ATLANTA - Louisiana's constitutional convention is on the verge of approving a proposed to limit state indebtedness, while the effort to reform the state's tax system appears to have run aground.
House delegates approved on Thursday a proposed debt amendment that, starting in fiscal 1994, would hold all tax-supported state borrowing to the level of 90% of the amount scheduled to be retired that year, according to John Carpenter, the House's fiscal division coordinator. Mr. Carpenter said this level would be reduced in five percentage point increments over the next eight years until a 50% level is reached in fiscal 2002.
The House proposal would also require the state to set percentage-based limits on the amount of spending dedicated to yearly debt service, he said. The percentage would be set at 12% of appropriated spending in fiscal 1994, which begins July 1, 1993, and be reduced to an 8% level in fiscal 2001.
On Wednesday, Senate delegates passed their own version of debt limitation, which covers only the state's general obligation debt, according to Mr. Carpenter.
Mr. Carpenter predicted that the House and Senate would reconcile their versions early this week, which would allow the constitutional amendment to be presented to voters in a statewide referendum Nov. 3. Currently, Lousiana's constitution does not address the state's debt level.
"Some kind of proposal will come out, because there is a solid consensus that debt should be limited, but the exact mechanics are still undecided," he said.
But if the much-heralded convention seems to be primed to set borrowing limits before voters, it does not appear be moving forward on tax reform, according to Mr. Carpenter.
He said a proposal to reduce the state's $75,000 homestead exemption died in committee. And although a proposal that would allow local governments to seek voter approval for reducing property taxes has been passed out of committee, delegates have balked at voting on the measure.
Another, proposal that has cleared the committee but does not appear to have enough votes for passage is a proposed constitutional amendment that would raise the cap on the state's income tax to 8% from 6%. Mr. Carpenter said.
"As things stand right now, delegates just do not want to vote on these proposals," he said. "It's a political nightmare."
Mr. Carpenter said the legislative leadership has said it would end the constitutional convention by Wednesday if the impasse on the tax reform issues continues. Under the rules for the convention set up in June, the convention must finish its business by Sept. 22, or 30 days after convening on Aug. 23.
Gov. Edwin Edwards, who has pushed the convention as the solution to Louisiana's recurrent budgetary imbalances, expressed his disappointment at the apparent impasse on tax reform.
"I have discharged its obligation." Mr. Edwards said in a press conference on Thursday, in which he blamed the situation on Republican and conservative Democratic lawmakers.
When the convention opened, Gov. Edwards proposed a program of tax reform and spending reductions that would raise state income taxes and reduce the state's homestead exemption.
Although most proposals put before delegates are still pending, the convention has passed some proposed amendments of interest to local governments.
Last week, the House delegates followed the Senate in passing a proposal that would require a two-thirds vote of the Legislature if it desires to exempt a portion of state sales taxes, according to the House fiscal division. Under current constitutional provisions, sales tax exemptions can be approved with a simple majority vote.
"This is a clear victory for local governments, because [such an amendment would] slow down the bleeding from the lost revenues that result from exemptions," said Gordon King, deputy director of the Louisiana Municipal Association.
Mr. King also praised the convention for passing a proposed constitutional amendment that would require the state to provide evidence that a tax exemption given to a business has a clear economic benefit.
The association, however, remains disappointed with the performance of the convention because it failed to act on proposals that would have given local governments power to legislate their own revenues, Mr. King said.
