SADOW: Louisiana House GOP Can Leverage Sales Tax Cut To Its Advantage

At its commencement, who knew that major fiscal decisions in the 2019 regular session of the Louisiana Legislature would turn on early childhood education funding, to partisan advantage or disadvantage?

As the session winds down, that dynamic increasingly has become obvious. And it focuses all on the widely-accepted notion among legislators, joined by Democrat Gov. John Bel Edwards, that money must increase for early childhood education activities.

Part of this perception has arisen from a desire to replace an expiring federal grant, added to a growing belief that reimbursement rates and capacity must rise in the state’s Child Care Assistance Program, which subsidizes access to child care/early childhood education resources for lower-income families, to make it more widely available. Altogether, the increases in state commitment would total $18 million in HB 105, the current version of the fiscal year 2020 operating budget.

However, besides a matter of budgeting, the issue has influence two other major fiscal initiatives. One involves HB 599 by Republican state Rep. Lance Harris, which would gradually repeal the 0.45 percent sales tax hike renewal backed by Edwards and acceded to by the Republican-majority Legislature last year. Currently, it would end in 2025, but the Harris bill as amended allows shunting 0.05 percent or roughly $43 million a year to early childhood education throughout that period.

Ironically, that dedication came at the behest of Democrat state Rep. Walt Leger, a floor leader for Edwards who opposes this tax relief. It may have come as a way to give some legislative Democrats cover to vote for a tax cut and signal support for the object of the spending, with the bill next headed to the Senate’s Revenue and Fiscal Affairs Committee. It almost certainly will die there, given the Alice-in-Wonderland situation of a Senate with a significant Republican majority yet having several key committees stacked with majorities of Democrats and Republicans-in-Name-Only including this one, courtesy of GOP Sen. Pres. John Alario having sold out to the agenda of Edwards.

Yet in the larger scheme of things, Leger and Democrats may have aced themselves, because they created a hostage in the form of that dedication – one that became more valuable when yesterday a House panel sunk SB 153 by Republican Sen. Danny Martiny, another ally of Edwards. That bill would have legalized sports betting in at least the 20 state-regulated casinos, although a committee amendment expanded that to any state-regulated place that allows gambling.

A mandate tucked into that bill would send 10 percent of state proceeds to a fund for early childhood education. Legislative staff refused to speculate on the amount of money that could raise, but if Louisiana matched annualized Mississippi numbers, that would be over $3 million yearly and could approach $5 million in subsequent years.

Regardless, the Republican-led House Appropriations Committee spiked it. That same committee forwarded HB 105 to the Senate, which most controversially gave elementary and secondary education employees a larger pay raise than Edwards had sought, but not through the Minimum Foundation Program as he preferred, while not adding on $39 million in higher spending on that governmental function, also contrary to Edwards’ preference.

The Senate Finance Committee, which does have a GOP majority, elected to follow Edwards’ wishes on the elementary and secondary education increases: pay raises totaling $101 million and the extra $39 million, snipping off $19 million of spending in other areas to equalize and shifting the remainder to the MFP. As the chamber already had approved of the MFP preferred by Edwards, it had little choice.

But House Republicans now have the upper hand on this item. They can refuse to pass the MFP as proposed, so then no raises happen unless the Senate agrees to the House’s HB 105 and MFP preferences (the latter of which would require fact action by the Board of Elementary and Secondary Education).

And, this puts them in position to bargain their position away in order to save HB 599. In other words, the House GOP can dangle the Edwards version of elementary and secondary education spending and much extra money for early childhood education (maybe reducing it somewhat by diverting some dollars to elementary and secondary) in exchange for HB 599. Otherwise, there is no significant extra early childhood money and no pay raises or additional spending on elementary and secondary education, with the House GOP dictating no $39 million without the $43 million and the cut.

That deal – $82 million more to education, pay raises, and a tax cut – enough legislative Democrats in an election year perhaps can’t afford to pass up, despite Edwards’ objections. They might even bargain to get SB 153 back, which shortly after its defeat was subject to rarely-used extreme measures to resuscitate it by attempting to attach it to HB 587 by no-party state Rep. Joe Marino, the bill that actually levies the tax (which fell woefully short of passage in the latest attempt yesterday).

Republicans shouldn’t be afraid to use more early childhood education spending – which they want – to leverage through the tax cut. Edwards then has two choices, neither palatable: veto a tax cut while running for reelection or let it become law and face criticism on the campaign trail that he inflates the budget while cutting revenues to set up the state for future budgetary problems. Republicans can find future budget cuts to offset because they are willing to jettison other spending, but not Edwards – if he can manage reelection.

Interested in more news from Louisiana? We've got you covered! See More Louisiana News
Previous Article
Next Article

Trending on The Hayride