Special session stalemate delays budget debates

State lawmakers are attempting to resolve a looming $1.3 billion fiscal cliff when temporary taxes are set to expire on June 30. The state legislature convened in a special session last week, but there is little agreement among lawmakers as to how the state's budget problems should be addressed. Republicans are pushing for changes on the sales tax side, while Democrats would rather see the state income tax altered.

The House convened two hours late on Monday before adjourning without any debate on bills that advanced out of committee Sunday evening. On Tuesday, the caucuses met behind closed doors to debate the bills and find enough common ground to get the necessary votes that will send the legislation to the Senate.

The delay came after the Louisiana Legislative Black Caucus (LLBC) proposed a new plan that involves changes to the state income tax brackets. The LLBC proposed the income tax changes at a meeting with House Speaker Taylor Barras on Monday. Barras said while he appreciated the dialogue, he did not understand why the proposal came eight days into the special session. Compressing the brackets could raise an estimated $400 million annually.

But Republicans are resisting changes to income taxes. Another proposal with little support from the GOP would eliminate itemized deductions on state income taxes, a provision typically used by higher-income taxpayers. That measure could generate about $79 million annually.

The GOP would rather see changes to the state sales tax to fill the budget hole. One proposal would extend one quarter of the clean penny sales tax enacted in 2016 as a bridge to longterm reform. That measure could raise an additional $300 million a year. But it has received pushback from Democrats who say they made a promise to voters that this would be a temporary bridge to reform, not a permanent solution to ongoing budget troubles.

Some lawmakers are pushing to continue collecting sales tax on some items that were previously exempted prior to the changes in 2016.

Governor John Bel Edwards is seeking $994 million in new revenue to offset the $1.3 billion in temporary taxes that will expire at the end of the fiscal year. State lawmakers are counting on an additional $302 million in tax revue as a result of tax changes on the federal level. But it's unclear when the Revenue Estimating Conference will recognize that change. Without any new revenue, the state could face a $994 million mid-year shortfall, which could result in massive budget reductions for the TOPS scholarship program, healthcare, and higher education.

As it sits now, there is officially $431 million in new revenue pending on the House calendar. If all of the revenue-generating measures pass both chambers, that would still leave a $261 million shortfall, making more budget cuts necessary.

Other items on the table during the special session include creating a budget transparency website and a new spending cap. Medicaid-related changes are also up for discussion, including establishing a work requirement for the healthcare program. That proposal has support from the Edwards Administration, including Secretary Rebekah Gee of the Louisiana Department of Health, who called the measure a "holistic bill" that her department has worked with the legislation's sponsor to put together.

It's unclear which measures can win the bipartisan support needed in both Houses to pass. The special session must end March 7.

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