2 weeks Ago
Gov. Jeff Landry receives a round of applause in the House of Representatives at the state capitol on Friday, November 22, 2024. Javier Gallegos Speaker of the House Phillip R.
DeVillier, R-Eunice, speaks before the House at the state capitol on Friday, November 22, 2024. Javier Gallegos State representatives try to get the speaker’s attention before voting concludes on a motion at the state capitol on Friday, November 22, 2024. Javier Gallegos Senate President Cameron Henry, R-Metairie, speaks before the Senate at the state capitol on Friday, November 22, 2024.
Javier Gallegos Sen. Royce Duplessis, D-New Orleans, speaks at the podium as members of the Legislative Black Caucus and Democrats from the House and Senate hold a press conference on opening day of a legislative special session focusing on crime, Monday, February 19, 2024, at the Louisiana State Capitol in Baton Rouge, La. STAFF PHOTO BY HILARY SCHEINUK Facebook Twitter WhatsApp SMS Email Print Copy article link Save The old saw that no one is safe in life, liberty or property as long as the Louisiana Legislature is in session was never truer than in Gov.
Jeff Landry’s hastily called — and even more frantically concluded — special session on tax reform. In the final hours, lawmakers had little-to-no clear idea what they voted for, other than getting out of Baton Rouge in time to keep their pre-Thanksgiving travel plans. It’ll be interesting to see what happens once voters realize what’s changing.
Here’s a hint: “Change” doesn’t necessarily equal “reform.” In fact, lawmakers may have created several new “fiscal cliffs.” All of which provides fodder for our four-decades-old tradition of surveying the battlefield and counting the victors and the vanquished, aka “Da Winnas and Da Loozas.
” We begin with ...
DA WINNAS 1. Gov. Jeff Landry — The governor didn’t get everything he wanted, but he got what he wanted most: a flat 3% individual income tax .
That was his Holy Grail, but it came at an Arthurian cost. The House balked at Landry’s proposed repeal of 41 sales tax exemptions , throwing his plan wildly out of balance. He settled for a hike in the state sales tax — which he initially hoped to keep at the .
45% rate that expires next summer — and a surprising spike in the effective tax rate on major corporations. (More on that below.) Landry is quite good at the transactional part of governance, but raising taxes on big business makes him look like more of a Democrat than his predecessor, John Bel Edwards.
Worst of all, when the 5% sales tax drops to 4.75% in 2030, the state may face another fiscal cliff. He was the session’s Big Winna, but the guv shed some blood in the process.
2. Senate President Cameron Henry — The Metairie Republican has emerged as the John Alario of his generation, the quintessential dealmaker and the glue that holds the upper chamber together. Henry more than anyone rescued Landry’s tax package when it was on the verge of imploding , further increasing the Senate president’s already rising political stock.
3. Local governments — Parish leaders, mayors and sheriffs worked lockstep to preserve everything they like about the current tax structure. Parishes kept their right to tax business inventories, manufacturing machinery and equipment and prescription drugs.
Sheriffs preserved their roles as tax collectors and gained a potential source of revenue from a push to house juvenile offenders in adult jails. 4. Rich folk — The new 3% flat income tax will be a boon to Louisiana’s ruling class.
Let’s pray they spend it locally. The state needs the higher sales tax we’re all gonna soon pay. 5.
Filmmakers and developers — Lawmakers preserved (but lowered annual caps on) tax credits for films shot in Louisiana and for historic restoration. The latter helps redevelop iconic old buildings all over the state. Which brings us to .
.. DA LOOZAS 1.
Poor people — The governor’s original plan, which lawmakers gutted, made genuine efforts to insulate low- and moderate-income Louisianans from some adverse impacts of the proposed changes. That went out the window when legislators hiked the state sales tax to 5%, which will hit poor folks the hardest. 2.
The House — Some members of the lower chamber acknowledged they were counting on the Senate to “fix” various measures they were approving. Ultimately, House members were forced to accept — with no deliberation or debate — what the Senate dictated in the final hours. It resembled the annual budget showdown, which is no way to do budgeting or tax reform.
3. The Democratic caucus — Landry steamrolled the Dems by convincing many of them to support various parts of his package, effectively reducing the caucus to in-fighting, disarray and virtual irrelevance. 4.
Big business — To pay for preserving film and historic restoration tax credits and dozens of sales tax exemptions, lawmakers socked it to big corporations. Yes, they lowered the corporate income tax rate from 7.5% to 5.
5%, but they also repealed a host of credits, exemptions, exclusions and rebates that have given large “C-corps” an effective income tax rate of 3%. Now those companies will pay an actual 5.5% income tax, which is quite a hit.
5. Juvenile offenders — It’s not part of tax reform, but the Legislature is determined to let DAs prosecute youthful offenders as adults more often, which will cost the state more in the long run. Speaking of costing the state more, the cost of repealing Louisiana’s criminal justice reforms already costs at least $200 million a year more, and the administration admits the annual cost will ultimately reach $450 million.
Others say it’ll be at least $600 million a year. That’s going to create another fiscal cliff, particularly when the 5% sales tax drops to 4.75% in 2030.
Lawmakers also diverted, for the next two years, $280 million in vehicle sales taxes from the Transportation Trust Fund to the state general fund — to help offset the cost of Landry’s 3% flat income tax. In two years, that money will revert to the transportation fund, potentially leaving yet another budget hole. Moreover, if voters approve Landry’s proposed constitutional amendment in March, future state budgets will be capped — creating more pressure to cut critical services.
In the end, the special session did some good things, but it’s unclear if the changes will be revenue neutral. We’re told lawmakers will address any problems in the spring fiscal session. We’ll see.
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