Saturday, April 20, 2024

Road construction money hits detour in Louisiana Senate

by BIZ Magazine

By David Jacobs | The Center Square

An effort to make permanent a temporary sales tax to fund road construction died Monday in the Louisiana Senate, which chose instead to redirect a separate tax for the same purpose.

House Bill 514 started as a proposal to tax medical marijuana. Sen. Rick Ward, a Port Allen Republican, proposed a successful amendment to make permanent a 0.45% state sales tax that is scheduled to expire in 2025 and redirect the money to a fund dedicated to construction and maintenance of transportation infrastructure.

The amendment, however, appeared to face long odds in the House. Enough conservatives had announced their opposition to block passage, and many liberals objected to relying on a “regressive” tax that is most burdensome for the lowest-income consumers.

Senators essentially gutted the bill Monday and replaced it with a new proposal to redirect most of the state sales taxes on automobile sales and leases from the state general fund to road construction and maintenance. Beginning with the 2022-2023 fiscal year, 25% of the proceeds would be redirected, followed by 50% the year after and 75% for each year thereafter.

The bill now is very similar to House Bill 511, which the Senate Finance Committee advanced Sunday with the understanding it was unlikely to survive in its current form. HB 511 would have ramped up over 10 years until all of the revenue was dedicated to transportation.

“I think this is a good middle ground,” Ward said.

Ward said 75% of the auto tax revenue would equate to about $375 million per year for roads and bridges. Unlike the state’s gas tax, which has not been adjusted in three decades, auto sales taxes naturally will rise with inflation, he said.

Since the money has been going to the general fund, redirecting most of it could contribute to future budget shortfalls, possibly leading to cuts to health care, higher education and other priorities.

Sen. Karen Carter Peterson praised the fact the bill no longer calls for taxes on medical marijuana. Louisiana does not generally tax medicine, she said. The proceeds otherwise would have been dedicated transportation construction, early childhood education and legal representation for defendants who cannot afford attorneys.

The bill returns to the House so members can discuss the changes.

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