La. Gov. Pushing Insurance, Tax Credits, Pay Raises in Special Session

Louisiana Gov. Kathleen Blanco said the costs of her special session agenda of tax breaks, pay raises and insurance relief could be covered by an expected $800 million jump in state income this year – on top of an $827 million surplus last year.

The governor offered more details Nov. 20 about her proposals for the 10-day special legislative session set to begin Dec. 8, including the financing. She said she expected the state to have at least $1.6 billion to spend from the current and prior budget years.

Blanco wants lawmakers to plow the state’s expected new dollars into child tax credits for families, a quickening of business tax breaks, road improvements, building repairs, retirement debt and pay raises for an array of state-funded workers, including public school teachers, university faculty and prison guards.

“This is good news for Louisiana after all the challenges we have been through,” Blanco told the Louisiana Association of Educators union, which cheered talk of pay raises and tax breaks.

The state’s coffers are bulging on the strength of high oil and gas prices and state taxes generated by the post-hurricane recovery, as people rebuild and replace flooded homes, cars and furniture. The state’s revenue estimating panel must recognize the dollars before they can be spent, but substantial income boosts are expected, according to Blanco and financial experts.

“The numbers are very, very good,” said Greg Albrecht, an economist for the Legislative Fiscal Office who works on the income projections for the state Revenue Estimating Conference.

Albrecht said the state is on track to continue bringing in the hefty streams of money for a number of years as billions of dollars continue to flow in the recovery efforts.

“It’s hard for me to make the case to be as conservative as we’ve been anymore. I think we’re probably in good shape for the out years,” he said.

The Revenue Estimating Conference is expected to meet in early December to formally revise the state’s general fund income projections. Then, lawmakers can decide how to spend the cash in the special session.

Blanco’s giving them a list of her spending suggestions as Louisiana heads into the 2007 statewide election year.

The two pots of cash must be handled differently.

The $827 million surplus from last year only can be spent on one-time items, like debt payments, highway improvements and construction projects. Blanco wants those one-time dollars used for retirement debt, road repairs and building upgrades at universities.

The expected $800 million for the current fiscal year has none of those one-time restrictions and can be spent however lawmakers and the governor choose. For those dollars, Blanco is seeking pay raises, the tax breaks for families with children and insurance rebate checks. She also wants to speed up the ongoing phase-out of two business taxes, the sales tax on machinery and equipment and the corporate franchise tax on debt.

Blanco was vague on many of the amounts, saying she was waiting for the Revenue Estimating Conference meeting.

Among the raises on Blanco’s list are salary boosts for public school teachers, school support workers, university faculty, prison guards, police, firefighters and state employees. Teachers, support workers and professors received pay raises from the state earlier this year.

Rep. Jim Tucker, R-Terrytown, head of the House Republican caucus, said the special session agenda should be more limited and focused on insurance relief and transportation needs.

“We don’t have enough money to do all of this, even if we have $2 billion,” Tucker said.

Lawmakers pressed for a special session to help cover the debts of the Louisiana Citizens Property Insurance Corp., the state-run insurance company of last resort for people who can’t buy insurance in the private market. Citizens borrowed $1 billion to cover claims after hurricanes Katrina and Rita and is repaying that debt by passing on fees to private insurers, who in turn are charging their customers rate hikes to cover those fees.

Blanco proposes using some of the state’s extra, unbudgeted dollars to pay down Citizens’ debt and give property owners rebate checks for the fee hikes they already paid to cover Citizens’ claims costs.

The governor said she’s scrapped a previous plan she floated to use the state’s tobacco settlement dollars to bail out Citizens – an idea that proved unpopular with legislators.

Insurance rebate checks should be in hand by Jan. 1, Blanco said, “so that people can pay their holiday bills off.”