Hold, or fold? That was the question Louisiana’s taxpayers eagerly awaited the answer to during a marathon final day of the Second Extraordinary Legislative Session at the state capitol on Monday. According to the call issued by Gov. John Bel Edwards, that session had to adjourn by midnight on June 4, and Edwards expected the session to produce a state budget of his liking and some $600 million or more in tax increases to fund it. There wasn’t much in that session taxpayers in the state, who haven’t fared well in Edwards’ first two years in office given an unprecedented tax burden and a shrinking economy, could find to their liking.
At the end of that long day, neither could Edwards. Because thanks to a last-minute showing of spine on the part of House Republicans, the answer to the question was “Hold” rather than fold.
The linchpin of the session was the passage of a sizable increase in the state’s sales tax, and the House Republicans had offered the governor a significant one. What went from the House floor across the marble to the Senate was a $369 million package which met Edwards more than halfway toward his demand for $648 million in takings from the productive sector of the economy. But in the Senate, that increase, personified by HB 27, authored by Rep. Lance Harris (R-Alexandria), the chairman of the House Republican Delegation, was blown up to some $640 million through a stripping of virtually all exemptions involving business activity in the Democrat-controlled Revenue & Fiscal Affairs Committee. Harris’ bill only improved a little on the Senate floor, as some of those exemptions were put back in and its bite into the state’s economy lessened, but last night when the bill went back to the House for concurrence with the Senate amendments Harris himself moved to reject what the Senate had done.
That rejection of the Senate was a theme of the day, because it’s what Rep. Cameron Henry (R-Metairie), the chair of the House Appropriations Committee, suggested be done with the budget. And over her objection it’s what Rep. Katrina Jackson (D-Monroe), the author of the other tax instrument being debated Monday – a change in the way the state handles taxation of income earned in other states which hiked taxes by some $33 million – had happen to her bill.
The rejection of the Senate amendments to the three main pieces of legislation brought to the House Monday led to a frenetic, hurry-up-and-wait day at the Capitol, in which the two houses appointed conference committees in an attempt to work out compromises between bill versions while their members sat around waiting for votes.
Finally, those conferees produced final versions of the bills.
Jackson’s bill failed on an initial vote upon coming back from conference with only 52 votes. The sticking point was an amendment in the Senate which attached a $21 million giveaway to the poor via an increase to the state’s Earned Income Tax Credit, something conservatives found ridiculous when the state had a sizable budget deficit to resolve. But after Jackson got the conference committee to agree to delay the implementation of that giveaway to the 2020 fiscal year, she was able to pull a pair of Lafayette Republicans, Jean Paul Coussan and Stuart Bishop, across to her side and gave the bill 54 votes – one more than the 53-vote threshold for passage.
That meant the legislature had raised a net of $12 million in taxes toward the $648 million Edwards was demanding.
When the budget came up for a vote, it was written in such a way as to conditionally fund everything on the governor’s wish list – but guaranteed little. One Republican member called it a “terrible budget, but it meets the governor part of the way.” Henry had promised the House a vote on the budget whether the items in it were fully funded or not, and he delivered on that promise with about 20 minutes left in the session. The House overwhelmingly passed the spending plan with a 66-vote majority – not enough to override a veto from Edwards, which is quite likely to come. As is, the budget only funds the TOPS program at 70 percent and imposes a $100 million or so cut to higher education but more or less fully funds the Louisiana Department of Health – which interestingly enough managed to cough up some $40 million in cuts to the Senate during negotiations yesterday, an item driving no small number of the state’s conservative legislators to irritation given a widespread belief that the governor’s budget demands are driven less by need and more by a desire to hoard as much money toward the purpose of growing government as possible.
Then, with time running out, came the main tax hike bill. The Senate’s amendments took Harris’ HB 27 from a 1/3 cent tax increase to a 1/2 cent increase, but when the House refused to concur in those amendments what ultimately came out of the conference committee was a 1/3 cent increase worth around $400 million in revenue to the state. It got only 38 votes, as just two Democrats voted for it. Meanwhile the Senate had another tax bill, HB 12 by Rep. Walt Leger (D-New Orleans) which had become a cloned version of Harris’ bill which raised 1/2 cent of state sales tax for a half-billion dollar price tag to the taxpayer, which it sent over to the House. That bill got 64 votes, six short of the 70 necessary for passage as a new tax.
And that’s where the last-minute heroics came in. With time running out in the session and Harris’ bill going down in flames due to the Democrats bailing on it, Rep. Julie Stokes (R-Kenner), who is running for Secretary of State as soon as the legislature is done for the year, brought Leger’s bill back up for a vote.
But as the last few minutes of the session ticked away, conservative hero Alan Seabaugh (R-Shreveport) took to the floor and ran out the clock on the session before the vote could happen. The House leadership says Leger’s bill didn’t have 70 votes in any event, but Seabaugh made sure it never got the chance for a second attempt at passage.
“We’ve already voted on this bill,” he said. “And yes, I’m trying to run the clock out.” There were murmurs of protest in the House chamber, including a rather nasty outburst by Stokes, who did her statewide campaign no favors, but the House adjourned nonetheless.
After that bit of dramatic tax-killing, over in the Senate chamber the chair of the Louisiana Democrat Party Sen. Karen Carter Peterson (D-New Orleans) took to the mic in a six-minute rant on personal privilege, attacking Seabaugh as being headed for hell because he stopped a tax increase. It was one of the more clownish and immature performances of recent times in the Louisiana legislature, but nonetheless a highlight in the state’s political circus put on as the special session ended.
Edwards launched into his own rant not dissimilar to Peterson’s following the end of the session. “I am extremely disappointed in what was just a disaster that played out in the House of Representatives that was attributable to a minority of the House members and to leadership that is anything but,” he whined. Edwards also harangued against the state law requiring a two-thirds vote to approve new taxes.
What happens now? Look for Edwards to veto the budget again and to call for a third special session of the year – both actions which are likely to further melt his once-enviable approval ratings. Poll data in recent weeks isn’t publicly available but it’s widely believed that Louisiana’s voters aren’t sold on the budget deficit being the true crisis the governor has sold it as, that tax increases are poison and that Edwards’ political stock is at a low ebb as a result of his constant demands on the legislature. He’ll have one more bite at a legislative session before the end of June exhausts the current fiscal year, though nobody seems to believe anything will change with respect to the tax increases he demands.
And meanwhile Seabaugh, who has been the most outspoken opponent of the governor’s tax demands since Edwards took office, said he’s off for a mini-vacation. Having saved Louisiana’s taxpayers and worst-performing economy in the country from a half-billion dollar tax increase to fund a poorly-performing $30 billion behemoth of a state government, we’d say he’s earned it.