Louisiana House approves sales tax renewal to avoid steep budget cuts
BATON ROUGE — The House erupted into cheers Friday after voting 74-24 to renew 0.45 percent of an expiring penny of sales tax until 2025, breaking a huge logjam and reaching a compromise with Gov. John Bel Edwards after nearly five months of intense fighting.
The bill would generate $466 million in additional revenue next year, falling $182 million short of the $648 million that Edwards had originally sought but only $42 million less than was needed to fund a somewhat reduced budget that the Legislature passed earlier this month.
Legislators said the compromise should provide enough money to fully fund TOPS, higher education, state health care services and other priorities while narrowing cuts to the Department of Corrections and payments to sheriffs for housing state prisoners.
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The House also voted 95-1 to approve a spending bill and sent both measures to the Senate.
Echoing similar comments by Speaker Taylor Barras, R-New Iberia, Edwards said he expects the Senate to pass the bill without amendments by Sunday night.
“There is no doubt that the hardest step in the process has been taken today — the one that has been most difficult to make in the past,” Edwards said after the votes.
“This plan is not perfect, but that’s the nature of a compromise,” he added. “It puts us on a more solid foundation and achieves many if not all of the goals we set out to accomplish.”
Edwards said he and Barras settled on the .45 percent compromise in a meeting Friday morning and spent the rest of the day working with their parties to ensure it would have 70 votes, or two-thirds majority, needed to pass the House.
“I think the most important thing is the people of the state of Louisiana win in the end,” Barras said in an interview.
All 41 Democrats, 30 Republicans and three Independents voted for the compromise sales tax bill, which also extended limits on certain tax exemptions for businesses. Twenty-four Republicans voted against it.
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Edwards had called three special legislative sessions since mid-February seeking to renew a half of a cent of the sales tax. House Republican leaders gradually gave ground from their original insistence on limiting the extension to one-quarter of a cent and then one-third of a cent.
Barras cautioned Thursday night that the two sides were deadlocked between Edwards’ continued insistence on a half cent and a revised GOP offer to renew four-tenths of a cent of the tax.
House members agreed on Friday to split the difference after Edwards and Barras struck that deal.
Rep. Paula Davis, R-Baton Rouge, presented the bill to renew 0.45 on the House floor.
“Compromise is never easy — not all Republicans are happy, not all Democrats are happy, not all Independents are happy, but we are going to go home today making our constituents happy,” she said.
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“Not budging is not an option,” Davis added in pleading with her fellow members.
Edwards, the only Democratic governor in the Deep South, is up for re-election next year. He would have suffered a big setback if he had failed to get much of what he said was needed through the Legislature after calling it into three special sessions.
Many Republicans in the House also took a political risk in bucking conservative groups, like the Louisiana chapter of Americans for Prosperity, an organization that is funded by oil billionaires Charles and David Koch and was opposed to any sales tax extension.
Asked about the political meaning of Friday’s votes, Barras said “it was important to the Republicans that we not overtax anyone if we could help it.” He added that to do that “you’ve got to get government as efficient as you can so we’re not continuing to ask for new money every year.”
“For the Democrats,” he continued, “I think it was to maintain the services that they think are important to their people in their districts.”
Renewing half a cent would have raised $510 million a year — enough to fund a budget bill with some cuts that the Legislature passed earlier this month. Extending four-tenths of a cent would have generated $424 million, requiring $86 million in additional cuts.
By raising $466 million, the compromise bill will reduce those cuts to $42 million.
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Davis, a first-term representative, emerged as an unlikely player to sponsor the compromise bill.
She originally proposed the four-tenths of a cent extension, and after the Democrats led a push to amend her bill to extend a half a cent, it failed on Thursday, winning only 60 of the 70 votes needed for passage.
A group of at least 20 House Republicans refused to vote for any sales tax renewal in any of the three special sessions. Some of them have said they believe Louisiana does not have a revenue problem, but a spending problem that can be fixed by the administration allocating funds more efficiently.
Rep. Valarie Hodges, R-Denham Springs, said Friday that she was “ticked off” Davis’ bill had passed and that members refused to let another anti-sales tax Republican, Rep. Raymond Crews of Bossier City, present an amendment to the bill.
As Crews headed to the podium to present the amendment, many members stood and met him with boos.
“We don’t need no hero today,” exclaimed Rep. Barbara Norton, D-Baton Rouge, referring to a filibuster by Rep. Alan Seabaugh, R-Shreveport, that delayed a final sales tax vote in the second special session.
“This is the Louisiana House of Representatives; you don’t act like that — shouting and hollering,” Hodges said.
Hodges added that “there was no need” for the sales tax to last seven years either because of the recent Supreme Court ruling that will provide additional revenue for Louisiana.
The high court made a decision Wednesday that would allow states to require internet retailers, including those out-of-state, to collect sales taxes that would raise additional state revenue.
But before enacting a law requiring the tax, Louisiana must first make reforms to meet criteria listed within the Supreme Court’s majority opinion that “prevent undue burdens on interstate commerce.”
“They just keep dividing and dividing and dividing,” Rep. Blake Miguez, R-Erath, said about the the most recent compromise number, repeating his vow to vote against any revenue raising measures. “I’m not raising taxes on my constituents back home. It’s time government learned to live within its means.”
But Rep. Terry Landry, D-New Iberia, a member of the Louisiana Legislative Black Caucus, said that in the end, “$42 million in cuts is a lot better than $84 million in cuts or $500 million in cuts.”
“There are some winners and some losers,” he added. “Hopefully the economy will get better, and somewhere along the line maybe the Revenue Estimating Conference can find some money and we can restore some of those cuts.”