Bill that weans Louisiana off temporary sales tax advances from House
The Louisiana State Capitol (Wesley Muller/Louisiana Illuminator)
A tax cut that would take a huge bite out of Louisiana’s budgets in upcoming fiscal years is advancing through the Legislature, perhaps curtailing big-spending plans for a huge cash surplus lawmakers are tasked with allocating.
The House of Representatives approved House Bill 438 in a 67-30 vote Monday. It pares back a temporary 0.45% portion of the state sales tax to 0.3% in mid-2023 and then to 0.15% in mid-2024. The entire tax is slated to expire, regardless of the bill’s fate, on June 30, 2025. The tax accounts for about $400 million in state revenue annually.
The bill’s sponsor, Rep. Tony Bacala, R-Prairieville, had originally proposed the gradual reductions in the tax go into effect this July 1, but he amended his proposal in committee rather than impact the ongoing deliberations over next year’s budget
While much of lawmakers’ fiscal focus has been how to spend a huge infusion of federal dollars, the fate of the temporary state sales tax has lingered over much these conversations. Separate proposals have suggested placing these tax proceeds into dedicated funds to ensure the money would be spent before the tax expires and illustrate the significant amount of revenue in question.
The Republican majority in the Legislature has largely been against making the 0.45% tax permanent, even though its loss will likely result in cuts to K-12 schools, higher education and health care. To date, there hasn’t been any discussion on how to replace the expiring tax revenue beyond hopes that the existing permanent tax will generate more money for the state.
The advancement of the tax reduction occurred on the same day lawmakers received an update on tax revenue increases for the current and upcoming state budgets. The Revenue Estimating Conference learned Monday an additional $350 million will be collected for the fiscal year that ends June 30, but projections for next fiscal year are far less at $104 million. For fiscally conservative lawmakers, the short-lived bounty could lend further support to their arguments to carefully marshal recurring expenses for state government.
Gov.John Bel Edwards has indicating he will continue to ask lawmakers to increase the $1,500 pay raise already in next year’s budget to $2,000. A more challenge request for the governor will be a monthly salary supplement he’s seeking for local police, firefighters and certain law enforcement from $500 to $600.
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