Louisiana political leaders in recent weeks have been trying to strike an optimistic tone about the state's budget and tax negotiations, which center on how to avoid a $1 billion deficit next summer. Gov. John Bel Edwards, a Democrat, has been touring the state, and his press office is pumping out upbeat releases about private meetings he has held with business leaders and legislators. House Speaker Taylor Barras, R-New Iberia, has been traveling the state separately and holding his own small meetings with lawmakers.
In an interview with The Associated Press last week, Barras was positive that the Legislature would reach consensus by January on what to do. He and the governor meet next week to discuss the options.
"I'm a bit optimistic because of some of the comments we are beginning to read and see," Senate President John Alario, R-Westwego, said Friday (Sept. 15), referring to Barras' remarks.
Yet interviews with rank-and-file legislators suggest the optimism has not trickled down from the leadership. Some legislators who would be crucial "yes" votes for any fiscal plan to pass said they aren't feeling well about the current negotiations.
"There is no tax solution. No one has suggested anything we haven't already tried, so I don't know why anyone thinks there are new ideas," said Sen. JP Morrell, D-New Orleans, head of the Senate committee that oversees tax policy. "I don't think the Legislature is going to solve this problem before we go off the cliff."
The "fiscal cliff" is what insiders call the predicament that state government faces July 1 if the governor and Legislature must cut $1 billion in spending. That's one day after some temporary taxes expire, which means officials must extend all or part of those taxes or raise some other revenue if they want to avoid wholesale cuts to services.
It's not a new prospect. Since 2015, the last year that Republican Bobby Jindal was governor, lawmakers have failed to come up with a permanent solution to the state's budget crisis.
Cutting $1 billion dollars from the $28 billion budget could shut down public universities, close public hospitals and halt some road and bridge projects. Lawmakers weren't willing to make those cuts in 2016 and instead raised more than $1 billion dollars in temporary taxes. With those taxes expiring next summer, many of the same cuts that the Legislature refused to make last year will be back on the table.
There are some reasons to feel better about where negotiations might be going, however. Reps. Gene Reynolds of Minden, head of the House Democratic Caucus, and Lance Harris of Alexandria, head of the House Republican Caucus, are holding a bipartisan retreat for members on fiscal issues Oct. 12 in Baton Rouge. Two other bipartisan groups of House members are also meeting regularly to discuss budget and tax proposals. Three to four concepts are floating around, Reynolds said.
Yet legislators said many of the proposals being discussed include keeping in place a higher sales tax, at least temporarily. Most of what's driving Louisiana's budget gap next year is a scheduled drop in the state portion of the sales tax, from 5 percent to 4 percent. Months ago, Barras, among other Republicans, started saying the Legislature must think about keeping at least part of the extra penny to resolve budget issues.
A few legislators said the Louisiana Chemical Association and Louisiana Association of Business and Industry, two of the most powerful lobby groups at the Capitol, are pushing to keep a higher sales tax rate in place, even though Louisiana has had the highest average sales tax in the country, when local sales taxes are included, since 2016. That label makes some legislators uncomfortable.
High sales taxes tend to be a greater burden for poor people, and many members of the House Black Caucus haven't been persuaded to vote to keep the state rate at 5 percent. "An extension of the highest sales tax in the United States is a very tough sell," said Rep. Gary Carter, an African American Democrat from New Orleans.
Democrats are outnumbered by Republicans in the Legislature. But at least some of their votes would be needed to renew the sales tax at 5 percent. Any tax bill needs the support of two thirds of the House and Senate members. That's 70 votes in the House, where Republicans have only 60 members.
Practically speaking, the House needs almost all of the Democrats and most of the black caucus to keep the higher sales tax beyond June 30. That's because many of the 60 Republicans won't vote for a tax under any circumstances.
Some legislators said they voted for the extra penny in 2016 only because they assumed more fiscal reform would be put in place before the temporary tax expired. Comprehensive reform hasn't happened, largely because the Legislature hasn't been able to agree on a permanent solution.
"I will be voting no on the penny, I can assure you of that," said Rep. Kenny Havard, R-Jackson. "All I hear about is the penny, and I don't think they have the votes to keep the penny on."
Havard and Morrell said business lobbyists are pushing to keep the extra penny tax because their business clients have exemptions from it on some big purchases. Further, if the sales tax stays in place, it makes it less likely that other taxes on businesses will be implemented or that tax exemptions for industry will be eliminated.
"People who have sales tax exclusions are simply convinced we are going to tax everyone else," Morrell said. "The reason that some people are bullish on the sales tax is [that] they don't have the sales tax."
When lawmakers initially passed the higher sales tax in 2016, they also temporarily eliminated some parts of sales tax exemptions in several areas, angering several different constituencies. But the Legislature reversed itself and voted to put some of the exemptions back in place this past spring. There will likely be a fierce lobbying effort to keep more of them.
That's already taking place actually. In May, the House refused to continue an elimination of the business utility sales tax exemption, which could have raised $173 million to help close the budget deficit. Business utility sales taxes are particularly expensive for places like chemical plants, which use a lot of energy.
"The special interests are going to push to keep the one penny on because they don't pay it," Havard said.
It's not clear where Barras stands on keeping the extra penny tax now. He didn't return several phone calls and text messages requesting an interview for this story. But the speaker's generally upbeat remarks to The Associated Press did seem at odds with another member of the House leadership, Rep. Cameron Henry, R-Metairie, who struck a very different tone in a Facebook Live video posted.
Henry, who helps build the annual state budget as House Appropriations Committee chairman, said he expects Edwards to engage in fear mongering over the next few months. He predicted that Edwards will threaten to cut the popular TOPS college scholarship program and services for disabled people if the Legislature doesn't raise or renew taxes in 2018.
He also implied that the governor, though not most legislators, is pushing the idea of keeping the sales tax rate at 5 percent. Edwards has indeed said he might be open to extending the 5 percent sales tax rate beyond June 30, but only if it was again done on a temporary basis and passed alongside permanent taxes that would kick in once it expired.
"It will be the permanent, temporary penny," Henry said in the video. "I think anyone who falls for that is really doing a disservice to their state and their constituents."
Henry did not answer several requests for an interview. He said in the video that he would prefer a cuts-only approach to solving the budget crisis. He criticizes Edwards for not cutting some of the state's larger contracts and specifically mentions Healthy Louisiana, the $7 billion to $8 billion Medicaid program in the Louisiana Department of Health.
Healthy Louisiana funds health care for most of the 1.2 million Louisiana residents who have signed up for Medicaid. Much more than half of its money comes from the federal government. Another large chunk comes from fees that the state collects from medical providers. Perhaps counterintuitively, legislators would have to cut much more than $1 billion out of Healthy Louisiana if they wanted to use it to close the $1 billion budget gap next year, since so much of the program's money doesn't come from state tax dollars and can't be transferred to other areas of the budget.
Some of the Healthy Louisiana spending is also required by the federal government for the state to have a Medicaid program at all. Much of the spending is used to cover the cost of child births and health insurance for children.
That Barras and Henry are striking different tones is not unusual; the speaker often seems more conciliatory in public than the Appropriations chairman on tax and budget agenda issues. In the past, Barras has taken a softer approach to budget negotiations initially yet often ended up siding with Henry in the end.
Earlier this year, for example, Barras aligned himself with Henry when Henry refused to allow the state budget to come up for a vote on the House floor near the end of the legislative session. Henry thought the budget being proposed contained too much government spending. But that meant the Legislature adjourned its regular session without a state budget and ended up having to hold a special session, which cost the taxpayers hundreds of thousands of extra dollars. In the special session, most House members broke with Barras and Henry and passed the same budget that Henry had blocked in the regular session.
If Barras decides to side with Henry again, it will be harder for him to build consensus among House members, particularly Democrats and moderate Republicans who are trying to find more common ground.