Tough Session For Business
The business lobby notched a small win on the final day of the legislative session when a handful of bills targeting Louisiana companies and the taxes they pay were given a three-year expiration date. But that move only slightly sweetened what was an unsavory end to a painful two months.
From the day the session convened, on April 13, to the day it adjourned on June 11, business and industry seemed more as if it were on the table than at the table.
After several years of mid-year budget cuts; money redirected from state reserve funds and privatization efforts; lawmakers felt they were left with few other choices than to go after business to fully fund health care and higher education.
As a result, many in the business community feel as if they have no other choice than to begin looking more seriously at the fall ballot, with an eye to electing a friendlier Legislature — and in some cases maybe serving up retribution.
The big threat, however, is that incumbent lawmakers will not only have to face additional scrutiny from the usual business groups with political action committees, but all of the business-related players with vested interests at the Capitol.
Businesses are positioned to receive a cut of 25 percent in the state tax credit they receive for the amount of local inventory taxes they pay; a suspension of a 1 percent exemption on utilities; limited exemptions on horizontally drilled wells; smaller corporate income tax exclusions; a 20 percent reduction in certain tax rebates; and an elimination of the carry-back option for net operating loss deductions for corporate income tax.
The problem heading into the session, according to several lawmakers and the Jindal Administration, was over the past seven years the state had chosen to give away more tax credits, incentives and rebates than there were revenues coming in to sustain the government.
House Speaker Chuck Kleckley, R-Lake Charles, said a careful review should have been carried out on the tax giveaways this session but lawmakers ran out of time.
“We’ve seen some numbers that it’s a $2 billion annual cost to the general fund. Now take that and plug it into the shortfall we had,” Kleckley said of the $1.6 billion shortfall. “I’m not debating whether they’re bad or good, but I’m saying that it’s an area we need to work on.”
The governor, who supported the tax giveaways in the past, agreed. “The state has also been funding large spending expenditures to corporations through corporate welfare — free from the taxpayer — and that contributes to the shortfall,” said Shannon Bates Dirmann, the governor’s spokesperson.
Business and industry has been the biggest beneficiary of these substantial tax breaks in recent years. But the tide turned sharply this session. Looming larger than the conflicts between the Legislature and the Jindal Administration was the ever-present funding choice lawmakers repeatedly had to make: higher education or business.
Clearly, higher education won that battle and now business interests are wondering just how hard they’ll go charging into the fall elections. Some lawmakers are meeting the threat with equal parts trepidation and disbelief, noting they’ve passed one tax break after another in recent years to help business.
“This session will forever change how we do credits and rebates here,” said House Appropriations Chairman Jim Fannin, R-Jonesboro. “We try to help business and they have chosen to take that as meaning forever and then calling it a tax increase.”
That they are. The Louisiana Association of Business and Industry estimates that companies large and small will have to pay billions in new taxes over the next three years. LABI president Stephen Waguespack said in regard to the fall elections that his group will soon “re-evaluate, re-focus and start meeting with our (political action committees). Ninety percent of the tax increases passed this session have been on business.”
LABI is already in discussions to scrap its PAC rules that guarantee an endorsement if lawmakers vote with the organization 75 percent of the time. That would allow the PAC committees to consider every race individually, regardless of legislative votes.
Dawn R. Starns, state director of the National Federation of Independent Business, said her group is sticking with its 70 percent two-year voting threshold. “But with the votes they’ve taken this session, several will likely take some hits in our scoring,” she added.
Like LABI and NFIB, the Louisiana Mid-Continent Oil and Gas Assoc. was expected to be heavily engaged in elections this year. But LMOGA will spend more this fall than ever before ó a strategy that was formulated before the session convened. “We will look at the races in the fall and dig deeper for support of oil and gas,” said LMOGA president Chris John. “We’ll have a clear menu of bills to review from this session for sure.”
The Louisiana Oil and Gas Assoc. is in the same boat, as is the Louisiana Chemical Assoc. The Louisiana Manufacturers Political Action Committee, which LCA is closely aligned with, ran radio ads statewide asking voters to urge lawmakers to kill legislation that would suspend exemptions on business utilities.
It didn’t halt the legislation and lawmakers say they felt the pressure from LCA most acutely during the session. Should LCA lead a charge this fall, other business organizations on the fringes of this session’s debate might be encouraged to follow suit.
Couple this with any reaction the Louisiana Republican Party might have to GOP lawmakers supporting taxes, and the lumps incumbents will surely take from their announced competitors, and the 2015 election cycle could bruise them.
Last-Minute Vote Ruled Invalid
A measure to significantly alter the way in which the House elects its speaker — the chief presiding officer in the lower chamber — was passed with no advance notice and no debate during the waning moments of the recently adjourned regular session. But don’t expect it to take effect any time soon — or ever, really.
With less than two minutes remaining in the session on June 11, the day of final adjournment, the House voted on a motion to suspend its rules and simultaneously adopt 10 different resolutions, including the one addressing how the speaker should be elected in future terms.
While some in the House were unaware that a vote was taking place, Speaker Chuck Kleckley, R-Lake Charles, managed to say “without objection” after he asked the body if anyone opposed the procedural move. He made the statement with enough certainty that those paying attention believed the deal was done.
They were wrong. It wasn’t until later that staffers discovered the maneuver had occurred after the session’s 6 pm deadline. That was the conclusion of House Clerk Butch Speer.
Few, including Speer, can remember the House ever lumping together so many resolutions for such a vote. And since the vote came during the session’s final moments, in a duration of time that could only be counted in seconds, lawmakers were unable to investigate the resolutions they were being asked to vote on; many seemed unaware there was even an opportunity to object.
Most of the resolutions, HR 219 through HR 226, were commendation, condolence and recognition measures — meaning they were largely ceremonial. But the others were substantive resolutions that some lawmakers would have surely wanted to debate.
Most notably, HR 228 by Rep. Jeff Arnold, D-Algiers, would have allowed for a secret balloting process for nominating a speaker of the House candidate. This was similar to a measure passed by the Senate this session.
HR 229 by Rep. Katrina Jackson, D-Monroe, was also part of the package that didn’t pass. It would have directed the state nursing board to make “limited exceptions” to the 80 percent licensure examination passage rule.
While the timing was unintentional — Kleckley was working under the assumption that the House had enough time left on the clock — the incident underscores the complaints that good government groups and others have voiced about the hectic pace of a session’s final moments. Usually the problems occur on the final day when compromise bills emerge from negotiations between House and Senate members, a process known as “conference committee.” Many lawmakers contend there’s not enough time on the session’s final day to thoroughly review the bills.
Rep. Julie Stokes, R-Kenner, said she’s working on legislation for 2016 that would limit what kind of proposals can be voted on when a session has entered its final day.
Another Paycheck Protection Bill
The biggest and loudest legislative floor debate of the session that never happened involved Rep. Stuart Bishop’s paycheck protection legislation. It would have prohibited union dues from being deducted from public payrolls.
Before it was parked, the bill had all the makings for a slugfest, with national interests ready to spend money and lobbyists being pulled in on both sides. But it didn’t have the votes on the House floor and the policy brawl was avoided.
However, Bishop, R-Lafayette, said he has begun drafting a new version for the 2016 session, should he be re-elected. “It’s going to be House Bill 4 next year,” he said, referring to the number made available for the first bill filed in a session. “I’m already working on it.”
Majority Whip Endorses Landry
House Majority Whip Steve Scalise of Metairie, one of the most influential members on Capitol Hill, recently endorsed former Congressman Jeff Landry in his bid for attorney general.
Calling Landry a “fighter,” Scalise said Louisiana voters should remember that today’s major policy fights begin on the state level.
“He is not only a strong conservative,” Scalise said, “but he’s someone who shares in Louisiana values and knows what is at stake.”
In response Landry said “our campaign is about protecting freedom, families and state law.”
He’ll face incumbent Attorney General Buddy Caldwell on the fall primary ballot. Prosecutor Marty Maley is also running.
When Vitter Surfaced This Session
In the past, U.S. Sen. David Vitter could be counted on to become an outside player in any given session — one who inserts his opinions through press releases and personal appearances. As a candidate for governor, Vitter seemed to steer clear of the 2015 session.
There was one exception. It occurred in the session’s final days — when lawmakers attempted to advance HCR 15 by Rep. Jack Montoucet, D-Crowley — to suspend for one year all of the state’s sales tax holidays.
When the resolution was brought up in the Senate on June 6, senators started pointing out the influence Vitter was throwing around on the issue. In particular, Vitter wanted senators to protect the state’s Second Amendment Sales Tax Holiday for firearm purchases.
Vitter sent an email to lawmakers, writing that the resolution “would likely have a very dramatic negative impact on Louisiana gun and sportsmen stores in particular with very little additional revenue produced from the suspension of that particular sales tax holiday.”
The timing is worth noting. Vitter held a campaign event with Gun Owners of America in north Louisiana just days before the Senate floor hearing. A campaign spokesman said the issue was brought to the senator’s attention while he was touring local gun shops during the event.
Montoucet said he saw the merit in Vitter’s argument, but made the decision on his own. “I didn’t pull the bill because of David Vitter,” said Montoucet. “I did it because it was the right thing to do.”
Concerns Grow For Pro-Tax Republicans
Some Republican lawmakers who voted in favor of tax increases this session are already worried about business interests and conservative activists recruiting opponents in their districts. But what about the Louisiana Republican Party?
“I’m sure everyone had a good reason for doing what they did,” said chairman Roger Villere. “But the party believes in smaller government and less taxes. The Republicans in the Legislature who supported increasing taxes should have looked at the budget more carefully for different ways to address the deficit.”
Villere added, “We’re not going to recruit candidates to run against them, but there are definitely some Republican seats that are vulnerable. But those Republicans made themselves vulnerable. We tried to visit with them during session. But they made their own decisions.”
For more Louisiana political news, visit LaPolitics.com or follow Jeremy Alford on Twitter @LaPoliticsNow.