Friday, June 21, 2024

Sales taxes the focus in Louisiana’s next special session

by BIZ. Staff

By MELINDA DESLATTE, Associated Press

BATON ROUGE, La. (AP) — To fill Louisiana’s budget gap, Gov. John Bel Edwards is backing a plan for the special session starting Tuesday that favors sales taxes, including renewal of up to half the 1 percent sales tax that expires in six weeks.

The Democratic governor also is proposing to permanently get rid of some sales tax breaks, continue charging sales taxes on business utilities and to keep in place prior, temporary reductions made to business tax incentive programs.

But Edwards also said he’s flexible if lawmakers have other ideas, and he’s included a long list of tax options in the parameters for the 14-day, budget-balancing session.

“I’m certainly willing to listen,” he said.

The governor’s goals are largely two-fold: to raise $648 million for the financial year that begins July 1 and to make whatever taxes are passed a permanent change, ending the financial see-saw with which the state has struggled for years.

“We ought to make sure we tackle these problems once and for all,” Edwards said.

Beyond taxes, lawmakers will need to work on next year’s budget, after the governor on Friday vetoed a version that contained deep cuts.

About $1.4 billion in temporary taxes passed by lawmakers in 2015 and 2016 to plug budget holes are expiring with the start of the new budget year. With other tax offsets, Louisiana is estimated to get $648 million less in general tax dollars next year. A February special session on taxes cratered, with no dollars raised to offset cuts amid partisan disputes in the House that stalled all major tax bills.

Lawmakers say there have been scant negotiations ahead of the next special session, creating questions about whether the House will break through its gridlock in a session that must end June 4.

“I thought there was a lack of communication during the first special session, and I don’t know that there’s been an attempt to reach across the aisle from both sides since then,” said Rep. Stephen Dwight, a Lake Charles Republican. “I think there’s too many ideas floating around, too many factions. There hasn’t been a consensus about how to go forward.”

Rep. Gary Carter, a New Orleans Democrat, opposed renewal of the expiring sales tax earlier this year – and he’s still resistant to the idea now.

“It’ll be tough for me to vote for it, especially to fund a standstill budget that doesn’t do enough for working-class people,” Carter said. “My thinking and logic hasn’t changed, and I haven’t heard anything yet to change my mind.”

A sales tax renewal can raise a lot of money quickly. Renewal of a half-penny tax on every dollar of a purchase would generate more than $400 million annually.

Supporters say sales taxes are fair because they apply to everyone evenly. Critics say sales taxes are unfair because they take a larger bite out of poor people’s income. During the last special session, House Republicans willing to consider taxes favored sales taxes. Democrats, particularly members of the Legislature’s Black Caucus, favored income taxes.
Dwight sponsored a sales tax renewal bill in the February session, but won’t be handling a similar measure this time. He said, however, he thinks a tax deal can be struck if leaders from all sides are engaged.

“It’s going to take a lot of hard work,” Dwight said. “I wish they would have started working a lot earlier.”

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