…and we can now survey the damage done by the fourth session the legislature just concluded last night.
On Friday the House passed a $463 million tax increase, with 74 House members voting for a “compromise” bill which raised the state sales tax rate from the four cents it was due to be when the “temporary” extra penny of state sales taxes rolls off on July 1 to a new .445 cent rate. That bill, HB 10, passed the Senate on a 33-6 vote Sunday.
But not before one of the six, Sen. Sharon Hewitt (R-Slidell), took to the microphone to express dissatisfaction with the lack of fiscal discipline in the building…
That speech earned Hewitt two responses by the Senate’s chief tax-hikers, New Orleans Democrats J.P. Morrell and Karen Carter Peterson, who attacked Hewitt as a “bomb-thrower” – which is rich – and “irresponsible.” Sen. Jack Donahue (R-Covington) then made a closing argument on the bill, expressing opposition to taxes but decrying the $100 million in cuts to higher education Louisiana would have to endure if the tax increase were to fail.
After the bill passed, Gov. John Bel Edwards also attacked Hewitt.
@LouisianaGov on Senator Hewitt’s political speech: “she was long on politics, short on facts” 🔨🔨🔨🔨
— Rep. Ted James (@EdwardTedJames) June 25, 2018
The fact is, counting total means of finance, Louisiana’s 2018-19 budget is over $33 billion. It’s $8 billion larger than it was three years ago.
The only silver lining to what happened Sunday is procedural. When HB 1, the supplemental budget bill that would spend the $463 million raised by HB 10, crossed over to the Senate the Senate Finance Committee added an amendment that would have potentially blown up the deal. The House Republican Delegation put this message out on Facebook Saturday…
This afternoon the Senate added an amendment backed by Governor Edwards to HB 1, the budget bill. This amendment would circumvent the legislative process and allow the governor to spend additional money on pet projects if the state’s revenue is greater than expected. If the state receives more money than forecasted, it should go before the Joint Legislative Committee on the Budget – not be the governor’s slush fund.
HB 1 author Representative Cameron Henry said, “If it comes back to the House in its current form, I will reject it.” Representative Paula Davis said, “I agree with Representative Henry and will not support HB 1 in its current form.”
This is the same amendment the governor attempted to attach to Representative Davis’s package (HB10 & HB1 by Henry) at the last-second that nearly ended the session.
But on Sunday, that amendment was changed. The final arrangement holds that when there is a surplus, and there will be one, the governor will have to get the Joint Legislative Committee on the Budget to sign off on any spending of that money before he can turn it loose.
This matters, because the state is almost assuredly going to see a windfall of revenue from internet sales taxes – and with oil trading between $70 and $75 per barrel, with the state forecast holding at $59, Louisiana will surely derive higher-than-forecasted revenue from severance and other taxes. Left to his own devices Edwards would have used that money on a pay increase for teachers, paying off one of the key interest groups backing his 2015 election. That increase is likely coming anyway, as few Republicans in the legislature would have the stones to kill it in an election year next year, but at least now there will be some deal-making before it happens.
On the whole, though, while Louisiana’s neighbors are engaged in cutting taxes and growing their economies this state is growing its government and becoming more uncompetitive all the time. That’s the key takeaway from watching the Louisiana legislature this year, and it’s the only thing that matters headed into the 2019 election cycle which may be the last chance for the Bayou State to avoid permanent status as the worst place to live and work in America.
UPDATE: From a Facebook statement put out by Rep. Phillip DeVillier, here’s a breakdown of what Louisiana’s budget looks like…
Below is a summary of the state budget (LARGEST in our States History) and revenue raised (TAXES) during the special sessions based on our preliminary numbers.
Overall Enrolled State Budget for FY19
The Total State Budget is $33.8 billion
$ 9.490B State General Fund
$ 1.582B Interagency Transfers
$ 4.306B Statutory Dedications
$ 4.425B Fees and Self-Generated Revenues
$14.116B Federal Fund
This is an increase of $465 million in total means of finance and $28.7 million in State General Fund over the Existing Operating Budget for FY18 (as of 12/1/17)
Also, there is $43 million in funding Below-the-Line that will be funded if additional revenue is recognized by REC between July 1, 2018 and December 31, 2018.
A total of $543M in revenue was raised during the 2nd and 3rd Extraordinary Sessions
· $483M was appropriated for the General Operating Expenses of State Government (HB1)
· $ 60M was appropriated to the Legislative and Judicial Budgets
Yes TOPS is fully funded and no one will get kicked out of nursing homes.