So What Are The Dimensions Of The Current Budget Fight At The Louisiana Capitol?

We can start off this discussion with a video. Here is State Rep. Paula Davis (R-Baton Rouge) delivering what was billed as the Republican response to the speech Gov. John Bel Edwards gave at the Capitol to open the third special session of 2018 yesterday…

Davis addresses the claim that what they’re fighting over at the Capitol is a small number, because she’s reportedly the author of what’s being billed as THE Republican compromise bill. It hasn’t hit the legislature’s web site yet, but Davis was passing around a co-author sheet on the House floor yesterday for a bill which would renew 4/10ths of a penny of the state sales tax and remove some exemptions from that tax. We don’t know what Davis’ penny-cleaning would do for the state’s coffers, but what we do know is that a 4/10ths renewal of that “temporary” one cent of the state sales tax carries a fiscal note of $363 million per year.

And we also know that the number Edwards is demanding is now $507 million. We know this because there are three bills already filed – one by Rep. Terry Landry, who is bringing the “official” Democrat/Edwards administration bill, one by Republican Kenny Havard and one by Democrat Walt Leger – which carry a fiscal note of $507 million. We got to $507 million rather than the $648 million Edwards was demanding in the previous special session because of a bill by Rep. Katrina Jackson raising $33 million in taxes based on changes in the state’s treatment of tax liability generated in other states, the agreement to spend $53 million in BP settlement money in the state’s general fund this year, and $55 million in cuts made at the Louisiana Department of Health. And those $507 million bills all contain a half-cent increase to the state sales tax, plus removing lots of exemptions.

So if Davis’ bill is something a little north of $363 million and Landry and Leger are looking for $507 million, it might come off as a little hollow to say Republicans are fighting for more than just a tenth of a penny in state sales taxes. Nevertheless, the principle at work here is that the House Republicans want to come out of this year’s legislative battles with a victory in that the FY 2018-19 budget is actually smaller than the FY 2017-18 budget, and they believe they can do that at 4/10ths of a penny.

Of course, another way to win, although it’s a messy way to win which might be hard to message as a victory beyond the GOP base, is to blow up this session like the previous two sessions have been blown up, and by so doing force Edwards to make do with the second or third largest budget in state history without any new tax revenue. This would put Edwards in somewhat of a tough spot, as he would then have to make good on his multiple threats about evicting seniors from nursing homes, ending state management of the food stamp program and cutting loose 10,000 inmates in jails around Louisiana if he didn’t get “full funding” from his tax increase demands – or else essentially admitting that those threats were a bluff.

It would sound like an easy decision to call that bluff, as if Edwards really did follow through on those threats he’d be politically dead for re-election next year and while the Republicans in vulnerable districts might have something of a tougher re-election fight based on the way the media would report the results of a “failed” session it’s rarely the legislators who get blamed for things which go wrong in Louisiana. That’s the governor’s lot in life.

But much of the delegation is exceedingly nervous about not passing a sales tax increase of some sort. They really believe Edwards is going to address budget cuts in the most painful way possible and blame them for the results, and they think his stenographers at the Advocate, Times-Picayune and the other state’s newspapers will echo that blame. A poll done by the delegation before the opening of the regular session told them their constituents wanted a “mixed” solution which combined cuts with tax renewals, and so they’re still seeking that.

But does that mean either Davis’ bill, or Landry’s bill, or any of the other bills, can get to the required 70 votes in the House? From what we’re sitting, that is definitely not in evidence.

There is still the problem of the Legislative Black Caucus, which blew up both of the two previous special sessions by refusing to vote for a Republican sales tax bill. This continues to be true, at least in part. Strangely enough, the word out of the Black Caucus is they won’t vote for anything less than a half of a penny in sales taxes, which is a funny position to take when all along they’ve complained that sales taxes are “regressive” and disproportionally harmful to the poor and downtrodden. Most Republicans say they won’t vote for a half cent. That looks a bit like an impasse.

Don’t be shocked, then, when the Black Caucus comes up with something they’d like in consideration for voting for Davis’ bill. After all, they asked for, and received, a boost in the state’s Earned Income Tax Credit in the last legislative session as an incentive to vote for the Republican tax bill in the last session – and then proceeded not to vote for it. Having wrangled that reward for nothing, they’re sure to come up with something else they’d like this time.

And don’t be shocked when that ask doesn’t materialize until Davis’ bill, or some other instrument, passes out of the House and crosses the Capitol marble to the Senate, where it will be amended in the Revenue & Fiscal Affairs committee controlled by Sens. J.P. Morrell and Karen Carter Peterson to contain whatever that consideration is that the Black Caucus will demand.

And when the bill comes back to the House, that’s when the Republicans will be put to the question, likely in the final moments of the session. Will they be willing to swallow something they cannot defend to their constituents, who seem to be pretty adamant on social media in opposing any tax increases and might even be more so if those increases are coupled with more wealth redistribution in the bargain? Or will they reject the whole package and present a “failed” session to the voters?

And will all of this come down to about $100-150 million which is fought over as a matter of “principle?”

The fact is, we shouldn’t be where we are. Edwards should have come up with those cuts already and done away with this issue so that a Republican bill for less than 4/10ths of a penny would have given the state the revenue he wants. But he didn’t, and we’re back to brinksmanship at the Capitol over the budget – while Louisiana’s economy, the worst-performing in America, limps along and the state’s outmigration problem returns with a vengeance.

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