Sarah Gamard
Senate President John Alario, R-Westwego, presided over a 33-6 vote on Sunday to approve a sales tax compromise between Gov. John Bel Edwards and the House.
In a 33-6 vote Sunday, the Senate sent a sales tax bill to Gov. John Bel Edwards that could end the financial instability that has dominated discussions at the Capitol and led to seven special sessions since he took office in 2016.
The bill, which represented a compromise Friday between Edwards and House Republicans, will extend 0.45 of a cent of sales tax that was scheduled to expire on July 1.
That will lower the state’s portion of the sales tax to 4.45 percent from 5 percent now. But by not letting the full penny expire, it will raise $463 million to fully fund TOPS scholarships, higher education and state health services and reduce cuts in other areas. The extra 0.45 of a cent will expire in 2025.
Edwards and House Republican leaders also have grappled for control over the budget process, and the Senate voted 39-0 Sunday to pass a supplementary budget bill after acceding to House demands about how some of the spending choices might eventually be made. The House then ratified that deal 88-7, ending the special session.
The Senate tax votes came after months of intense infighting between Edwards, who initially warned that the state faced a $994 million budget shortfall, and House Republican leaders, who want to shrink the size of government, contended that the budget hole was much smaller.
A deal ended up being possible partly because changes in federal tax laws created a windfall in state tax collections, reducing the projected shortfall by nearly a third, and lawmakers agreed to apply tens of millions in damage payments from the BP oil spill to the budget.
In the end, there will still be cuts in the budgets for corrections, juvenile justice and other programs. But most Democrats and Republicans agreed that they were manageable.
Edwards has said that the state was in a $2 billion financial hole when he took over as a result of income-tax cuts by former Governors Kathleen Blanco and Bobby Jindal and Jindal’s expansion of tax exemptions for corporations that the state is still digging out of.
But in opposing the sales tax bill Sunday, Sen. Sharon Hewitt, R-Slidell, argued that taxpayers had been left out of the conversation.
Hewitt pointed to the federal tax changes, which lower the value of deductions that wealthier taxpayers can claim on their state returns, and said they would increase the tax burden on Louisiana residents by $350 million. She said the sales tax extensions and other changes would add nearly $500 million more.
“Spoiler alert to the taxpayers – we are raising your taxes another $850 million in this year,” Hewitt said.
Hewitt criticized Edwards for expanding the Medicaid program without considering other vital state services and for letting the state budget grow to its highest level.
She also chided both the governor and fellow legislators for not making broader reforms in the state’s tax structure over the last two years, as both sides had talked about doing when they added the temporary extra penny sales tax in 2016.
“As long as we continue to solve long-term expenditure problems with short-term solutions like tax increases, we will never solve our state’s fiscal challenges,” Hewitt said.
Sen. J.P. Morrell, D-New Orleans, responded to that, saying: “It boggles my mind that some come down here and talk about taxes like this was the first thing we went to – this was the last line, ladies and gentlemen, we tried everything else.”
“We’ve had several opportunities where this body tried to do tax reform,” Morrell said. “There’s been at least two instances where I’ve had bills that would have saved the state a tremendous amount of money, but they were killed in the Senate Finance Committee by some of the same people who are going to vote no today.”
Sen. Karen Carter Peterson, D-New Orleans, said Hewitt’s comments were “offensive.”
Sen. Norby Chabert, R-Houma, said he liked that the extra sales tax would not expire for several years.
“The reason why the budget is so big is that we have so many people in abject poverty,” Chabert said. “We need to grow our economy – our economy’s broken.”
The compromise bill was sponsored by Rep. Paula Davis, R-Baton Rouge, in the House, and Sen. Jack Donahue, R-Mandeville, presented it to the Senate.
In his closing comments on the bill, Donahue drew applause from other senators when he said, “I’ll be damned if I’m going to cut $100 million out of education for the state of Louisiana when I know that’s what we need in this state to make it what it can be.”
“Nobody had a better solution,” Donahue added.
Hewitt and fellow Republicans Ryan Gatti of Bossier City, Beth Mizell of Franklinton, Jonathan Perry of Kaplan and Neil Riser of Columbia were joined by Democrat John Milkovich of Shreveport in voting against the tax bill.
