With lawmakers at odds over tax reform, both chambers opted not to go into session Wednesday. The goal of the session is to lower personal and corporate income tax rates and make Louisiana a more attractive place to live and do business. But the decrease in revenue for the state budget means sales taxes on more goods and services must be implemented and or raised.
HB 1 lowers the personal income tax rate, for anyone making more than $12,500 annually to a flat 3%. And because that would create a $1.3 billion loss in revenue for the state, the bill originally repealed a number of tax credits, which didn’t go over well.
Among those on the chopping block were the Film and Historic Tax Credits, but large support for those incentives kept them in play. The bill was amended to cap the Film Tax Credit at $125 million and the Historic Tax Credit to $85 million.
There’s also legislation to move funding from various trust funds to pay off other projects. For example HB 7 eliminates the Education Excellence Fund, the Louisiana Education Quality Trust Fund and the Louisiana Quality Education Support Fund. That would leave $2 billion to go towards the Teachers Retirement System of Louisiana (TRSL).
And with the debt of the TRSL paid down, school systems can use those savings to implement permanent $2,000 teacher pay raises and $1,000 raises for support staff as outlined in HB 5, instead of the current stipends.
While there’s a consensus on teacher pay, other bills are facing pushback. For example, with HB 12, Sen. Thomas Pressly (R-Shreveport) took issue with an amendment on the bill to remove funding for the I-49 project for Shreveport and Lafayette and retain monies for the Lake Charles and Baton Rouge mega-bridge projects.
“I can’t vote for this amendment set or this bill with the way that it’s currently written,” said Pressly.
And that’s a sentiment on many of the tax reform bills. They are each multifaceted and where there’s agreement on portions of the bills, funding from another source to balance the anticipated losses is where there’s dissension.
HB 9 originally added 42 categories to be taxed, but that has been amended to 19 goods and services. Even heavily amended the bill has been pushed from the calendar multiple days because the votes aren’t there in the House. Changes to the state’s tax code require a two-thirds majority.
Rep. Mandie Landry (D-New Orleans) says there’s dissension over raising taxes and lots of backroom deals being made on what tax breaks will remain and which ones will be repealed.
“Honestly, this is all being decided by men behind doors, like everything has happened here for a long time. And the rest of us here, little bits of information here and there. It does seem like there’s a huge amount of discord behind the scene and among parties and House and Senate members,” said Rep. Landry.
But Revenue Secretary Richard Nelson, who crafted the legislation remains optimistic.
“We’re going to end up passing some significant tax reforms, what the flavor of that’s going to be I think we’re still working all that out,” said Nelson.
And while special interest groups and lawmakers continue to negotiate tax reforms, the clock is ticking. Rep. Landry says the idea of increasing taxes to balance those that are lowered is receiving an adverse response.
“There’s just a lot of heartburn at the idea that some taxes will have to be raised in order for this to balance out, and I think that might eventually be why it’s killed,” said Rep. Landry.
So far, none of the tax reform bills have passed in both chambers. The session is scheduled to adjourn Monday evening.
