Bill advances to reduce Louisiana’s temporary sales tax, but not right away

Louisiana lawmakers want to address the so-called fiscal cliff that arrives in mid-2025 when a temporary portion of the state sales tax expires, eliminating more than $400 million in revenue from the state budget. A bill to wean off that 0.45 of a penny advanced Monday from a House committee.

Rep. Tony Bacala, R-Prairieville, had originally proposed that House Bill 438 drop the temporary tax to 0.35% effective this July 1, but he amended it rather than impact the budget for next fiscal year currently being fashioned in the Legislature. His proposal now calls for the tax to drop to 0.30% in mid-2023, then 0.15% in mid-2024 before coming off the books entirely in mid-2025.

“We can wait until the cliff is upon us and scramble to fix it, or we can work on it now,” Bacala told committee members.

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.