ATLANTA - Louisiana's constitutional convention has wound up its four-week session after agreeing to put before voters a plan to limit state borrowing.
Convention delegates, however, were unable to agree on any major tax reform amendments before they ended their session last Friday.
The proposed constitutional amendment on debt, if approved in the general election on Nov. 3, would gradually reduce the amount of general obligation bonds the state could issue in any year to 70% of bonds retired that year.
The amendment would also require the state Legislature to adopt a comprehensive debt management plan to take effect no later than Dec. 31, 1993.
In addition, the amendment would give constitutional backing to a bond security and redemption fund that would have first call on all state money deposited in Louisiana's Treasury. An exception would be made if two-thirds of the elected members of each House directed the Treasury to do otherwise.
"We are pleased with this proposed amendment," Tony Gelderman, general counsel to state Treasurer Mary Landrieu, said yesterday. "We think it represents a compromise, in which the state will still have flexibility to issue the debt it needs while achieving a gradual but prudent reduction in its debt outstanding."
The debt limitation proposal is a modified version of a measure put forth by delegates from the state House of Representatives. That measure called for: reducing the borrowing of all tax-supported state debt to 50% of the debt retired in any given year by fiscal 2002. Treasurer Landrieu had objected to the 50% level, seeing it as overly restrictive, who felt it was too restrictive, Mr. Gelderman said.
The House amendment proposal would have also required the state to set percentage-based caps for the amount of spending dedicated to yearly debt service.
Under the proposal approved by the convention on Sept. 18, Louisiana would first reduce the amount of GO bonds it could issue in fiscal 1993 to 90% of the GOs retired that year. For each year thereafter, the cap would be reduced by five percentage points until a 70% level is reached in fiscal 1998.
But the convention, which began Aug. 23, was unable to reach any agreement on tax reform. This had been the main focus of the gathering for Gov. Edwin Edwards and his supporters in the Legislature. Since 1991, the governor has pushed the convention as a possible solution to the state's recurrent budget imbalances.
Gov. Edwards was particularly disappointed that the convention did not agree to put before voters a proposal to reduce the state's $75,000 homestead exemption. Another measure, which would have reset the cap on the state's income tax to 8% from 6%. was also killed in committee.
"My initial reaction is that [the proposals that will be put before voters] are a start and ought to be adopted," he said. "But I have to say I'm disappointed overall."
The convention did agree, however, to send to voters a proposal that sets spending limits for upcoming fiscal years that are pegged to personal income growth in the state over the past three fiscal years. Another proposal sent to voters would prohibit the use of nonrecurring funds for recurring expenditures.
In addition, the convention called for voters to consider two provisions of interest to local governments. The first, if approved, would allow localities to levy an occupational license tax if it is authorized by two-thirds of the members of each house of the Legislature. The second would require a two-thirds vote of the Legislature if it desires to exempt a portion of state sales taxes.