Baton Rouge business community grapples with how much it’s willing to give up as Louisiana budget battle looms

Business Report

On a snowy January morning inside Washington D.C.’s historic Willard Hotel, dozens of Louisiana’s top business leaders gathered for a briefing from Gov. John Bel Edwards. Some in the room, mostly CEOs and members of the Committee of 100 of Louisiana—the influential business roundtable—were concerned about the approaching blizzard that threatened to disrupt the Washington Mardi Gras festivities that had brought them all to the nation’s capital in the first place. Some were worried about catching a flight home while they still could.

But as Business Report’s new cover package details, most were focused on a more serious pending crisis—the state’s budget situation. As he had in other recent speeches, Edwards told the group about the $750 million hole in the current fiscal year’s budget and the $1.9 billion deficit projected for next fiscal year. He outlined his administration’s plan to deal with the crisis in the upcoming legislative session: a series of some cuts and lots of tax increases that would hit business hard. He also asked for their support.

It’s not the message anyone in the room particularly wanted to hear, but when the governor finished his speech, the group gave him a standing ovation.

“It’s partly because of the stature of his office, but I think they genuinely appreciated his brutal honesty and they recognize we have to do something,” says C100 President Michael Olivier, who organized the event. “He was refreshingly blunt and honest, and I think that set the tone in terms of the reality of what we’re dealing with … and it reinforced the need to work together.”

There has been a lot of talk about the need to work together during the upcoming special session, in which lawmakers will have just three weeks to fill the current year’s budget hole and pass any tax increases to help close next year’s gap. But there’s a difference between talk and action, and not everyone in the state’s business community is as receptive to the governor’s proposal as are the leaders of C100. Reaction to the plan from other business organizations has ranged from disappointment to disgust because of its heavy emphasis on tax increases.

“This is tilted towards business-related proposals,” says Baton Rouge Area Chamber President and CEO Adam Knapp. “It’s death by a thousand cuts to business.”

Or as Stephen Waguespack, president of the Louisiana Association of Business and Industry, puts it: “This is not a menu of options. It is one main dish and it is all taxes.”

“We pretty much have a problem with all of it,” says Dawn Starns, president of the National Federation of Independent Businesses.

To suggest there is a division within the business community over how far—if at all—they’re willing to compromise on the issue of tax increases is, perhaps, an overstatement. It’s certainly not a popular thesis to float. No one wants to publicly disagree.

But there are clearly differences of opinion within the organized business community. Some are pragmatic, reasoning that if business can coalesce behind the revenue measures that hurt them least, they’re likely to fare better than opposing everything and getting hammered, which is what happened last year.

Others are standing firm against tax increases, arguing they will endanger the state’s economy and harm its competitiveness with other states.

The extent to which they come together and come up with their own offensive strategy in the session will go a long way toward determining how business ultimately fares because here’s the thing: Tax increases are coming. It’s just a matter of which ones and how many.

Read the full cover story, as well as sidebar stories detailing how Louisiana found itself in its current budget crisiswhat’s on the table to balance the current fiscal year budgetthe proposals to fill the larger gap in the next fiscal year budget; and a look at how Rep. Julie Stokes is making the case that the budget can be balanced without raising revenue.

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