In its first week, the special session of the Legislature, which was called to address the state’s huge budget gap, was dominated by tax issues. Tax legislation can only originate in the House of Representatives. As a result, the lower chamber gets to set the pace in the special session — at least at the beginning.
To take it a step further, tax policy almost always has to start in the House Ways and Means Committee, which places Chairman Neil Abramson, D-New Orleans, in what is arguably one of the most important positions in the 2016 special session.
A 48-year-old New Orleans resident who grew up in Gonzales and attended high school in Baton Rouge, Abramson was an all-state football standout who played in college as well. Now an attorney, he was the editor of the Louisiana Law Review. He’s clerked for federal judges and members of Congress.
He’s also one of the few Democrats in the House’s heavily Republican leadership structure; thus he can hop from one political pond to another.
“We’re all in this together,” he said in a recent interview. “Trusting the magnitude of the shortfalls, I think we all realize that the solution is going to have to be a balance of cuts and revenue.”
Abramson has been overseeing long hearings on tax bills — hearings that sometimes go into the night. But he held off on actual votes until the second week of the special session.
He said he’d been working with House Appropriations Chairman Cameron Henry, R-Metairie, and other legislative leaders to make sure his committee only takes votes when necessary. There’s little interest in passing several small tax bills when passing a smaller number might make the difference. He wants to avoid moving legislation that might die on the floor. “No one wants to take unnecessary votes,” he said.
The man with the gavel, however, is concerned that tax policy is not being approached holistically in the special session. You can expect Abramson, as he has in previous years, to bring back one of his perennial bills to address the issue in the regular session.
“I’ll have a bill to hold a constitutional convention,” he said. “We can’t keep working year to year.”
Abramson so far has six bills filed for the special session; a couple focus on lifting low-income citizens out of poverty. He wants to modify the Enterprise Zone Program to include a special credit for new employees who were previously on public assistance. And he’d like to increase the Earned Income Tax Credit — in conjunction with adjustments to income tax rates.
BP Money Disputed
Attorney General Jeff Landry told the House Appropriations Committee that there might be a chance that money connected to the BP oil spill that was meant for the current budget might not make it to Louisiana by the time the fiscal year ends on June 30.
A spokesperson for the Division of Administration, though, said executives from BP have already met with Gov. John Bel Edwards and have vowed to pay on day one. If they do that, they’d be passing on the option of waiting 90 days; so the payment could arrive in a timely manner if all goes as promised.
Still, it’s yet another spot of uncertainty in the ongoing special session, in which lawmakers are being asked to resolve a shortfall between $850 million and $940 million for this fiscal year, and a budget gap that surpasses $2 billion for the next.
The full Senate has already voted to redirect $200 million from the Deepwater Horizon Economic Damages Settlement, which is the result of the BP oil spill. The details can be found in SB 4 by Senate Finance Chairman Eric LaFleur, D-Ville Platte. It’s a key element in Gov. John Bel Edwards’ special session plan.
Taxes In Escrow Reach $13 million
The Louisiana Legislature suspended part of a sales tax exemption favored by industry last year. As a result, $13 million has been paid in protest, and the money is now being held in escrow.
In response to a request from LaPolitics, Revenue Dept. spokesperson Kizzy Payton said 479 payments have been made under protest since July, 2015. Those total payments are averaging $2.1 million a month.
With the Louisiana Chemical Assoc. appealing a decision on its lawsuit against the Legislature for passing the exemption, the legal proceedings will keep lawmakers from using the money in the current fiscal year. It could be another 12 to 18 months before the matter is resolved.
Ads May Target Lawmakers
The Committee For a Free Louisiana, which ran ads against lawmakers in December in an effort to elect a conservative speaker, will be mounting a similar campaign against legislators who support increasing the state sales tax.
“We already have the third highest sales tax in the nation,” said consultant Chris Comeaux. “For Democrats to lead the charge on this is a complete betrayal to their base.”
Caucus Targets Vote Switching
The chairman of the Democratic Caucus in the Legislature’s lower chamber has introduced a resolution that would remove the provision in House rules that allows representatives to switch, or “correct,” their votes.
Rep. Gene Reynolds, the caucus chairman from Minden, said the special session that just convened will have too many contentious issues and high-profile votes for this practice to continue.
“I watched last year when we were doing [tax] measures, and I saw time after time people would change their votes,” he said in an interview. “If the tax bill had enough votes to pass, and they supported it, they would change their votes [later] to ‘no’ so they could go home and do their song and dance.”
Under House rules, a representative can change their vote on a previously debated topic as long as they request to do so — publicly; at the microphone — on the same legislative day they cast the vote. That means a representative can vote “yes” on a bill first thing in the morning and then switch the vote to “no” at the end of the day — just hours after the original vote was cast.
“You should be studying these issues before you vote and then standing by your vote,” said Reynolds.
The proposal can be found in HR 1, which has been filed for the special session. It is pending a hearing before the House and Governmental Affairs Committee.
Lawmakers have been charged with solving a budget shortfall for the current fiscal year that’s somewhere between $850 million and $940 million; in addition, they will be obliged to bridge a budget gap for the next fiscal year that surpasses $2 billion.
House Freshman Have Committee Clout
When it comes to the money committees in the Legislature’s lower chamber, there’s a lot of new blood.
There are eight true freshmen on the House Appropriations Committee and six freshmen on the House Ways and Means Committee. These are the largest term-starting totals many longtime Capitol-watchers can recall.
A group of freshmen played a key role in getting House Speaker Taylor Barras, R-New Iberia, elected. But the leadership said in recent interviews that the internal election had nothing to do with the assignments.
Instead, lawmakers contend several factors played into the decisions. For instance, a number of third-term representatives who won’t be up for re-election in 2019 were given chairmanships, while most others, knowing the stress and headaches involved, didn’t want to have anything to do with the money committees this term. That sentiment was shared by many second-termers as well.
With a massive turnover expected in four years due to term limits, Barras also wanted to make sure that the House would have some experienced budget and tax handlers in 2020.
Democrats, who are unhappy with some of the appointments, insist they were made to stack the money committees with conservative votes. In some respects, the appointments show how fractionalized the Republican Party is in the House, with conservatives complaining that the right kind of conservatives weren’t chosen in some instances.
Any which way you cut it, House freshmen are in a position to make a true impact. Should they get organized and decide to vote as a bloc, they could create a new element of politics in the lower chamber.
But when it comes to the Ways and Means Committee, where the real pressure will be applied, some are wondering if the new members know what they’ve gotten themselves into. The Ways and Means Committee is the first stop for all tax-related bills.
Kennedy Becomes Major Session Factor
As he has in previous sessions, Treasurer John Kennedy plans to be an active player in budget and tax negotiations this session.
He’s pushing his own proposals, second-guessing the administration’s tax plan and playing the role of fiscal watchdog. He’ll be the usual thorn-in-the-side for the Division of Administration, he admits, and he’s not making any apologies about it. “It’s the spending, stupid,” he said in an interview.
Kennedy is circulating a list of 165 instances of government spending to lawmakers and others. He argues that a majority vote can do away with them and raise $480 million.
Administration officials claim the dedications, as they stand today, would only generate a fraction of that amount; they are in favor of reducing some of those funds, which concern fees from various groups for dedicated services, ranging from pet overpopulation to artificial reefs.
Kennedy also wants to do away with a large number of state consulting contracts. The administration of Gov. John Bel Edwards is open to doing this on some level, but it questions Kennedy’s broad approach on the issue.
“I understand why the governor wants to scare everybody,” said Kennedy. “I’ve seen governors do that in the past. It’s to pass taxes.”
In his special session-opening speech, in a thinly veiled reference to Kennedy, who is running for the U.S. Senate, Edwards said, “Let’s ignore the self-serving voices of candidates running for office. After all, that’s what got us in this mess.”
Edwards added in his speech that cuts alone won’t solve Louisiana’s budget woes; that taxes will be needed as well.
“Now, I am mindful as I address this chamber that we will not agree on every solution,” Edwards said. “There are some that will tell you we have a spending problem; that simply ‘tightening our belts’ will eliminate this historic deficit. But let me be clear — we can’t just cut our way out of this crisis.”
Kennedy said he’s working with lawmakers on legislation. He plans to be at the witness table during the session.
“I’ll be there,” the treasurer said. “I don’t want to intrude, but I am going to be active. We need spending reforms, not new taxes. We are not one tax increase away from prosperity.”
Teacher Groups Unite
As they did last election cycle, the leaders of Louisiana’s two largest public education unions are joining forces for the special session and sharing resources.
The Louisiana Federation of Teachers and the Louisiana Assoc. of Educators are operating as one — maybe not on paper, but definitely strategically. This is a trend worth keeping an eye on.
“We can accomplish far more together than we can by remaining divided,” said LFT president Steve Monaghan.
Supreme Court Race Shapes Up
In the race to replace Supreme Court Justice Jeannette Knoll, the field is shaping up just as it was predicted to by politicos and pundits more than a year ago.
Judge Jimmy Genovese, who serves on the Third Circuit Court of Appeal, made his campaign official. He joins Judge Marilyn Castle, chief judge of the 15th Judicial District Court, in the early field. Both Castle and Genovese are Republicans.
There’s already a great deal of interest in this race. The Louisiana Assoc. of Business and Industry has been rallying around Castle for some time.
Genovese is expected to have a strong showing of support from the trial bar. He’s well known in Acadiana. The district encompasses Lafayette, Acadia, Vermilion, St. Landry, Avoyelles, Jeff Davis, Cameron and Calcasieu parishes.
Learn more about this developing race at JudgeGenovese.com and MarilynCastle.com.
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