House Republicans resisting governor’s call for new tax to plug budget hole, setting table for a rollicking debate

When the Louisiana Legislature approved this year’s state budget in June, just about everyone agreed it was actually far out of balance — everyone, that is, but Gov. Bobby Jindal, who proclaimed it a successful day and announced his campaign for president two weeks later.

With Jindal gone, newly minted Gov. John Bel Edwards is warning that state lawmakers can no longer employ the short-term fixes and accounting tricks to keep state government operating that were a hallmark of the Jindal administration, particularly under his budget director, Kristy Nichols.

Edwards has called a three-week special session that begins Sunday to deal with what he says is a $940 million shortfall during the fiscal year that ends June 30. That means state lawmakers must move quickly to cut spending and raise taxes, Edwards told a statewide television audience Thursday night. If they don’t, he added, the disabled will lose state care, and public universities may have to shut down. Even next year’s LSU football season could be sidelined, he warned, in what would be a worst-case scenario.

“These are not scare tactics,” the governor said from his fourth-floor office in the State Capitol. “This is reality — an unstable state budget will not only hurt children and working families in our state; it will devastate communities, businesses and local government as well.”

But Republicans in the state House don’t see things quite the same way.

Egged on by bloggers and a partisan-minded state party, many Republican House members have been saying they will oppose any tax measures. Topping their grievance list: Edwards’ proposal to raise the state sales tax by 1 cent, a move that would raise $216 million in quick cash during the final three months of the fiscal year.

Edwards is asking lawmakers to approve a series of one-time fixes, spending cuts and tax increases that would allow state government to keep providing its normal services through June 30. Of the $940 million that is needed, perhaps $200 million would come from cutting spending, $200 million from a settlement with BP, $128 million from the rainy day fund and perhaps $400 million through various tax increases — on cigarettes, alcohol and businesses — besides the sales tax.

State senators, led by Senate President John Alario, seem amenable to following Edwards’ lead.

But Alario, R-Westwego, a canny legislative veteran of 44 years, is preparing contingency plans in case House Republicans do not agree to the revenue-raising measures sought by Edwards. One possibility: a special fiscal session that would run concurrently with the regular legislative session that begins March 14 and that must deal with a separate $2 billion deficit for the next fiscal year.

The additional special session would be needed for this year’s problem because lawmakers cannot raise taxes during the regular session in 2016. Alario said he wasn’t sure, however, if the Legislature can hold two sessions at the same time because it hasn’t been done before.

When legislators left Baton Rouge last June, they acknowledged the looming deficit but said they were glad they had passed a budget that at least temporarily prevented potentially dire cuts to Louisiana’s universities and public hospitals.

But one Republican candidate for governor, then-Lt. Gov. Jay Dardenne, said the budget provided enough funding for only six months, while a Democrat — Edwards — promised to call a special session after taking office to deal with the budget mess.

The two men are now working together, with Dardenne — who endorsed Edwards in the runoff over Republican U.S. Sen. David Vitter after finishing fourth in the primary — serving as the state’s chief budget officer.

“There are no magic wands,” Dardenne said in an interview. “If there were any easy fixes, they would have been done.”

Dardenne pointed to one idea offered by conservatives, including state Treasurer John Kennedy: unlocking so-called statutory dedications, programs that get funding automatically each year without going through a regular budget review. Unlocking the “stat deds,” as they are known among insiders, would save up to $440 million, Kennedy has said in recent days. (Kennedy is running for the U.S. Senate seat Vitter is vacating.)

But Dardenne pointed out that the “stat deds” actually pay for state programs used by people throughout Louisiana. So while it might allow the state to reallocate money, the reallocation would come at the expense of another state program. For example, one $2 million fund is dedicated to the Louisiana Center for the Blind in Ruston. Another $21 million funds the State Fire Marshal’s Office. If those dedications were ended, the state could reroute the money to other needs, but it would mean no more fire marshal and no more Center for the Blind.

“Anyone, including John Kennedy, who says the solution to our present budget deficit is simply to use stat deds is either grossly misinformed or purposefully politically disingenuous,” Dardenne said.

During the campaign and since he became governor, Edwards repeatedly has said Louisiana’s problems require a bipartisan solution of spending cuts and higher taxes.

While his critics have been quick to characterize Edwards as a classic tax-and-spend liberal Democrat, his administration has a bipartisan aspect. Besides Dardenne, other top Republicans advising him include Robert Adley, who spent 29 years in the state Legislature until term limits kept him from seeking re-election last year, and Noble Ellington, whose switch to the Republican Party in 2010 gave Republicans control of the state House for the first time since Reconstruction. Ellington is Edwards’ chief liaison with the Legislature. Edwards also attended a Republican retreat in Lafayette earlier this month — a contrast to Jindal, who never spoke to a Democratic caucus.

But Republicans have knocked Edwards for proposing to raise the sales tax after he said during the campaign that he wouldn’t increase taxes. Edwards said Thursday night that he had no other choice because the budget shortfall was greater than anyone understood, in part because of the drop in state revenue tied to the decline in oil prices.

To balance the budget, the Edwards administration is planning to cut $28 million in programs at the state’s community and technical colleges as well as at the four-year universities — in order to maintain funding for all Taylor Opportunity Program for Students scholarships.

It would get far worse for the community and technical colleges if lawmakers do not solve the budget problem by March 9, when the special session is scheduled to end. Monty Sullivan, who oversees the colleges, said he would have to lay off 1,200 of the system’s 3,000 employees. The system already absorbed brutal cuts in state aid during the Jindal years, even as enrollment grew dramatically.

Under the state constitution, all measures to raise revenue must begin in the House, so that is where the action will be in the coming days, especially before the Appropriations Committee, which handles spending and the budget, and the Ways and Means Committee, which handles tax measures.

State Rep. Neil Abramson, D-New Orleans, the Ways and Means Committee chairman, said he hopes to hold hearings on the tax measures during the first week but noted on Friday that no legislators had yet filed the administration’s tax increases.

“I have no interest in delaying things,” said Abramson, a pariah among many Democrats after he voted for state Rep. Taylor Barras, R-New Iberia, to become the next speaker rather than state Rep. Walt Leger III, D-New Orleans, who was the governor’s choice. Abramson, who represents an Uptown New Orleans district, was the only Democrat who didn’t vote for Leger in the second ballot, 56-49 vote. The committee chairmanship was his reward.

Meanwhile, state Rep. Cameron Henry, who ended his candidacy for speaker to position Barras for the job, was named as the Appropriations Committee chairman.

Many Capitol insiders believe that Henry, who is close to senior Republicans in Washington, including his former boss, U.S. Rep. Steve Scalise, has been playing a key behind-the-scenes role in organizing the House to oppose Edwards’ tax measures. “The biggest concern is that his focus seems to be on raising taxes and not really looking at long-term structural changes for state government,” Henry said.

Barras said House members are open to higher taxes but only after being sure that the governor has exhausted all possible ways to cut spending.

Neither Henry, nor Kennedy nor any other Republican has offered more than a handful of specific spending cuts as an alternative to tax increases to help solve the immediate budget crisis.

“If they are going to offer an $800 million plan of cuts, let’s see it,” said Alario, who added that he hopes that House Republicans get educated quickly on the available solutions. “This is a monumental problem.”

One of the moderate Republicans who might help craft a bipartisan solution is state Rep. Kenny Havard, R-Jackson.

“We have a lot of entitlement programs that Democrats support,” Havard said. “Republicans have given away too much money from tax programs. This is Louisiana’s problem. This is not a Democratic or a Republican program.”

Another key Republican in finding a compromise could be state Rep. Chris Broadwater, R-Hammond.

Broadwater said one Republican solution — to cut state spending by 5 percent across the board — was unrealistic. He noted that cutting 5 percent of the $9 billion in state funds in the budget would net $450 million over a full year, but there are barely four months left in the fiscal year. Besides, he added, an across-the-board cut would cost the state hundreds of millions of matching federal Medicaid dollars.

When Edwards speaks to lawmakers Sunday afternoon to kick off the special session, it will mark his first time in the chamber since June 9, when he gave his farewell address after eight years in the House and predicted he would be returning as governor.

He will be speaking to dozens and dozens of familiar faces. Many of them voted for the budget last year that he is now asking them to rebalance.

“We were part of the problem, whether we weren’t critical enough or thought it was futile to oppose the governor last year,” said state Sen. Eric LaFleur, D-Ville Platte. “Now we have to be part of the solution.”

Editor's note: This story was modified Feb. 14 to include the number of votes received by Walt Leger.

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