La. Cuts $600 Million from Budget, Looks to Fed Aid

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Louisiana's legislature approved $600 million in budget cuts Tuesday to wrap its special session to address the economic crisis left by hurricanes Katrina and Rita. Now state officials hope their efforts will persuade the federal government to offer more support.

MADELEINE BRAND, host:

This is DAY TO DAY. I'm Madeleine Brand.

After weeks of haggling, Louisiana lawmakers have cut $600 million from their state budget. Legislators had been meeting in an emergency session in order to rebalance finances thrown out of whack after the recent hurricanes. NPR's Audie Cornish reports on the last day of the session in Baton Rouge.

AUDIE CORNISH reporting:

With thousands of people now out of work and businesses in hurricane-ravaged areas closed or struggling, the state's tax revenues are shrinking. So lawmakers were spending the final hours of yesterday's special session trying to make up the difference.

Governor KATHLEEN BLANCO (Democrat, Louisiana): There is a new reality in Louisiana, the reality of the limitations of the post-Katrina-Rita economy.

CORNISH: Governor Kathleen Blanco got most of the measures she asked for. Lawmakers voted to take over failing schools in New Orleans' public school system, a move Blanco called a gift. Legislators wrangled over the details of a three-day tax holiday for consumers, and passed a statewide building code to encourage insurers. And local levy boards will receive more aggressive state oversight through the Coastal Protection and Restoration Authority. There were no new taxes and no plans for the state to borrow money. The session ended an hour early with lawmakers such as Representative Ernest Wooton saying the measures should draw the attention of federal officials.

State Representative ERNEST WOOTON (Republican, Louisiana): Eighty-five days ago today, Hurricane Katrina was blowing through here. Eighty-five days is a short time in history, but I think and I fear that our friends in Washington, where we need help, think the crisis is over. We have to convince the people in Washington that the crisis has just begun for Louisiana, that it's not over.

CORNISH: But although there are no new taxes, there are new tax credits. Businesses replacing machinery damaged by hurricanes will get a tax break. Lawmakers are phasing out taxes on corporate debt, and they're reducing the industry tax on utilities such as natural gas and electricity. So where does this leave the citizens of hurricane-damaged parishes? State Representative Troy Hebert.

State Representative TROY HEBERT (Democrat, Louisiana): For the people that actually got affected by the storm, I think we've done very little. I think for other big businesses, I think when it comes to money and tax breaks, big businesses got the majority of it, and I think the person that individually got affected got very little.

CORNISH: But Governor Blanco says in order to get people back on their feet, the state needs to get businesses back on their feet. And she's also looking to lure more support from the federal government by proving that Louisiana is holding up its end of the recovery process.

Gov. BLANCO: I think that when I go to Washington this coming month that I can bring a long laundry list of the things, as Congress is so fond of asking, what has Louisiana done for itself in this effort. And I think that I can bring a very substantial package of accomplishments.

CORNISH: But all of this is just the start. Louisiana still faces a $3.7 billion bill from FEMA for the state's share of hurricane costs. And although the governor says she can ask for relief, she says she doesn't believe the debt will all go away. Meanwhile, Blanco is asking lawmakers to clear out a few more days of their schedule in January in case they need another emergency budget session. Audie Cornish, NPR News, Baton Rouge.

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