NOLA.COM: "Leger front and center"

By Greg LaRose, | The Times-Picayune
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on June 17, 2016 at 6:54 AM, updated June 17, 2016 at 7:41 AM

The fatigue was evident in state Rep. Walt Leger's voice at a New Orleans Chamber of Commerce luncheon this week. While the content of his speech balanced optimism and reality, the House speaker pro tem's typical enthusiasm was somewhat toned down.

He spoke with only days remaining in the Louisiana Legislature's second special session to deal with a $600 million budget gap. Time is of the essence, with the session ending June 23 and the new fiscal year starting July 1.

"It's gonna be tough," Leger said after his speech Tuesday (June 14) at the New Orleans Sheraton. "People are really tired and have very strong opinions on whether we should do this now or whether we should wait until next year.

"The problem is once we hit July 1, everybody's got to put their plans in motion. If you got to cut, you got to plan for that cut. That means potential layoffs. It means reduction or programs at colleges. It means cutbacks. So they can't wait until September or October to see if additional revenue comes in."

Fiscal conservatives, especially those holding sway in the House, are holding firm despite Gov. John Bel Edwards' appeal for new taxes to spare additional cuts to higher education, health care and other services. As of Thursday, the House had approved $222 million and the Senate $400 million, with each chamber having yet to consider the other's tax proposal.

Leger, D-New Orleans, has been front and center for the debate and the discord. The 19 consecutive weeks lawmakers have convened in 2016 is a record for the 204-year-old institution. Meanwhile, he and his wife, Danielle, are expecting a child in August.

"I can happily report the pregnancy is going much smoother than the legislative session," Leger said.  

The rancor he references was evident a month before the first special session began in mid-February. Even before taking office, Edwards had tapped Leger as his choice for House speaker. The Republican majority in the chamber wasn't keen on allowing the new governor hand-select his leader. Rep. Taylor Barras, R-New Iberia, became the compromise selection, leaving Leger in the No. 2 role.

But Leger said Tuesday he refused to consider the outcome of the leadership elections a "bitter defeat," especially in light of the progress made in the first special session toward closing a $943 million gap in the current fiscal year budget.

The process to fashion next year's $26.1 billion spending plan has not gone as smoothly, culminating with the separate state construction budget being held up in the waning hours of the regular session. It, too, is being hammered out in the special session.

Leger said the legislative maelstrom was predictable, given the Jindal administration's questionable use of $800 million in nonrecurring revenue to balance the state budget in recent years. Combined with a nosedive in state revenue from oil and gas exploration, the scenario was set for Louisiana's fiscal house of cards to collapse.

"The same people (in the Legislature) who are crying now ... were in charge of the budget when this happened," he said.

During the first special session, Leger succeeded in getting a bill passed that he says is a step toward overhauling the state's budget policies.

It creates the Revenue Stabilization Trust Fund, which would receive money from the state's mineral revenues -- taxes on oil and gas production -- between $650 million and $950 million. Also going into the fund are state corporate income and franchise taxes surpassing $500 million in collections.

Leger's bill outlines how money from the trust fund would be allocated, including a dedication to the Louisiana 8g Fund for elementary and high school education. The Legislature is not allowed to touch the stabilization fund except when its balance exceeds $5 billion at the beginning of the year. At that point, it can appropriate up to 10 percent of the balance for specified uses that include state debt retirement, new highways and construction projects in the state capital outlay budget.

Leger originally called the bill the Restrict, Restore, Rebuild Act. He said the fund's value is twofold: It creates fiscal discipline because its uses are restricted, and there are incentives for it to grow.

Similar funds exist in other states like Louisiana with a heavy reliance on mineral revenue, and Leger said they have provided a fallback for when that money source dries up. Wyoming's fund reached $3.9 billion and provided the state with nearly $390 million in interest from the fund.

Another measure Leger believes would steady the state's fiscal ship is restoring a portion of the Legislature's peel-back from the Stelly Plan. In 2002, Louisiana voters approved a trade-off between lower state sales taxes on food and utilities and higher state income taxes for the middle class and higher.

But in 2007, when the state coffers were flush with tax revenue from the Hurricane Katrina recovery, lawmakers started stripping away the income tax provisions of the Stelly Plan. The absence of that revenue has become more acute with the accompanying decline in mineral taxes from the plummeting price of oil.

"If we wanted to go back to pre-Stelly, we could do that and it would be responsible. But the way we are currently is just totally out of balance," Leger said.

The middle ground he sees is between current tax rates and the restoring of the full Stelly Plan. It would amount to a 0.4 percent increase on personal income taxes -- enough to fund the priorities Edwards set for the second special session.

For someone making $100,000, Leger said the increase would add about $500 to their income taxes. That boost in state taxes could be claimed against federal income taxes, he said.

"We need people to understand that it's a small change that would make things steady and put us in a posture that would be very much sustainable."