just over a billion dollars in increased taxes.
Edwards is using about $400 million in one-time money to plug the midyear hole; he’s no longer able to complain about his predecessor Bobby Jindal’s use of one-time dollars to fill budget holes without being called a hypocrite.
The legislature also passed tax increases on alcohol, cigarettes, car rentals, short-term apartment rentals through services like AirBnB and a few other measures, none of which had much effect on the state budget. Minimal cuts were made.
But in the regular session, those cuts are coming. They can’t be avoided, and the cuts the legislature makes will have to be banked and then built upon, because the billion dollars in sales tax hikes passed in the regular session will expire by law – meaning that like it or not, major budget restructuring is coming this year or next.
It’s not the return to big government he wanted, even with the massive sales tax hikes he received. And therefore Edwards is whining. He’ll be whining even more starting on Monday when that regular session begins.