Capitol Views: Inventory tax repeal put on hold for now
A highly anticipated hearing scheduled for this afternoon to consider a bill that would repeal Louisiana’s inventory tax ended before it got started.
Sen. Robert Adley, R-Benton, shelved his SB 85 with a promise of returning soon to the Senate Revenue and Fiscal Affairs Committee for a vote. While there has been a great deal of concern voiced by local governments , which rely on the tax money generated for their budgets, Adley said he found out about certain “implications” too late. He said his bill would have a negative effect on public schools and some retirement systems and, as such, that it needs to be adjusted. Rather than floating several amendments to do just that, Adley said he would return instead with a substitute bill to advance at the committee’s next meeting.
“It is my goal to move forward with the legislation,” Adley said, “but I don’t want to move forward until I have accurate numbers for everyone.”
An analysis released by the Legislative Fiscal Office midday today estimated that the loss to local governments could range between $517 million to $634 million annually. That’s further off the mark from the $450 million yearly figure that supporters and opponents had been working with. The repeal of the inventory tax credit is central to the plan constructed by lawmakers to address the state’s $1.6 billion budget hole. It could result in several revenue-generating measures being put on hold prior to Tuesday’s meeting of the House Ways and Means Committee.
In an earlier interview, Ways and Means Chairman Joel Robideaux, R-Lafayette, said he scheduled his meeting to follow the Revenue and Fiscal Affairs gathering to make sure the inventory tax repeal would be moved to the Senate floor before he asked his members to vote on a slew of tax proposals.
—Lawmakers have plenty of ideas to address the state’s $1.6 billion budget shortfall, including some proposals from Gov. Bobby Jindal, but they’re slowly learning that the initial math is not necessarily in their favor.
For example, Jindal’s plan to make $526 million in refundable tax credits non-refundable, if passed, would not necessarily equate to $526 million in savings next fiscal year. Greg Albrecht, the Legislature’s chief economist, said today that only 10% of that total would be realized in FY 2015-16, which begins July 1 and ends June 30, 2016, with it expanding further with each passing year. Robust returns from a possible Internet sales tax collection nexus may be overhyped as well.
“The FY16 revenue would likely be very small,” Albrecht said.
The same goes for modifying excess itemized deductions, which would generate new revenue for the state only when returns are filed in the spring of 2016. If lawmakers pass a suspension of the tax exemption for horizontal drilling, next year’s “revenue gains may not be material,” ALbrecht said.
The list of examples and holdups went on during a meeting of the Senate Revenue and Fiscal Affairs Committee today. So what are lawmakers to do? According to Sen. Robert Adley, R-Benton, lawmakers still have the ability to amend bills, and that includes the trigger mechanisms for all fiscal measures filed this session.
“They could always be changed to speed things up,” Adley said.
Jeremy Alford will publish a daily update throughout the legislative session on Daily Report PM. He reports on Louisiana politics at LaPolitics.com. Follow him on Twitter or on Facebook. He can be reached at JJA@LaPolitics.com.