La. governor pitches plan for $1 billion fiscal cliff, gives preview of regular session goals

BATON ROUGE, LA (WAFB) - The governor is still pushing lawmakers to reach a deal to address the state's projected $1 billion fiscal cliff, but he is now offering some flexibility.

Governor John Bel Edwards originally set a deadline of January 19 for legislators to coalesce around a plan. Otherwise, he said he would not call a special session for February. Speaking before the Press Club of Baton Rouge Monday, he said he would extend the deadline if they were making progress towards a deal.

Because it's an even numbered year, new taxes can only be passed during a special session. Edwards said he wants to hold one in February so they can deal with shortfall and create stability for college students, TOPS recipients, healthcare workers, and businesses.

The governor held another meeting with legislative leaders Monday afternoon, though it's unclear if anything came out of such talks.

The $1 billion shortfall projected for the 2018-19 fiscal year comes as one penny of the state sales tax falling off the books. That tax, passed as a temporary measure by state lawmakers, expires in July.

The governor wants to replace the expiring tax revenue to avoid what he described as "devastating" cuts to state programs, including healthcare and higher education. "Fixing the cliff doesn't require any new revenue next year, we just need to replace what is falling off the books," he said.

The governor has ruled out one solution. He said he does not want to renew the fifth penny of the sales tax, calling the sales tax "regressive" and harmful to low-income folks.

Instead, he has proposed a list of other ideas, including expanding the sales tax to services like cable TV, reducing certain tax exemptions for businesses, and changing some income tax brackets. The specifics of those new tax brackets have so far not been released; the governor's office says they are still studying the tax changes at the federal level before rolling out their new brackets.

Similar tax overhaul ideas, based on recommendations from a legislature-created nonpartisan panel, have been proposed in the past. However, those proposals hit roadblocks in the Republican-controlled House of Representatives. "At some point, saying 'no' has to give way to an alternative. Something that they can support," Edwards said.

The governor said business leaders want greater predictability in the tax system, and he argues his plan will do that.

However, this new push from the Edwards administration is already facing push back from GOP lawmakers, who argue they want to look at state budgeting practices.

At the end of December, Sen. Conrad Appel, R-Metairie, tweeted, "If we pass 'tax reform' as the governor wants, we are assured of 'no reform' in our really bad government structures... Government reform first, then revenue reform."

Speaking at Press Club, Edwards fired back, saying his administration has already done away with the practice of using one-time money in shaping a budget, something he said happened frequently during the Jindal years.

"I'm willing to entertain any specific proposals that they have, but I'll tell you they are less necessary today because of how we run the governor's office and the Division of Administration," Edwards said.

While the governor called dealing with the fiscal cliff his first goal for the months ahead, he also laid out some of his ideas for the regular spring session during his appearance at Press Club. He said he wants to provide relief to small businesses. While he offered few specifics, he hinted at his desired to reduce regulations and cut back on some licensing requirements for certain jobs. He said he will also once again be pushing legislation to increase the minimum wage. Currently, Louisiana uses the federal minimum wage of $7.25 per hour. The governor has backed bills boosting the minimum wage during previous sessions, but they failed to get traction.

"The federal minimum wage in 2018 is wholly insufficient, and we need to increase that so working men and women have a fair opportunity to get ahead and support themselves and their kids," he said.

Meanwhile, with a panel of lawmakers currently examining potential changes to the TOPS program to make it more sustainable going forward, the governor did not embrace any reforms. "I don't favor changing TOPS," he said. "I favor funding TOPS."

The governor said TOPS funding would likely be on the chopping block if the $1 billion fiscal cliff is not addressed.

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