A possible June special session to help plug what is expected to be a $600 million budget hole will likely focus on raising revenues by reducing tax credits and rebates for corporations, Gov. John Bel Edwards said in a speech given today to the Baton Rouge Rotary Club.
But the governor is taking another state sales tax off the table.
“We will not go up on sales tax again,” Edwards said. “We have the highest tax rate in the nation, and I feel terrible about that.”
To help balance the budget during a special session in March, the Legislature passed a temporary one-cent sales tax increase, bringing the state sales tax to five cents.
“I think we are all better off if we can get our tax rate back down again,” the governor said.
Edwards said he will rely on recommendations from a special task force on the state’s tax code headed by LSU economist Jim Richardson and Louisiana Revenue Secretary Kimberly Robinson to determine what direction the special session should take. The governor has asked for those recommendations by mid-May and hopes to build a bipartisan consensus by relying on the report’s data and analyses.
“We have a pretty good idea of what they will say,” Edwards said. “We are going to have to look at reducing tax credits and rebates.”
As the governor was outlining the state’s fiscal situation to the Rotary crowd, the Louisiana Association of Business and Industry released an editorial opposing a June special session. In the editorial, LABI President Stephen Waguespack says June is too soon to hold another tax-raising session, noting that fiscal experts don’t know how much revenue the new taxes passed during the spring session will actually bring in this year.
“Those numbers are not yet clear and will remain unclear in the weeks ahead,” Waguespack says.
He also notes that the size of the state’s budget deficit is a moving target and is likely to fluctuate again in the near future.
“If you find yourself in a hole, one of the first things to do is stop digging,” Waguespack says. “Legislators and the administration are neck deep in a hole of taxation, and it is well past time they put the shovels down.”
Waguespack urges the Legislature to shift proposed budget reductions to “areas of lower priority, where funding may not be needed until the latter half of the fiscal year,” and put off talk of a special session for now.
Asked after his speech about the LABI editorial, Edwards quipped: “I’m assuming that’s the counsel he gave to Gov. Jindal that resulted in so many midyear budget cuts.”
The governor went on to say that waiting and “praying that something happens for the good” is irresponsible and would mean closing hospitals and failing to fully fund the TOPS scholarship program.
“I could not imagine a more irresponsible path to take,” he said.
—Stephanie Riegel
