1 week Ago
Louisiana Gov. Jeff Landry Facebook Twitter WhatsApp SMS Email Print Copy article link Save After it was sailing through without a hitch , Gov. Jeff Landry’s ambitious tax package ran aground Thursday as the Louisiana House couldn’t pass one revenue-raising tax bill because it lacked votes and only barely passed another one.
The House agreed to raise sales taxes by up to $820 million per year, by 71-23, only one more than the needed 70 votes in the 105-member House. Whether House Bill 10 would actually raise the $820 million was in question after the House adopted 47 amendments with little explanation. But the bigger issue Thursday was that Landry and House leaders couldn’t secure the 70 votes needed to pass House Bill 9 , another key component of the governor’s plan.
In its current form, HB9 would raise $500 million per year by extending the sales tax to 41 services that go untaxed today, including online dating, pet grooming and spa treatments. Landy and House leaders tried to corral the necessary 70 votes by dropping a number of services that would be taxed, but that wasn’t enough. The path forward for Landry and legislative leaders was not clear as business finished on the 9th day of a 25-day special session.
Rather than pass HB9 as planned on Thursday, the House adjourned until Monday. Rep. Julie Emerson, R-Carencro, who is shepherding the package through the House, acknowledged after adjournment that they didn’t have the votes for HB9.
“Some people don’t like the bill at all,” Emerson said. “They just don’t like services. Some people don’t like particular services.
” Landry wouldn’t agree that his plan was in trouble. “Don’t ever go into the kitchen halfway through the meal is cooked,” the governor said in a brief interview. “Judge it once it’s cooked.
” At Landry’s behest, the House has already passed $1.3 billion in individual income tax cuts. The problem is this: House members have to raise enough money to offset those reductions to keep the budget balanced, a requirement under state law.
Landry is proposing to do that through more sales taxes. But he is now at least $500 million short of what he needs. The Senate appears to be planning to go even further in reducing how much money the package would raise by not eliminating, for now, tax credits for film producers and developers of historic buildings.
The Senate is likely to cap each program at a lower cost to the treasury and study in the coming months whether to replace the tax credit with a direct grant subsidy during the regular session next year, said Senate President Cameron Henry, R-Metairie. The cost of the film tax credit is currently capped at $180 million per year, while the historic building tax credit is capped at $125 million per year. Overall, Henry added, he expects the Senate to approve Landry’s tax package, albeit with some changes.
“The Senate is on board with changing the direction of the state,” Henry said in an interview. “We know we’ll have to make some tough votes that will benefit Louisiana in the long run.” The Senate Revenue & Fiscal Affairs Committee will take up the House-passed tax bills on Sunday but won’t begin to vote on the measures until Monday, said Sen.
Franklin Foil, R-Baton Rouge, and the committee chair. Reduce income tax rates Landry is seeking to reduce corporate and individual income tax rates and offset the lost revenue by raising sales taxes. He also wants to abolish the corporate franchise tax.
House Bill 1 in his plan calls for replacing the current individual income tax rates of 1.85%, 3.5% and 4.
25% with a flat 3% rate. That would cost the treasury $1.3 billion per year.
House Bill 2 calls for replacing the current corporate income tax rates of 3.5%, 5.5% and 7.
5% with a flat 3.5% rate. That would cost the treasury $600 million per year, but Landry had proposed offsetting that revenue loss by eliminating tax credits for film producers, developers of historic properties, research and development, quality jobs and enterprise zones.
Lawmakers will have to drop the income tax rates by less than planned to make up for the revenue raising measures cut from the plan. Every .1% increase in the individual income tax rate would generate $100 million, according to Revenue Secretary Richard Nelson, architect of Landry’s tax plan.
So if lawmakers settled on a 3.2% individual income tax rate, that would raise an additional $200 million. The tax rate can go as high as 3.
5% and give all individuals an income tax cut, Foil said. Until Thursday morning, Landry had won the votes of all Republicans, which hadn’t been a certainty before the special session began, given GOP antipathy to taxes. Landry has been telling legislators that they would have to raise sales taxes to reduce income taxes.
The Ways and Means Committee Wednesday approved the sales tax hikes intact, with only two Democrats voting no. Problems encountered But turbulence became evident Thursday morning when Speaker Phillip DeVillier, R-Eunice, recessed the House at 10:30 a.m.
to allow Republicans to caucus in private to discuss complaints about HB 9 and HB 10, the sales tax measures. For the second day in a row, Landry met privately with Republicans to discuss the path forward and tell them to dismiss naysayers. The House reconvened at 2:30 pm and took up the sales tax bills.
After more than two hours of debate, the House passed HB10, sponsored by Rep. Mark Wright, R-Covington. It would replace an expiring 0.
45-cent state sales tax with an 0.4-cent sales tax, a reduction of .05-cents.
That would mean about $50 million per year less for the treasury. Along with approving the 47 amendments en globo without objection, the House approved keeping sales tax exemptions for the purchase of diapers and Bibles. Severance tax Before taking up the sales tax bill, the House unanimously passed a measure that would change how Louisiana imposes the severance tax on oil and natural gas producers.
It is House Bill 25 , sponsored by Rep. Neil Riser, R-Columbia. Currently, oil is taxed at a 12.
5% rate on a value basis, and natural gas is taxed at a 4.5% rate on a volume basis. After adopting an amendment offered by Rep.
Joe Orgeron, R-Golden Meadow, the House-passed version of the HB25 would establish a 6% tax rate for both oil and natural gas on a volume basis. Both oil and natural gas lobbyists supported the change, saying it would promote investment. HB25 would likely cost the state treasury, according to a legislative analysis.
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