Louisiana budget special session collapses without tax deal

Louisiana budget special session collapses without tax deal

Louisiana budget special session collapses without tax deal

BATON ROUGE, La. (AP) — Louisiana lawmakers failed to reach a tax deal by Monday’s deadline, cratering their second special session this year without agreement and passing a budget that would force deep cuts across state government next month.

The House and Senate couldn’t agree on what level of taxes to raise in the budget year that begins July 1, and the House ended at midnight in meltdown as lawmakers tried to scramble to bring up a sales tax bill that was opposed by House GOP leaders.

READ MORE: “Yes, I’m trying to run the clock out.” Special session collapses in dramatic final minutes

Another special session seems all but certain, but it was the second special session on taxes to end in stalemate this year.

Gov. John Bel Edwards called both in hopes of closing a budget shortfall that is now only weeks away. But disagreements about the size of the problem, the amount of money to raise and the approach to take couldn’t be bridged in the final hours before a midnight deadline.

Senators passed a $29 billion budget proposal that relied on $540 million in additional taxes. House lawmakers backed a lower spending plan that assumed $400 million in taxes.

Edwards had wanted lawmakers to replace $648 million in temporary taxes expiring July 1. But the Democratic governor acknowledged he couldn’t win support for the full amount in the Republican-led Legislature, and backed the Senate proposal in the session’s final days.

“Obviously it’s not everything that I asked for,” he told supporters. “But it is a really decent resolution to the budget problems we have.”

Still, some factions dug in their heels in opposing different parts of the proposals.

Lawmakers were in their sixth special session since Edwards took office in 2016, all of the sessions involving Louisiana’s continuing financial problems, which have stretched over a decade. And they appear to be facing a seventh one.

READ MORE: Lawmakers lash out after special session collapses

Nearly $1.4 billion in temporary taxes, mainly sales taxes, passed by lawmakers in 2015 and 2016 are expiring when the new financial year begins. Increases in other tax types lessen the gap, leaving Louisiana estimated to bring in $648 million less in general state tax dollars next year.

The centerpiece of tax negotiations involved the expiration of a 1 percent sales tax hike enacted two years ago that would drop the state sales tax rate to 4 percent in July. The House initially voted to renew one-third of the expiring tax, to have a sales tax rate of 4.33 percent on July 1. The Senate backed a 4.5 percent rate.

The difference was 17 cents in sales taxes on every $100 of spending.

The two chambers also disagreed on the level of sales tax exemptions to continue. And Democrats, particularly members of the Legislative Black Caucus, wanted a tax break program for the working poor expanded to offset some of the sales tax’s impact.

Both the House and Senate agreed to scale back an individual income tax break that Louisiana allows for taxes paid to other states, raising about $34 million for next year.

Edwards vetoed an earlier version of the budget that reached his desk that is similar to what won final passage Monday night, saying the cuts were too catastrophic to enact.

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Lewis Rice

Real Estate

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