The Louisiana Legislature’s big hangover
Elected officials, staffers, lobbyists, donors, consultants, department heads and many others in the inner orbit of Louisiana politics were at the annual Mardi Gras soiree in Washington, D.C. last week. The multi-day event transplanted the Bayou State’s political class to the Beltway, where the bar at the Washington Hilton briefly became known as “Louisiana’s 65th Parish.”
??Those preferring a higher power over parades and princesses were in Baton Rouge at Gov. Bobby Jindal’s “The Response,” a massive prayer rally on LSU’s campus Jan. 24. It competed with D.C. Mardi Gras as well as another prayer rally organized by Democrat-aligned groups on Southern University’s campus. The latter was dubbed the “Prayer Rally for the Soul of Louisiana.”
??The three events represented the starkest of Louisiana political choices: You could have stayed home and gotten some religion or headed north to the belly of American politics for a nonstop party. Either way, there were avenues available to lift your spirits before all hell breaks loose across the political and governmental landscapes. This week, things are going to start getting serious. Very, very serious.
??As of this week we no longer can claim ignorance about the further widening of the state’s budget deficits — that’s one for the current fiscal year (ending June 30) and another for the next. The Revenue Estimating Conference (REC), which is charged with determining how much money the state has to spend (or, in this case, doesn’t have), was scheduled to release those numbers Monday, Jan. 26.
??No amount of praying at LSU or Southern could have helped with what was expected. More mid-year budget cuts appear to be a certainty, so much so that department heads started making reductions earlier this month. Meanwhile, the 2015-2016 budget hole — already $1.4 billion as of last week — is expected to grow as well. How much, no one is willing to predict. Suffice it to say it has many lawmakers bracing for their worst session in memory, with the nightmare officially beginning April 13 (otherwise known as Opening Day of the Legislature).
??Faced with that scenario, who can blame legislators for wanting to drink and/or pray? In addition to the budget chaos, voters are clamoring for something definitive on Common Core, an issue that, if last year is any guide, will pack committee rooms and hallways with teachers and parents ready to scream at lawmakers. Additionally, the $12 billion backlog for transportation projects has reached critical mass, with no consensus solution in sight, and the capital outlay budget for construction projects around the state is set to be overloaded once again.
The parade of tears won’t stop with adjournment on June 11, either. Lawmakers’ decisions in the upcoming session — be they courageous but controversial reforms or cushy but temporary Band-Aids — will be carried over to their re-election campaigns this fall. And that’s what this entire year is really about: a jam-packed ballot of fall elections.
??It’s going to be a banner year, with assessors, sheriffs, legislators and statewide elected officials all running at the same time. The big show appears atop the ballot, pitting some serious players against each other for governor. January hasn’t even concluded yet and we already know practically all of the fundraising numbers from the previous year and the first official gubernatorial forum has been held. It was conducted on Jan. 16, with all four major candidates in attendance — U.S. Sen. David Vitter of Metairie, Lt. Gov. Jay Dardenne of Baton Rouge, Public Service Commissioner Scott Angelle of Breaux Bridge and state Rep. John Bel Edwards of Amite. Vitter, Dardenne and Angelle are Republicans; Edwards is a Democrat.
??The forum, which focused on infrastructure issues, was civil enough, although you could hear tension bubbling below the surface. It’ll likely be among the last times we see the candidates shaking hands and joking around. The knives will come out sooner than later, especially considering the number of super PACs rumored to be entering the fray. They’ll allow the campaigns to go negative without the candidates getting dirty, since super PACs can attack without overt coordination.
??Finally, Jindal’s prayer rally marks the unofficial start of his presidential campaign. His focus may move farther away from Louisiana than ever, leaving a leadership void in Baton Rouge at a time when leadership will be needed desperately. Jindal will be more of a missing duck than a lame duck. How involved he is in rolling out his budget proposal will be the real test. Right now, it looks as though the challenge will be dropped squarely into the laps of lawmakers. Nothing new there.
??With the state facing a 2015-16 budget hole of $1.4 billion (and growing), and with Jindal unwilling to sign into law any increase in taxes or major changes to the tax code, lawmakers already are considering a veto-proof approach that would temporarily suspend certain sales tax exemptions.
??”Whereas tax exemptions weren’t even on the table a month ago, the talk around the water cooler is much different today and they’re back on the table in a real way,” an influential lobbyist said.
??A lawmaker in the leadership confirmed the talks and added that it may be the strategy for which Jindal, who plans to be on the presidential campaign trail in the coming months anyway, is secretly hoping. It would help him avoid cuts to higher education while allowing him to maintain his precious “tax virginity” — he could blame a small and temporary bump in sales taxes on lawmakers who pulled an end-run around him. No doubt members of the House and Senate, facing re-election in the fall, aren’t eager to take full responsibility for a tax hike. There may be a move to force Jindal to take a position on their solution (whatever it may be), depending on whether they can craft one early in the session or in a special session.
??At this hour, lawmakers are considering putting into play rarely used substantive resolutions, rather than a traditional bill, to temporarily suspend exemptions. The veto-proof maneuver would allow for a suspension that would stretch from the resolution’s effective date to 60 days following the conclusion of the 2016 regular session. The big question is whether it will take a two-thirds vote or a majority in each chamber. Precedent in the House calls for a two-thirds vote, although House Speaker Chuck Kleckley, R-Lake Charles, may be called for a ruling.
??”If the speaker does allow for a majority vote, it seems the beneficiaries of the tax exemptions would be in a position to litigate,” a source familiar with the process said.
??Kleckley’s recent statements that he’ll oppose Jindal’s plan to cut as much as $300 million from higher education has given House members “breathing room and more options” to put together an independent plan, one lawmaker said. But the idea of temporarily suspending sales tax exemptions to save higher ed actually harks back to 1986, when lawmakers used that same tactic to get around the opposition of then-Gov. Edwin Edwards, who wanted land-based casinos instead.
??The idea being floated these days would protect the sales tax exemptions for utilities, political subdivisions, food, drugs and other constitutionally protected or vital categories. Lawmakers said if they were to suspend the remaining exemptions on only the smallest portion of the sales tax structure for one year, there could be as much as $250 million to work with next fiscal year.
??Opposition from business and industry, not to mention groups on the right like the tea party, represent a very serious wild card. Together with the administration, they halted a similar plan two years ago.
??”The Legislature is going to want cover on this,” one lawmaker said of the sales tax plan. “The gubernatorial candidates are going to be put on the spot, although none of them are going to want to comment until the last minute. We’re going to want to hear that they’re willing to protect the colleges and universities next year.”
??One candidate already has chimed in on the budget crunch. Vitter announced that if elected, he immediately would call a special session of the Legislature to address the state’s budget issues. Vitter said tax credits, exemptions and deductions would be on the table along with the state’s constitutionally dedicated spending.
??”Governor Jindal should be doing this now,” Vitter said in a news release. “I’ll do it the minute I’m sworn in. We need to break out of this never-ending cycle of budget chaos and cuts to vital areas like higher ed.” At the Jan. 16 governor’s forum, all of the other candidates agreed. More on their individual approaches are sure to come.
State government is in a tough spot. There’s already talk of closing college campuses, issuing furloughs, draconian cuts and other nightmarish scenarios. State senators met privately two weeks ago as representatives worked on hatching their own schemes, and all of them are expressing frustration that the administration has yet to join them at the chalkboard.
??”Whatever does happen from all of this, I already know it’s going to be the worst session I’ve ever been in,” a state representative said.
??To prepare for the coming crisis in 2015-16, sources say Commissioner of Administration Kristy Nichols has been meeting with statewide elected officials and agency heads this month and has directed all of them to reduce spending by 15 percent. Officials with the Division of Administration said the across-the-board cuts should work out to $1 billion in savings next fiscal year.
??”That number gives us a starting point as we develop the budget, but it will fluctuate depending on how activities are prioritized in each agency and (based on) the updated revenue forecast for the upcoming fiscal year,” Division of Administration spokeswoman Meghan Parrish said.
??Right now the statewide and agency heads have some wiggle room, but many expect the 15 percent directive to be delivered soon in the form of an executive order. Secretary of State Tom Schedler is talking about forced and unpaid days off for employees as soon as next week. Sandra Woodley, president of the University of Louisiana System, is trying to soften the blow of some lawmakers’ predictions that some campuses may need to be shuttered.
??While it might be easy to blame oil prices, Jim Richardson, an LSU economist and REC member, cautioned against it, saying, “Look, we would have had budget problems without the oil prices, due to things like using one-time money in the budget. But it is making the budget picture worse and it is the latest problem.”
??The truly bad news is that, aside from whispers like the sales tax exemption plan, no one has a solution that garners widespread appeal. “There’s no consensus,” said Bernie Pinsonat of Southern Media & Opinion Research. Last month his firm polled 600 likely voters about the budget situation and participants’ responses to finding a solution are as mixed as those of our elected officials.
??Poll respondents do not want further cuts to higher education; nearly 80 percent are opposed. Yet only 23 percent favor paying additional personal taxes to avoid cuts to state government. Voters are evenly split on across-the-board cuts to state services to balance the budget, but oppose increasing fees for state services by a 52-40 margin.
??Respondents just barely favored doing away with tax exemptions for specific types of businesses, 48-38, which may provide lawmakers with a bit of cover for suspending some tax exemptions and/or credits.
??We’re about to experience a dramatic change in Louisiana politics. But don’t mistake the coming week for the calm before a storm. It’s more like Fat Tuesday approaching midnight in New Orleans — only this post-party cleanup will take years. So let the good times roll while they can. Our political hangover is right around the corner.