Adams And Reese: LA Governmental Relations Team Extraordinary Session Recap, Update

NEW ORLEANS – The Louisiana Governmental Relations Team with Adams and Reese LLP issued the following recap and update of the 2016 First Extraordinary Session of the Louisiana Legislature:


         The 2016 First Extraordinary Session of the Louisiana Legislature convened on Sunday, February 14,, in response to a call issued by Governor John Bel Edwards (D-Amite). This special session was called by the Governor in hopes of closing a combined budget shortfall of $2.9 billion for this fiscal year and next. The special session must end on or before March 9, leaving legislators with less than three weeks to consider legislative instruments.

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         In his opening address to the legislature on Sunday, Gov. Edwards called for legislators to “shed partisan labels and blinders” as they work to address the fiscal crisis. On Monday, lawmakers agreed to $38 million in spending cuts across state agencies which, when combined with cuts made by Gov. Edwards will trim nearly $60 million from this year’s budget. In addition, the Department of Health and Hospitals trimmed another $64 million from their departmental budget affecting their low-income clinics, outreach clinics, local health units, and eliminated a couple department positions.

         Facing an estimated $950 million budget gap for the fiscal year ending June 30, Gov. Edwards has proposed both new taxes and hikes to current taxes. Many Republican legislators have criticized the Governor for use of “scare tactics” and have suggested that a change in spending habits is the answer to the state’s budget woes. “The people of Louisiana think we are spending too much,” said state Sen. Conrad Appel (R-Metairie), a member of the Senate Finance Committee.

         Though opposed to many of Gov. Edwards’ revenue proposals, the Senate Finance Committee agreed Tuesday to measures that would appropriate $128 million from the state’s “Rainy Day” fund and passed SB4 by Senate Finance Chairman Eric LaFleur (D-Ville Platte). If enacted, SB4 would create the Fiscal Year 2015-2016 Deficit Elimination Fund and would deposit $200 million from the Deepwater Horizon litigation into the fund.

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         Louisiana’s “Rainy Day” Fund – officially referred to as the Budget Stabilization Fund – is constitutionally mandated to help cover fiscal shortfalls and is only a temporary fix to help lessen the budget gap. Barry Erwin, Council for a Better Louisiana CEO and President, told the Baton Rouge Press Club “It’s almost unavoidable that you’ve got to have some type of bridge… to get you through the next year…. The problem is it takes us three months to pass a budget on a good year anyway.”

         Proposed corporate tax bills went unheard in the House Ways and Means Committee Thursday, due to the staff’s lack of time to prepare fiscal notes quickly. Staff is continuously working to produce these fiscal notes so bills can be voted on in committee. All seven bills have been rescheduled for today’s agenda.  The committee will also meet tomorrow.

         These corporate tax bills are listed below:

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–      HB16 and HB55 by Rep. Walt Leger (D-New Orleans) and HB73 by Rep. Jay Morris (R-Monroe) propose a requirement on corporations to add back otherwise deductible interest and expenses and costs in connection with one or more related members.


–      HB19 by Rep. Ted James (D-Baton Rouge) expands the definition of franchise tax to property owned either directly or indirectly by any business venture – not just ”corporations.”


–      HB20 by Rep. Chris Broadwater (R-Hammond) prohibits the amount of the Net Operating Loss (NOL) deduction from exceeding 72% of Louisiana net income effective January 2016. HB25 by Rep. Katrina Jackson (D-Bastrop) suspends the NOL deduction entirely for all returns filed between January 1, 2016 and December 31st, 2016.


–      HB64 by Rep. Jack Montoucet (D-Crowley) replaces current business utilities exclusions and redefines them as exemptions from the four percent state sales tax.


–      HB74 by Rep. Jay Morris imposes uniform reporting methods in order to ascertain income subject to corporate income tax.


         With 19 days left in this special session, the legislature will have to make hard decisions. Thus far there have been 107 measures filed in the House and 24 in the Senate.

         The 2016 Regular Legislative Session will convene on Monday, March 14. As of today, there have been 115 pieces of legislation pre-filed in the House and 20 pre-filed in the Senate. The deadline to pre-file bills is Friday, March 4.


         Adams and Reese is a multidisciplinary law firm with more than 300 lawyers and advisors and offices in New Orleans, LA; Baton Rouge, LA; Birmingham, AL; Mobile, AL; Chattanooga, TN; Memphis, TN; Nashville, TN; Houston, TX; Jackson, MS; Jacksonville, FL; Sarasota, FL; St. Petersburg, FL; Tallahassee, FL; Tampa, FL; Columbia, SC; and Washington, DC.

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