BATON ROUGE, La. (AP) - State senators Wednesday heavily rewrote a sales tax renewal bill to boost the money raised for next year’s budget, despite warnings the approach would be rejected by the House and could collapse the entire budget-balancing special session in its final days without a deal.
Louisiana’s state sales tax rate is 5 percent, dropping to 4 percent on July 1 when the new budget year begins, blowing a hole in the state’s revenue. The bill by House Republican leader Lance Harris that was backed by the full House moves the rate to 4.33 percent on July 1.
The Senate Revenue and Fiscal Affairs Committee kept the tax rate. But senators stripped off the five-year expiration date and removed high-dollar exemptions for businesses, particularly manufacturing facilities. Senators then sent the rewritten measure to the full Senate for debate.
The proposal would raise $642 million to stave off deep cuts across state government in fewer than five weeks. That’s significantly higher than the $365 million raised in the more business-friendly House version.
“This won’t pass the House,” Harris said.
Sen. J.P. Morrell, the New Orleans Democrat who chairs the committee, shot back: “What about what will pass the Senate?”
The special session must end June 4.
Senators said the House hasn’t agreed to enough tax revenue to avoid damaging cuts to health, education and public safety programs in the upcoming year.
After Harris refused to commit to how he would handle the sales tax bill when it returns to his chamber, senators also hijacked a House-approved tax bill sponsored by a Democrat and made it a duplicate sales tax bill. If Harris won’t agree to bring up the rewritten sales tax bill for a House floor vote, senators hope that Rep. Walt Leger, the top-ranking Democrat in the chamber, will ask House lawmakers to vote on his version.
Sen. Karen Carter Peterson, a New Orleans Democrat, said the duplicate maneuver aimed to ensure that lawmakers would “not be held hostage on June 4 by any one individual.”
The rewrite was led by Democrats. No Republicans on the committee objected, though it’s unclear if Republicans in the GOP-majority Senate will back the sales tax proposal on the Senate floor.
Wednesday night’s tax hearing became a public airing of the grievances between the House and Senate that stretch over two years, since 2016 when the 1 percent sales tax hike was made temporary, with the promise it would be a bridge to a larger tax overhaul. Since then, the House has stalled all major efforts to rewrite Louisiana’s tax laws. Because nearly all tax measures must start in the House, senators have largely had to watch.
“We’ve been waiting patiently in the Senate for a year and a half to get something,” said Sen. Jay Luneau, a Democrat from Harris’ hometown of Alexandria. “And now we get something and you tell us, ’It’s this or nothing.’ That’s not compromise.”
Democrats on the Senate committee objected to House Republican leaders’ talk about needing to shrink the size of state government without identifying a specific list of programs or services they would eliminate. They pushed Harris to spell out where he would cut spending. He suggested scaling back the state’s film tax break program, but offered few other specifics.
“We continue to hear we can cut our way out of the problem, but nobody identifies the cuts,” Luneau said.
Harris said government spending has grown faster than the state’s economy.
“What I hear in my district is they’re sick and tired of being taxed to death,” he said.
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House Bills 12 and 27: www.legis.la.gov
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