With less than half an hour remaining until deadline, Louisiana legislators passed the $24 billion state budget Thursday after many passionate debates and difficult compromises were made within and between both chambers. If Gov. Bobby Jindal approves, this bill, House Bill 1, along with others proposed, will take effect on July 1.
The original budget contained a $1.6 billion shortfall, which threatened the funding of supplementary programs such as higher education and healthcare. State legislators had their work cut out for them as they tried to bridge the gap that the deficit caused. In order to address the lack of funds, a number of taxes and exemptions were put on the table to increase revenue.
Higher education came out almost entirely in the clear after the budget was proposed. The fear of an 82 percent cut is gone, and replacing it is an almost identical amount of funding prior to the session. Higher education came out on top of what was originally a bleak session.
Unfortunately for college students though, there remains the possibility that the TOPS fund will be capped. Additionally it will be easier for higher education institutions to increase fees.That means that students are responsible for more of their own tuition costs. Jindal can choose to veto this proposed cap, but his decision currently remains unknown.
One of the taxes that was increased in an attempt to bring in more state revenue was the tax on packs of cigarettes and e-cigarettes. Previously, the tax was 36 cents. Upon the passage of House Bill 119, the tax increased to $1.54, active July 1. Most of the debate over the bill’s passage centered around how much the tax should be increased, and the final tax hike ended up being higher than either chamber originally aimed for. The increase is projected to add $188 million to state revenue over the course of the year. The rise of tobacco taxes was partially responsible for lightening the load on higher education budget cuts. As time was winding down, proposing a raise in taxes became unavoidable, according to Sen. Danny Martiny, R-New Orleans.
“We are raising taxes because we have to. We are a billion-six in the hole. We can’t cut it anymore,” Martiny said.
Along with the cigarette tax increase, the tax subsidies on the film and television industries were capped at $200 million. House Bill 829 added a financial ceiling for how much money the state can give back to filmmakers. In addition, House Concurrent Resolution 8 is expected to increase funds by $103 million by making businesses and utility providers pay a one-cent sales tax that they were exempt from prior to passage.
The most controversial bill in the debate over higher education was Senate Bill 284. Otherwise known as “SAVE,” the bill, sponsored by Sen. Jack Donahue, R-Mandeville, proposed adding a $1,500 fee on top of current tuition. Later on in the fiscal year, the students would theoretically get a credit back of the same amount. Sen. Eric LaFleur, D-Ville Platte, and Rep. John Edwards, D-Amite, had strong words to say about the bill, and the repercussions it could have before the bill was passed.
“The SAVE bill is ridiculous, it’s misleading, it’s deceptive, it’s a sham, and it makes a mockery of how we do business here,” LaFleur said.
“If a student came up with this in creative writing, they’d get an A. If they made it up in political science, they’d get an F,” Edwards said.
Upon original displeasure with what the bill did, the bill was later broken up into three parts and attached to different bills, which contain pressing content themselves. One of those bills was Senate Bill 93, a bill that said students who receive state help with paying for nonpublic education could not receive a $25 credit from the state. After much debate in both chambers, the bill was passed through in a Senate landslide with a much closer battle in the House of Representatives.
The leading advocate in the Senate against the SAVE bill was Sen. Karen Peterson, D-New Orleans.
“If you vote for this, it will be one of the worst votes you ever take in your political career,” Peterson said to the chamber during the debate.
Many higher education officials including LSU President F. King Alexander were in favor of SAVE out of fear of a 25 percent cut in the higher education budget.
After the decisions on Thursday, many tax credits for businesses are being removed from legislation. The industry that took the brunt of the bill was film. Most of the incentive for studios to film here were the tax credits and tax cuts they received. Without those extra incentives, film in Louisiana may take a heavy blow.
House Bill 817 added an extra $5 million back to the budget by ending the solar tax credit program.
House Bill 1, the budget bill, was passed through both chambers surrounded by controversy. The budget as it stands now achieved all of the goals the Capitol set out for the year, but most of the fixes are only temporary. Next year the legislature might have to reevaluate most of the bills passed during this past legislative session. At the time the final vote in the House came, there were still three outstanding bills that had yet to be voted on. Those bills had a direct effect on the budget, as there was still a $171 million deficit on the table. Even with the time winding down, representatives debated whether to vote on the budget with the fate of three more bills yet to be determined. Peterson warned the chamber to dig deeper to finally propose a budget that would last.
“This budget reflects so many new taxes and fees on people without a sustainable course for Louisiana to move forward,” Peterson said on the Senate floor Monday. “At what point do you say ‘no’ to irresponsibility?”
The budget was crafted in an attempt to keep tax raises to a minimum in order to avoid a veto from Jindal. In the event the budget is vetoed, the legislature must wait until July 21 to meet again to attempt a super majority of two-thirds to overturn the veto. If the legislature fails to gain the super majority, they must create a new budget proposal.
LaFleur said he is confident that the legislature will successfully join forces if needed to override a gubernatorial veto. However, with the pass of the SAVE fund, that might not be necessary.