Louisiana Governor Ends Deadlock on Constitutional Convention

ATLANTA --Gov. Edwin Edwards's proposal for a state constitutional convention to reform Louisiana's taxes has moved from off track to the fast track following his shift of position on delegate selection.

The governor agreed Thursday to a convention made up of the 144 members of the state Legislature rather than specially elected and appointed delegates.

The state's House of Representatives had held up an Edwards-backed Senate bill that took the latter approach. Opponents said the Senate plan would cost too much and exclude legislators from the reform process.

Gov. Edwards's offer was endorsed by the House Governmental Affairs Committee and approval by the full House is expected, according to Albert Donovan, executive counsel to the governor.

Under the new plan, the convention would be held between Aug. 17 and Oct. 3, Mr. Donovan said. Keeping to that plan, he added, could result in a slate of tax reform proposals for voter approval on Nov. 3--a full four months ahead of the original schedule.

Most aspects of Louisiana's tax code can be changed only through constitutional amendments, which require a vote of the people.

"Although the original concept [of the convention] was to have a majority of the delegates chosen by the general public, it has become clear that there was a strong feeling in the Legislature that it should handle the problem," Mr. Donovan said.

"So the governor agreed to change the process, and that change will result in an expediting of the process in terms of both time and expenditure," he said.

The push for a constitutional convention comes after Gov. Buddy Roemer, Gov. Edwards's predecessor, waged a persistent but unsuccessful campaign to reform state taxes.

Gov. Roemer argued that Louisiana's unusually high homestead exemption, comparatively low personal income tax rates, and broad exemptions to the sales tax limited state revenues and contributed to a recurring budgetary imbalance.

But the former governor was unable to convince Louisiana residents that change was necessary. In April 1989, voters rejected an ambitious slate of constitutional amendments that would have shifted the burden of taxation from corporations to individuals, reduced the homestead exemption, and broadened sales taxes.

Looking for a way to tackle the tax problem, Gov. Edwards has settled on a constitutional convention because it would allow delegates to focus on a single issue and would require only a simple majority to send proposed amendments on to the voters. A legislative session requires a two-thirds vote.

So far, Gov. Edwards has avoided spelling out what tax measures a convention should adopt, saying he does not want to "prejudge" its deliberations. In his state of the state address, the governor did, however, suggest that delegates should consider reducing the state's four cent sales tax to two cents in exchange for higher property or income taxes.

Jay Abrams, a senior vice president at Standard & Poor's Corp., said last week's compromise between lawmakers and Gov. Edwards was a promising sign.

"The sooner the state gets down to tackling its overall financial problems, the better," he said. But Mr. Abrams added that the real test will be what proposals the convention actually drafts, and how voters respond to those proposals.

Both Standard & Poor's and Moody's Investors Service have said that continuation of their current ratings on Louisiana's $2 billion of outstanding general obligation debt depends on further progress toward reforming the state's tax base. Standard & Poor's rates Louisiana's GOs at A, while Moody's Investors Service rates it Baa1.

In other legislative action in Baton Rouge, the Senate has begun to consider the $10.3 billion budget passed last month by the House of Representatives.

The House-passed version closely resembles Gov. Edwards's proposed budget. Both would continue food and utility sales taxes now scheduled to expire, make use of anticipated lottery and video poker receipts, and reduce contributions to the state's retirement funds.

In addition, a bill passed by the Senate and now pending in the House would allow the Louisiana Stadium and Exposition District to issue about $115 million of tax-exempt bonds. About $63 million of the proposed debt would be used to refund existing bonds, with the remainder financing Louisiana Superdome improvements, a new baseball stadium and a professional football training facility in Jefferson Parish.

Two other bills would establish major new debt-issuing authorities in Louisiana. One bill would set up the Louisiana Airport Authority, giving it the power to sell bonds for a proposed international airport. The other would permit establishment of a maritime development authority to fund shipyard improvements in Louisiana's cities.

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