And so it begins.
The House Ways and Means Committee voted 11-5 today to pass the first tax of the session, with the extra cents being attached to cigarettes. HB 119 by Rep. Harold Ritchie, D-Bogalusa, would match Mississippi’s rate of 68 cents per pack, up from Louisiana’s current 36 cents. The bill now will be debated on the House floor.
Ritchie originally wanted to take the tax to $1.54 per pack, generating $240 million in new revenue next fiscal year, but he agreed to an amendment from Committee Chairman Joel Robideaux, R-Lafayette.
The revised tax now would bring in $67 million, or perhaps slightly more, next fiscal year, according to the Legislature’s chief economist.
Some lawmakers on the committee objected, questioning whether the revised increase would be enough to reduce the number of smokers in Louisiana or truly help create the kind of revenue the state needs to help balance the budget.
“That’s a big difference,” said Rep. Regina Barrow, D-Baton Rouge. “I wonder if this can really get us where we need to go.”
Ritchie said he was trying to accommodate a compromise. “It’s a good way to get it out of committee and to live to fight another day,” he said.
The proposal is key to the legislative and administrative plans to close a $1.6 billion budget shortfall.
Some conservative lawmakers on the committee would never vote for a tax under any circumstances, due to campaign promises, while others were swayed by business interests to oppose the cigarette hike. For example, former state Sen. Fred Hoyt, who operates several convenience stores, told lawmakers that cigarette sales account for 30% of his bottom line and a tax increase would be detrimental.
Moving forward, one of the sticking points in increasing the cigarette tax may be how the revenue is used. Many lawmakers on the committee voiced support for linking it to health care.
—As lawmakers work to cobble together the pieces of their budget-balancing plan, Gov. Bobby Jindal’s administration appears to be reserving judgment and holding onto the cornerstone bill from its own plan.
HB 366 by Rep. Bryan Adams, R-Gretna, includes Jindal’s proposal to make a set of refundable tax credits non-refundable. It was temporarily put on hold during today’s Ways and Means Committee.
Revenue Secretary Tim Barfield also told committee members that the administration would not be opposing any tax bills this early in the process. The governor is opposed to any net increase in taxes, but would endorse them if reductions of an equal amount are made elsewhere in the budget. Legislative leaders feel like they’re meeting the revenue neutrality rule by advancing an inventory tax repeal bill in the Senate, which would cut that particular tax by around $500 million.
Robideaux recessed the committee meeting just prior to lunch with plans to reconvene after the full House meets this afternoon. The committee may also meet a few more times this week, with at least one additional meeting scheduled for Tuesday.
Telling his colleagues that the bills to come this afternoon could help prop up higher education and health care, Robideaux is working to frame a debate that will focus on tough decisions. Left on today’s agenda for consideration this afternoon are bills that would roll back the movie tax credit, limit the Enterprise Zone program, alter the net operating loss deduction and scale back the solar tax credit, among other measures.
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.
