- Associated Press - Sunday, June 24, 2018

BATON ROUGE, La. (AP) - After three special sessions and a boost from congressional action, Louisiana lawmakers used a mix of fixes to balance the state budget that begins in July.

The shortfall tied to expiring taxes passed by lawmakers in 2015 and 2016 initially was pegged at nearly $1 billion earlier this year. The gap was closed with better-than-expected income projections, taxes and oil spill recovery money. The centerpiece of the budget-balancing package was a sales tax that won final passage Sunday.

Here’s how the budget was balanced:

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IMPROVED FORECAST



Though a February special session cratered without any money raised to fill the gap, Louisiana’s budget shortfall still dropped to $648 million in April.

The state income forecasting panel revised revenue projections upward by $346 million, accounting for expected tax collection improvements. The changes were largely tied to the federal tax overhaul passed by Congress. Louisiana residents will have to pay higher individual income taxes to the state because of the federal changes.

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TAX BREAK REDUCTION

In a second special session that began in mid-May, lawmakers failed to broker a final deal, but the House and Senate raised some money toward the budget gap. They agreed to a measure by Monroe Democratic Rep. Katrina Jackson that scales back an individual income tax break that Louisiana allows for taxes paid to other states.

The reduced tax break will stay in place through mid-2023. It will raise about $34 million for the upcoming budget.

The revenue decreases to nearly $13 million the following four years, because lawmakers added a tax break for Louisiana’s working poor families into the bill for future years. Some Democrats, particularly members of the Legislative Black Caucus, withheld their support for sales taxes until they successfully expanded the tax break program for the working poor, called the Earned Income Tax Credit.

The $21 million annual tax break expansion begins in 2019.

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OIL SPILL MONEY

Lawmakers agreed to divert $46 million in oil spill recovery money from state savings accounts for spending instead on general operating expenses.

Louisiana is expected to receive similar annual payments for 15 years from BP PLC as compensation for economic damages from the massive 2010 oil spill. The payments are separate from billions in recovery money designated for coastal restoration.

Under a 2014 law, that money will be steered to the “rainy day” fund, an elderly trust fund and a health savings account that were drained during former Gov. Bobby Jindal’s tenure. The House and Senate moved the upcoming budget year’s annual payment to programs and services instead. Payments in the following years are scheduled to flow into the savings accounts as planned.

Lawmakers reworked the economic damages spending once before. In 2016, they spent the first $200 million from the $1 billion settlement to plug budget holes.

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SALES TAX RENEWAL

In the latest special session, lawmakers agreed to renew 0.45 percent of an expiring 1 percent sales tax. The state sales tax rate will fall from 5 percent to 4.45 percent on July 1 and stay there until mid-2025. It had been scheduled to fall to 4 percent, without the sales tax renewal.

Several sales tax breaks for people and companies, including an exemption from sales taxes on business utilities, also will be scaled back during the period.

The bill by Baton Rouge Republican Paula Davis was sent to the governor’s desk Sunday.

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Follow Melinda Deslatte on Twitter at http://twitter.com/melindadeslatte

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