The Taxes Failed, The Special Session Imploded, And Now It’s All Reactions And Recriminations

After HB 23, the quarter-penny sales tax bill, failed in the Louisiana House of Representatives Sunday it was fairly obvious that this year’s 2018 Special Session of the state legislature was cooked. Monday this fact became official.

In an abbreviated meeting, the House voted on whether to have another go at HB 8, the excess itemized deductions bill – a bill which only needed 53 votes to pass and which the Democrats in the House had boasted they had the votes for despite it failing 50-51 on their first attempt Friday.

It turns out they didn’t have the votes. The bill failed on a 49-49 vote. And when it failed, a motion was submitted and passed to end the legislative session two days early.

There were lots of lessons from the special session, none of them particularly positive for Gov. John Bel Edwards – who called the session with a number of goals in mind. Edwards advertised that the state’s budget was $994 million in the red and therefore would need a billion dollars in new taxes in order to make it balance. Nobody really believed that line of argument, and as such there was a relatively convincing case make by the governor’s critics that the special session was more or less a waste of some $60,000 a day of the taxpayers’ money on votes for unpopular tax increases which wouldn’t pass, when the true size of the need was not established.

Given that, it was obvious to many, particularly on the Republican side, that caving on tax increases wasn’t necessary. Nothing which “needed” to be passed in the early special session couldn’t be taken up in another special session at the end of this year’s regular session, in which no tax measures can be introduced – and a second special session, if necessary, would come with the benefit of a better idea what the state’s finances actually look like.

House Appropriations Chairman Cameron Henry outlined this much in a Facebook video released after the special session ended…

Henry’s point, that Edwards’ deficit is a number generated by the prospective budgets state agencies are asking for, rather than amounts his committee has vetted as to actual need, is one you’ll likely hear a great deal as the legislative process continues into its next phase – after all, in the regular session Henry will be at center stage in going through Edwards’ budget with a fine-toothed comb and scrubbing frivolities and low-priority items out.

This year might be the first time, in the event it’s messaged properly, that the public realizes the imbalance in information between the governor and his Division of Administration, which mostly controls the state’s budget down to the line item, and the state legislature. Legislators we’ve talked to repeatedly complain that they’re kept very much in the dark as to what those agencies are actually spending money on and have very limited access to the budget’s particulars – and without large budgets for staff or much time in their own schedules as part-time legislators, deep dives into the state’s finances are very difficult.

What this means is when Edwards, or his predecessors, to be fair, challenges legislators to “come up with your own cuts” to the budget it rings rather hollow.

The response to this, of course, is that the House controls the purse strings and since the state government is required to balance the budget, the legislators can just respond to the governor’s challenge by saying “No, this is the amount of money we’re giving you to work with. Make state government function on this level of funding, period.”

The House has tried to do that for several years. They started trying to do it when Bobby Jindal was governor by making cuts – or restrictions on growth – only to have the Senate restore those cuts by use of one-time money and other accounting tricks.

But with the surprising revolt in the House stopping tax increases from taking place, perhaps the dynamic has now changed.

After all, it’s now clear that John Bel Edwards cannot control the votes of Democrats in the state legislature. As such, Edwards now has less leverage over the legislative process than any Louisiana governor in modern times. And with only two regular sessions left in his first (and perhaps only) term, maybe the Senate isn’t going to be such a rubber stamp for the governor’s position going forward. We won’t bet on that body’s independence so long as John Alario is its president, but on the other hand Alario is getting close to the end of his run – he’s termed out in the Senate after the 2019 elections and it’s highly unlikely he would be able to be much more than a back-bencher if he ran for another hitch as a member of the House next year. So if ever some of the Senators were going to break free from Alario’s control now would be the time.

There’s obviously going to be lots of blame thrown around for the special session going to seed today. You’ve seen Henry’s reaction; here was U.S. Sen. John Kennedy’s…

“I commend House Republicans for saving Louisiana families from Gov. Edwards’ tax increases. This special session was a missed opportunity for meaningful budget reforms, and the fault lies with Gov. Edwards and Democrats for refusing to fully embrace those basic budget reforms,” said Sen. Kennedy. “House Republicans worked diligently and sincerely toward a compromise but in the end had to stand on principles of fiscal responsibility. I commend them for doing so.”

And here was State Treasurer John Schroder’s…

“This special session was prematurely called and was a complete waste of taxpayer dollars. This is very disappointing that the Governor and the Legislature couldn’t reach an agreement during the session on how to achieve financial stability. If we ever want to right-size government, we have to get serious about implementing true spending reforms and stop relying on temporary revenue measures to plug the budget.”

Americans For Prosperity’s Louisiana chapter, which had been outspoken about killing tax increases, was fairly similar in criticizing Edwards. It’s director John Kay put out this statement…

“I am looking forward to the legislature solving the ever-decreasing deficit during the regular session by passing a budget with responsible cuts to state government. A second special session in 2018 is completely unnecessary and would be another waste of taxpayer dollars whether taxes are raised in that session or not.”

And then there was Edwards, who blamed the whole business on House Speaker Taylor Barras

With the collapse of the special session on Monday without any solution to the state’s budget problems, legislators in both parties are warning that all the bickering and mistrust will make it harder for them to come together on other important issues.

Gov. John Bel Edwards said in a post-session news conference that House Speaker Taylor Barras, R-New Iberia, reneged on a promise in early February to deliver 40 GOP votes for proposals to raise $440 million of revenue. Edwards said Barras cut that offer down to $220 million when the session opened a week later without even telling him and then failed to deliver on that.

Barras’ behavior “caused tremendous problems that we never recovered from in this session,” the governor said, referring to it as “a spectacular failure of leadership in the House.”

Edwards’ assertion about Barras, who did not respond to a request for comment, is one example of the allegations of broken faith on both sides in what Edwards called a “totally dysfunctional” session permeated with distrust and political maneuvering.

On Sunday, a last-ditch effort to find solutions to a projected $1 billion budget shortfall disintegrated when a majority of Democrats voted down a Republican bill to extend a quarter penny increase in the sales tax out of fear that Republicans would renege on a compromise to support New Orleans Democrat Walt Leger’s bill, which limited income tax deductions.

Whatever representations Barras may have made to Edwards about Republican votes, of course, would have been dependent on his and his party’s acceptance of the conditions laid out in a letter he sent to Edwards prior to the special session. The governor didn’t guarantee those conditions would be met, and in fact his party killed one of them, co-pays in the state’s Medicaid program, at the beginning of the session. At that point it would seem to be difficult to hold Barras to any promises he may have made.

And still the Speaker hung in until the end, trying to broker a deal both sides would accept. If anything he bent over backwards in the attempt. On Sunday night the Republicans allowed all the conditions to be stripped out of the sales tax bill, and the Democrats still wouldn’t vote for it. And on Monday there was the attempt to bring the excess itemized deductions bill back to the calendar, presumably with an attempt to strip those same amendments out, and by then the votes even to debate it again weren’t there. If all the Democrats had backed the bill, the result would have been different.

So the Louisiana GOP, whose new chairman Louis Gurvich seems to be willing to take a fairly aggressive anti-tax conservative tone with respect to the governor and his legislative mis-steps, popped out a press release letting Edwards have it over the special session…

GOVERNOR JOHN BEL EDWARDS IS THE BIG LOSER IN THE 2018 LOUISIANA LEGISLATIVE SPECIAL SESSION

(Baton Rouge, LA) As our first special session of 2018 comes to an end, the LAGOP wants to take a moment to thank our Republican House and Senate leadership.

“We stand behind our Republican legislators. As we have repeatedly seen over the past several years, the one thing we can fully agree on with our Governor is that there has indeed been a lack of leadership. However, this spectacular failure can ONLY be attributed to the Governor,” said LAGOP Chairman Louis Gurvich. “It is apparent that the Governor was not even able to control the Democratic delegation in this session,” Gurvich went on to say, commenting on the divide between the Governor and the legislative Black Caucus.

“The Governor called a special session based on the false premise that Louisiana was facing a $1 billion dollar plus deficit. The truth is that we will not know what the projected deficit will be until the Revenue Estimating Conference meets in the next few months,” said Senator Conrad Appel (SD-9, Metairie)

Lance Harris, the Louisiana Republican legislative delegation chairman, (HD-25, Alexandria) stated that the Governor “should quit blaming everyone from Jindal to Peter Pan and man up! It’s a sad day when the leader of the Democratic Party of Louisiana can’t produce, much less even communicate. We (Republicans) wanted a fair result, but the goalposts were moved every day,” commented Harris.

“As a result of the Governor’s leadership failure, Louisianans will not receive the benefit of the widely supported Louisiana Checkbook (a reform that would require detailed summaries of all state expenditures, which passed the House 104 to 0), or much needed Medicaid reforms, and students and parents will not know what amount of aid, if any, will be available to them under the TOPS program this Fall,” stated Gurvich.

The regular session starts on March 12th. By law, the regular session in even years cannot consider revenue raising bills, and another special session is expected in the Summer.

At the risk of being perceived as partisan, the state GOP has a point. The fact is, if Edwards could have delivered Democrat votes for those two tax bills they would have passed out of the House. He didn’t. That hasn’t really ever happened in the modern era since Louisiana developed two functioning political parties.

And it will be fascinating to see, if the current dynamic persists, what the implications of Edwards’ loss of control will be going forward.

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