BATON ROUGE, La. (AP) — The sales tax proposal advancing in the Louisiana House to help close a nearly $1 billion budget shortfall caused by expiring taxes would repeat the problem three years later, enacting only temporary changes and causing a new budget gap in 2021.
Several lawmakers say they disagree with creating another self-inflicted financial problem, rather than a permanent fix.
"It should concern the people of the state," Senate President John Alario, a Westwego Republican, said Sunday night. "They need to make it permanent so that colleges and universities can plan, health care people can plan, all the other agencies in this state, so we wouldn't be fighting this every couple years."
The sales tax bill would raise about $300 million a year — the lion's share of the money that would be raised by the tax measures scheduled for debate Monday on the House floor. It would temporarily enact a 0.25 percent sales tax and temporarily eliminate some sales tax breaks.
The budget hole that hits when the new financial year begins July 1 is caused by the expiration of a previous package of temporary taxes largely enacted two years ago, mainly an expiring 1 percent sales tax, described as a bridge to a larger rewrite of Louisiana's tax laws. That rewrite never happened as House Republicans blocked ideas proposed by a task force of tax and policy experts and by Democratic Gov. John Bel Edwards.
Edwards called the 17-day special session, seeking to pass replacement taxes. He said without them, deep cuts would be forced on the TOPS college tuition program, health services and public safety spending.
The task force recommended against temporary taxes. Edwards also opposed the idea, though he hasn't commented directly about the temporary sales tax bill by Rep. Stephen Dwight, a Lake Charles Republican, that emerged from the House Ways and Means Committee on Sunday.
Addition of the short-term language to the sales tax proposal won support in a 10-7 committee vote, before it was advanced to the full House for debate. It's unclear, however, if the measure can win the required two-thirds vote needed to pass with or without the temporary language.
Rep. Alan Seabaugh, a Shreveport Republican who voted against the sales tax measure, suggested the June 30, 2021, expiration date for it.
"If we were to make this change permanent, I would think that's tantamount to admitting failure" on the larger tax rewrite, Seabaugh said. "And I'm not ready to admit that yet."
Rep. Chris Broadwater, a Hammond Republican, disagreed with making the sales tax measure temporary, saying businesses and residents need stability in knowing what taxes they will have to pay. He also cited national credit rating agencies that have raised concerns about the impermanent nature of Louisiana's financial base.
The nonpartisan Council for a Better Louisiana sent a letter to House members Monday objecting to the "bad policy of temporary taxes." The organization urged lawmakers to "provide stability to our budget and end the distractions that for too long have prevented us from focusing on the many other important issues that impact our state."
Also awaiting debate on the House floor are measures to cut tax breaks for middle- and upper-income taxpayers who itemize deductions on their income tax returns and to continue reductions to certain tax break programs for businesses and for taxes paid to other states.
The package of bills would be about $260 million short of closing the budget gap, even including a bump in personal income tax collections expected in Louisiana because of the federal tax changes.
"That's falling short from what we need to handle the problems that are facing the state," Alario said. "So, I'm hoping that they'll find some additional revenues."
-by AP reporter Melinda Deslatte
