Legislature Avoids Fiscal Cliff, Closes 2018 Session

Jun 24, 2018

After months of deadlock, lawmakers have finally agreed on a solution to the fiscal cliff, avoiding major cuts to state services and bringing an early end to the third special session.

"I know you are all as sick of this as I am. We've been here - seems like forever," lamented Senator Jack Donohue (R-Mandeville).

Senator Karen Carter Peterson (D-New Orleans) urged her colleagues to pass a tax bill that required sacrifice on both sides.

"None of us ultimately, I believe, are completely happy with the instruments, but in furtherance of our people’s interest, we’ve all had to compromise," Peterson said.

For four months, lawmakers have been debating exactly where between 4 and 5 percent the new tax rate would fall. The House and Senate agreed Sunday to set the state sales tax rate at 4.45 percent starting July 1st.

While lawmakers were celebrating a moderate victory, it came after a long battle. Two earlier sessions ended in failure. This was the third special session of the year - and the seventh since Governor John Bel Edwards took office.

“It shouldn’t have taken this long, it shouldn’t have been this hard," Edwards said.

The Legislature has known about the fiscal cliff for two years.

Edwards took office in 2016, facing a $2 billion budget deficit. The legislature fixed it by raising the state sales tax by one cent. That one cent expires on July 1st - causing the current budget shortfall.

"The good news is the fiscal cliff is now gone and we have predictability ahead of us," Edwards said.

But only until 2025 - when this new tax expires.

The new rate still won’t fully fund the budget. $40 million in additional cuts will have to be made. But TOPS, higher education, and the Department of Children and Family Services will be fully funded.