Louisiania: Compromise fails before it really starts

Kevin McGill

Sunday, June 4, 2000 | 3:04 a.m.

BATON ROUGE, La. - A 5-percent-per-drink increase on alcoholic beverages served at bars and restaurants appear headed for final House and Senate votes, but there is no guarantee of passage.

And there is no sign of agreement on other proposed "sin tax" increases affecting tobacco and riverboat gambling or any other tax.

Even if the full House and Senate go along with a compromise committee's report Sunday on the alcohol tax, only $60 million would be raised. That is less than a fourth of what is needed to plug an estimated $250 million hole in the $13.8 billion budget for the 2000-2001 fiscal year beginning July 1.

Some lawmakers hoped compromises could be reached on the riverboat and tobacco taxes. But House-Senate conference committees on those two issues ended with nothing accomplished.

Frustration was evident near the end of the tobacco meeting.

House Speaker Charlie DeWitt, noting the muscle of business interests in derailing tax bills this session, warned that taxes will come back to bite business in an even bigger way unless the special interest's lobbyists are willing to bend a little now.

He said if the budget hole remains unfilled, health care programs will be crippled, nursing homes and public hospitals may have to close and people back home will begin shouting. When that happens, lawmakers will return in a mood to tax everything, DeWitt added.

Alcohol industry lobbyists argued vehemently against the liquor-by-the-drink increase. But the conference committee of three House and three Senate members appeared ready to advance the tax Sunday evening.

Restaurant industry lobbyist Jim Funk said the tax will harm many restaurants but Sen. Bill Jones, D-Ruston, expressed the prevailing sentiment on the committee. He argued that the tax, based on Funk's rough price estimates, would add only about 18 cents to the price of the average drink - a small part of an overall restaurant bill.

"I don't think it'll keep anyone from buying the meal or the drink," Jones said. "And the only people who will pay the tax are the people who choose to drink mixed drinks. And I think that's fair."

Chris Young, lobbying for licensed alcohol businesses, argued that the tax is not fair at all. "It's piling on to a product that is already the highest taxed product in Louisiana," said Young.

Committee members did not vote on the measure, choosing to allow alcohol lobbyists to take a look at a final draft of the measure drawn up by legislative staffers. But Rep. Chuck McMains, a sponsor of the measure and a member of the committee, said he would seek to gather four committee signatures on the measure quickly and that it could be ready for full House and Senate votes Sunday night.

Still, the measure will need two-thirds approval in each chamber (70 in the House, 26 in the Senate) to become law. If the measure fails in either chamber, it is dead for the session.

The conference committee was assembled to work out differences between the House and Senate on the bill - and those differences were huge.

The bill started out as a measure to simply extend a tax exemption on boiler fuel. That is how it left the House. But the Senate altered the bill to include the 5 percent tax.

The tax amount would remain the same under the conference committee's revamped measure. Only methods of collecting it were altered.

Similar conference committee meetings were held Sunday evening to work out differences between the House and Senate on tobacco taxes - the Senate greatly extended House increases on cigarettes - and on riverboat casinos.

The riverboat casino meeting ended with no apparent agreement.

As the meeting started, Rep. Ronnie Johns, R-Sulphur, announced that no vote would be taken because the committee needed more time - perhaps a day or so.

The House began work on the state budget weeks ago. House members sent the budget to the Senate with $370 million in unfunded programs but proved reluctant to pass enough taxes that would erase the shortfall.

The Senate added greatly to the tax bills, bringing the total of the three to more than $200 million, while a Senate committee reworked the budget, slashing some programs all together and reducing the number of unfunded programs to $250 million. The budget was before the full Senate as of Sunday evening but it was unclear whether the Senate would act on it.

Johns, as author of the riverboat bill, was chairman of his conference committee and indicated he was not able to go much above the 3 percent tax increase passed by the House.

The casino industry supported Johns' bill because the casinos got a sweet deal in the process. The bill also called for the cruising boats to go dockside. Also, any boat that invested from $200 million to $250 million in its facilities would not have to pay the extra tax.

The Senate rejected the dockside idea and the investment credit. In addition, the Senate raised the tax increase to 8 percent.

"We cannot balance the budget on the backs of just one industry," said Johns.