Louisiana Lawmakers Hunker Down

Gov. Kathleen Blanco warned state lawmakers Sunday that the tremendous amount of work needed to help Louisiana recover from the devastation of Hurricane Katrina will require tough choices as they start their 17-day special session.

In a speech from the House chamber, the governor said the challenges would "test what it means to be public servants."

Louisiana is asking for federal money and assistance, but the state must help itself, Blanco said. "Recovery will involve tough choices."

Blanco set the tone on 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 gaping 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 both from the storms' damage and the loss of customers, and lawmakers are expected to consider tax breaks during the special session 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.

Blanco isn't asking for any tax increases, but she is expected to run into resistance from lawmakers who want to borrow more and others who prefer deeper cuts to borrowing.

Several senators also complained that Blanco got off to a bad start by announcing the budget cuts without going through legislative committees.

"I think it was a strategic mistake on her part. I can't defend her on that," said Sen. Butch Gautreaux, a Democrat and Blanco ally.

The Legislature could restore the cuts Blanco made on Saturday, but the state constitution still requires a balanced budget, and estimates of lost tax revenue and recovery expenses could continue to rise.

Democratic Sen. Francis Heitmeier, chairman of the Senate budget committee, said he was surprised Blanco cut so much but it was too early to say if lawmakers would try to reverse the reductions.

Though Blanco initially proposed a limited special session, with a more expanded agenda for a planned special session in January, lawmakers pressured her for more immediate relief efforts. Her framework for the November session mushroomed into dozens of topics that legislators are allowed to consider. Legally, the session must end by Nov. 22.