La. Gov. Presses Ahead with Special Session for Dec. 8-17

Despite calls to cancel, Gov. Kathleen Blanco issued her formal plan Dec. 2 to bring lawmakers back to the Capitol for a special legislative session to spend as much as $2 billion in new state dollars on pay raises, tax breaks and insurance relief.

The session will last no longer than 10 days, running from Dec. 8 until Dec. 17.

“This unprecedented revenue allows us to give money back to the people of Louisiana in a targeted manner that will help families, spur our economy and continue to strengthen our businesses,” Blanco said in a statement. “I look forward to working with our lawmakers in this effort.”

Many legislators and policy groups had urged Blanco to postpone or scrap the session entirely. They said that the governor’s agenda was vague and that she was trying to spend an expected $827 million budget surplus from last year and another $1 billion or so from this budget year too quickly and with too little discussion from the Legislature.

The chorus of cries for a delay grew throughout the week, hitting a crescendo on Dec. 1 when Senate President Don Hines, D-Bunkie – once a Blanco ally – said the governor should cancel the December special session because it was poorly planned.

Blanco, however, refused to change course, and on Dec. 2, issued the official “call” for the special session.

The agenda deals mainly with three areas: spending proposals, tax breaks for a litany of groups, and ways to bail out the state-run insurance company of last resort, Louisiana Citizens Property Insurance Corp., to stop it from passing on the costs of its $1 billion in borrowing for hurricane claims to all homeowners.

The proposals’ price tags are vague and dependent on how much money is available, which still is unclear. Blanco’s budget architect wouldn’t describe the costs of any plans on the drawing board. The revenue-estimating panel that must determine how much money lawmakers have to spend is scheduled to meet Dec. 5.

“It does no good to set an expectation that the revenue estimate can’t support,” said Commissioner of Administration Jerry Luke LeBlanc, the governor’s chief budget adviser.

The governor has talked of seeking insurance rebate checks, highway repairs, retirement debt payments, and pay raises for public school teachers, university professors, prison workers, law enforcement and state employees. But she also is giving lawmakers leeway in determining how they want to spend the extra dollars.

“The governor’s thinking was she would not tie the Legislature’s hands,” said Terry Ryder, Blanco’s top lawyer who worked on the formal outline for the session.

The session also will include debate on an array of Blanco-backed tax breaks for businesses, sugar cane farmers, parents, commercial truckers and a steel manufacturer that the governor hopes to attract to Louisiana.

Several lawmakers had sought a session dealing mainly with insurance issues, looking at comprehensive ways to re-attract insurers after the hurricanes and stop insurance costs from continuing to rise.

And legislators, both Democrat and Republican, said politically popular pay raises and other spending proposals pushed by Blanco weren’t urgent and could wait until the regular session, which begins in April.

“Just because it’s close to Christmas doesn’t mean the governor has to be Santa Claus. That’s not what the special session should be,” said Rep. Steve Scalise, R-Metairie, a member of the House Appropriations Committee, which will debate spending bills.

“We should be having an insurance session,” said Rep. Eric LaFleur, D-Ville Platte, chairman of the House’s Democratic Caucus.

Hines also has said it will be difficult for Blanco to muster the two-thirds vote she needs to pass many spending proposals.

The nonpartisan Public Affairs Research Council of Louisiana and Council for A Better Louisiana has questioned the need for a December session and the hasty spending of all of the state’s newfound cash.

“The time to act is now,” Blanco said. “Calling a December session will allow us to deliver tax relief for the 2006 tax year, spare our homeowners from another LA Citizens assessment, and start road construction before costs further escalate.”

The session begins at 5 p.m. on Dec. 8 and must end by midnight on Dec. 17.

On the business front, lawmakers will consider whether to quicken the phase-out of two business taxes – the corporate franchise tax on debt and the sales tax on manufacturing machinery and equipment – both of which are scheduled to go off the books in 2011.

Lawmakers also will consider whether to get rid of the state sales tax on business utilities.

And they will look at whether to grant some of the tax breaks that went away with the enactment of the Stelly Plan tax change.

The Stelly Plan eliminated state sales tax on food “for home consumption” and residential utilities, in exchange for greater income taxes for taxpayers higher up the income ladder.

In the special session, Blanco is including discussion of giving tax breaks for home mortgage interest, charitable gifts and medical and dental expenses that could be deducted on tax forms before the Stelly Plan was put in place.