Louisiana lawmakers plan to head into a special session in an attempt to bridge a $1 billion deficit that stems from the pending expiration of a temporary sales tax hike and other measures.
Gov. John Bel Edwards called the session for Feb. 19 through March 7, although Republicans controlling both chambers haven’t indicated specifically what replacement revenues they would approve for the budget.
Edwards, a Democrat, said there is an emerging consensus among lawmakers that what he calls the “fiscal cliff” should be addressed. The so-called cliff occurs after June 30 when a 1% sales tax falls off the state’s books along with temporary reductions of tax credits and other incentives.
“After multiple meetings with House and Senate leadership, I feel confident that we are coming to an area of compromise,” he said. “This special session will give us the opportunity to make reforms that we all know are needed in Louisiana to stabilize our budget and tax code making it more predictable and fair for Louisiana taxpayers.”
Previously, Edwards said he would not call a special session without agreement in advance on concrete proposals. But if he and lawmakers don’t consider measures in the next few weeks, legislative rules prohibit such work during the regular session that starts March 12 and runs through early June.
The governor’s special session proclamation Friday briefly describes 17 items he negotiated with House and Senate leaders, but no bills or other details had been filed by Monday except for two GOP measures.
The first item says lawmakers will “legislate with regard to the brackets for state income tax,” while the second item says “to legislative with regard to the state sales and use tax on the sales of services.” The other 15 items are worded similarly.
Legislation that has been filed in the House, where fiscal matters are considered first, doesn’t address new or existing revenues to prop up the budget.
HB 1 would require the state treasurer to implement a so-called “checkbook” allowing website visitors to comprehensively search state expenditures.
House Concurrent Resolution 1 would lower the state’s general fund spending limit in fiscal 2019 to $13.5 billion from $14.8 billion in the current year. It requires a vote of two-thirds of members in each chamber to pass.
Two years ago, after Edwards took office facing a $2 billion general fund deficit, lawmakers made budget cuts and agreed to enact temporary revenue raising measures to give themselves time to consider budget and tax reforms.
Edwards’ proposals never moved forward in the conservative House, whose own members failed to propose their own reforms, leading to a partisan stalemate.
The inability of state officials to address the budget imbalance has led rating agencies to downgrade the state’s general obligation bond ratings by one notch. The GO bonds are now rated AA-minus by Fitch Ratings and S&P Global Ratings, and Aa3 by Moody's Investors Service. S&P and Moody’s maintain a negative outlook, while Fitch’s outlook is stable.
To meet a statutory deadline, Edwards last month released his budget recommendation paring $1 billion from the general fund, cutting largely from health care and higher education spending.
