Baton Rouge, La. – Louisiana lawmakers will have to make tough choices to help the state and its residents and businesses recover from the devastation of Hurricane Katrina, Gov. Kathleen Blanco warned legislators Sunday as they convened a special session to deal with the massive crisis.
In a speech from the House chamber, the governor said the tremendous work needed to cope with the devastation would “test what it means to be public servants.”
“Recovery will involve tough choices,” Blanco said.
She set the tone Saturday by cutting the state budget by $431 million, slicing from state agencies almost across the board, including a $222 million hit to health-care services and a $71 million cut in spending on public colleges.
The agenda for the 17-day special session runs the gamut, from the oversight of levees to tax relief. But overshadowing everything will be the hole in the state budget – a deficit estimated at nearly $1 billion in an $18.7 billion spending plan for the 2005-06 fiscal year.
Blanco’s cuts were a start, and she is asking lawmakers to tap at least $153 million of the state’s “rainy day” fund and borrow money to help the state cope.
She also is backing a statewide building code and unified state oversight of the levee system that provides hurricane protection for New Orleans and other parts of the state.
Katrina hit Louisiana on Aug. 29, damaging levees, flooding large parts of New Orleans and neighboring parishes, and killing at least 1,050 people in the state. On Sept. 24, while thousands of residents were still living in shelters, Rita dealt another blow to the region.
Businesses suffered from the storms’ damage and the loss of customers, and lawmakers are expected to consider tax breaks to help them rebuild. Among the possibilities are the removal of a tax on manufacturing machinery bought in the disaster areas, the removal of a corporate franchise tax on new debt in the hurricane-ravaged region, and a cap on the sales taxes businesses pay on utilities.
“We all know that our businesses and industries need far more than a shot of adrenaline to rebound and put our people back to work,” Blanco said.
For residents, the governor is suggesting property-tax breaks and a statewide sales-tax holiday for one day in December.
She isn’t asking for any tax increases, and she is expected to run into resistance from lawmakers who want to borrow more and others who prefer deeper cuts to borrowing.
The Legislature also could restore the cuts Blanco made Saturday, but the state constitution still requires a balanced budget, and estimates of lost tax revenue and recovery expenses could continue to rise.
