After days of closed-door negotiations, the Louisiana House is scheduled to debate today more than 30 tax proposals aimed at raising new cash for state government operations.
The Associated Press reports the potential tax hikes would impact shoppers, smokers, phone service, drinkers, businesses and more as state lawmakers look to end the boom-and-bust cycle of the state budget.
The short-term problems are acute. Louisiana has a budget gap estimated at around $900 million that needs to be closed by June 30. Public colleges, health care programs and social services are threatened with deep reductions if new dollars aren’t plugged into the hole.
Next year’s budget shortfall is even worse, estimated to top $2 billion.
Gov. John Bel Edwards is proposing to raise more than $420 million in taxes for this year’s budget, to combine with other short-term fixes and spending reductions across agencies. The Democratic governor is seeking even greater tax hikes for the next fiscal year.
But Republicans, particularly in the House, are reticent about many of the proposals. And the Senate only can consider—or modify—tax measures that win passage from the House, making the action in the lower chamber of great significance to budget-balancing efforts.
The foundation of Edwards’ plan is a bill sponsored by Rep. Katrina Jackson, D-Monroe, that would raise Louisiana’s 4-cent state sales tax by another penny on every dollar spent. The proposal is seen as critical to the budget-balancing effort because it could kick in quickly and raise money immediately. If it began on April 1 as proposed, the tax hike would raise an estimated $220 million for this year’s budget and more than $900 million in the next fiscal year.
Several bills being debated today would impact businesses. House bills 22, 23 and 24 would make permanent across-the-board cuts on many tax break and business tax rebate programs. The reductions are due to expire on June 30, 2018, so the revenue raised woudn’t affect the treasury until 2018.
Also on the table is House Bill 46, which would reduce the tax credit businesses can receive from the state for paying local property taxes on their inventory. It’s estimated to raise $290 million annually. House Bill 55 would change what businesses can deduct from their income for tax purposes. It’s uncertain how much revenue this measure would raise.
Other measures sought by the governor would increase cigarette and alcohol taxes, charge a sales tax on car rentals, increase taxes on phone service and boost costs on business utilities. Edwards also is proposing some long-term tax restructuring that could bump up the taxes owed by middle- and upper-income earners and change the way corporate taxes are charged. One measure, House Bill 33, would increase the state income tax for middle- and upper-income residents who itemize their tax deductions, by cutting the percentage of federal excess itemized deductions they can deduct. An estimated $142 million would be raised annually. Others, including House bills 31, 32 and 95, propose eliminating the state tax deduction for federal income taxes in exchange for lower individual tax rates. It’s not known how much money doing this would raise for the state.
House Bill 34 would also increase taxes on who people with net income above $17,500 a year. Doing this could raise an estimated $324 million in the 2016-17 budget year and $259 million annually thereafter. And House Bill 5 would double the amount of state Earn Income Tax credit for the working poor. It’s estimated this would raise $47 million a year.
GOP lawmakers are pushing back against many of the ideas, saying they support efforts to restructure Louisiana’s tax system to make it more competitive and to treat people and businesses fairly. But they say state government is bloated and in need of restructuring as well, and they want any tax measures coupled with deeper cuts and reform proposals.
