Louisiana Senate reins in tax cut and school voucher plans

Yahoo

2 days ago

BATON ROUGE, La. (LSU Manship School News Service) — The Louisiana Senate is reining in several major proposals pushed by Gov. Jeff Landry and House conservatives, rejecting additional tax cuts and scaling back spending on private school vouchers amid caution over the state's longer-term financial outlook.
Despite clearing the House with little resistance, two key tax bills were effectively shelved by the Senate Revenue and Fiscal Affairs Committee earlier this week.
The committee declined to take up a plan to further phase down personal income taxes, and it slashed funding for a Landry plan to expand state funding for parents to send their children to private schools.
The moves mark a shift in the session's power dynamics and highlight tension between the governor's office and Senate leaders as the legislative session heads toward a close on June 12.
Senate leaders said they did not see any way to offset the revenue losses from further tax cuts. Some lawmakers fear that the state could face hundreds of millions in additional costs if Congress and the Trump administration follow through on proposals to cut federal Medicaid spending and shift much of the responsibility for disaster relief to the states.
Two bills by Rep. Julie Emerson, R-Carencro, were at the center of the House's tax-cutting agenda. House Bill 578 would have dropped the state's portion of the sales tax rate from 5% to 4.75%, while House Bill 667 aimed to lower individual income taxes from the 3% flat rate approved in November to 2.75%.
The bill also would have doubled the standard deduction for seniors.
Legislative analysts estimated that the sales tax bill would have reduced general fund revenue by about $266 million in fiscal 2028. Emerson's income-tax bill would have cut another $378 million in the same year.
Emerson said her goal was to eventually eliminate the state income tax altogether. She also had proposed a constitutional amendment to eliminate the Revenue Stabilization Fund and redirect corporate tax surpluses to help pay for the cuts, but legislative economists said that would have offset only a portion of the lost revenue.
Senators, led by Revenue & Fiscal Affairs committee chair Sen. Franklin Foil, R-Baton Rouge, said they were not ready to move forward without more data.
Referring to tax cuts in 2008 that later led to a $2 billion state funding shortfall, Foil said: 'In hindsight, we moved too quickly in enacting those tax reductions.'
He added: 'I'm all for trying to reduce taxes if we have excess revenue, but we have to do it in a responsible way.'
National conservative groups have poured money into lobbying for the LA GATOR program and similar school vouchers in other states to help families pay private school tuition.
Landry had asked for $93.5 million, and the House had included that amount in its version of the budget for fiscal 2026, which starts July 1. But the Senate Finance Committee slashed that amount to $43.5 million.
The increase would have nearly doubled the number of students receiving vouchers to about 11,300.
The cut reflects a clear political divide between Landry and Senate President Cameron Henry, R-Metairie, who has said since April that the Senate would only fund LA GATOR at the same level as an older voucher program it is replacing, and he has not budged.
Some lawmakers also are concerned that there are few private schools in rural areas and that the LA GATOR program could eventually lead to a reduction in funding for public schools
The reduced GATOR funding would cover about 6,000 students already receiving state-funded tuition assistance.
Earlier this year, State Superintendent of Education Kade Brumley opened applications for the program statewide, assuming the number of available vouchers would grow. Nearly 40,000 families applied.
Henry and other senators also voiced concerns about how fast LA GATOR's costs could grow and whether private school vouchers improve student outcomes.
The difference in LA GATOR funding levels between the House and the Senate bills will have to be ironed out by a conference committee with members from both parties.
The Senate budget also includes several education-related amendments:
● Restores $30 million for high-dosage tutoring.
● Allocates $20 million to pay off the University of New Orleans' debts so it can merge into the LSU System.
● Keeps $198 million for teacher stipends, $2,000 for certified educators and $1,000 for support staff, by offsetting costs elsewhere.
Senators also added hundreds of millions in federal funding to increase Medicaid reimbursement rates for hospitals and physicians. The request still needs federal approval, but if approved, it would raise Louisiana's Medicaid funding by $500 million in the budget year starting June 1. Lawmakers are also hoping to get retroactive payments for the current fiscal year.
The request comes as President Donald Trump and House Republicans, including House Speaker Mike Johnson and Majority Leader Steve Scalise, push to reduce federal Medicaid spending. State leaders hope those efforts to affect the reimbursement rates they're trying to secure.
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