Anyone following the early stages of the 2021 regular session is no doubt aware that the policymaking gathering will be a fiscal session. The tax chatter is loud and unmistakable and the ideas lawmakers have to influence state revenue are varied.
During an online forum hosted prior to the Thanksgiving break by the Pelican Institute and led by John Kay, the group’s vice president for advocacy, a trio of conservative representatives spoke openly about their desire to repeal personal and corporate income taxes.
Reps. Richard Nelson and Thomas Pressly noted such a move would make the state more competitive for attracting business while empowering local government to step up their game on property taxes. Rep. Mark Wright, who’s one class ahead of Nelson and Pressly, did spend some time explaining just how difficult that would be, which his colleagues recognized as well.
Revenue and Fiscal Affairs Chairman Bret Allain is likewise “pushing for a major reform of Louisiana’s taxation system, including a cut in personal income tax rates,” according to a story in The Franklin Banner-Tribune.
“I never thought I’d be a tax nerd,” Allain told his hometown paper. “I have to be one because of my position.”
Some of the chairman’s plans include a cut in the top personal income tax rate from 6 percent to 3 percent to 3.5 percent; phasing out the state’s inventory tax; reducing severance taxes; and cutting the number of exemptions “available to energy producers who pay the taxes according to the amount of oil and gas they extract.”
Last month the Centralized Sales and Use Tax Administration Study Group took yet another step toward sending a centralized sales tax proposal to the Legislature. The main thrust of the study group’s findings is still the formation of a panel of state and local officials that would oversee a new, streamlined system for the payment of sales taxes.
The devil, as they say, remains in the details. There’s a struggle for control, between local tax officials and state tax officials, over who should have the most sway over the panel and any auditing elements. Legislative leaders, however, do see a compromise on the horizon.
“In all these meetings, we’ve seen progress moving forward, not backwards,” said House Speaker Clay Schexnayder, who’s expected to handle the centerpiece legislation.
As reported in this space over the last couple of months, there’s also a new highway funding plan being developed by Rep. Jack McFarland that will have a gas tax component. Some conservatives are already pushing back on the concept as McFarland travels the state to meet with lawmakers and the media, but few if any naysayers can deny the basic need Louisiana has for infrastructure upgrades.
As for non-tax chatter, speculation is building about the need for yet another special session should Congress manage to cobble together another coronavirus relief package in the coming weeks and months. Lawmakers don’t necessarily need to gather in the wake of such a decision, but based on the way the House and Senate carved up the money in the last congressional package, there could be some interest.
Another special session this term will most certainly be needed to host the decennial redistricting process. Every 10 years lawmakers must redraw Louisiana’s election lines based on the latest U.S. Census findings. The House and Senate are running a touch behind on getting the proverbial ball rolling, but given the trajectory of the current year, what with record hurricanes and the coronavirus pandemic, the delays are understandable.
The politics of 2021 in Baton Rouge will at the very least be interesting to watch unfold. This past legislative year was defined by a number of issues that will certainly reappear in the New Year, starting with tort reform. Republican legislators have already passed a bill that was intended to lower insurance rates through changes to the civil justice system. But it’s a safe bet that they’ll be back for another bite at the tort reform apple in 2021.
Roughly a month before he issued his first stay-at-home order in March, Governor John Bel Edwards also proposed a $32 billion state budget to lawmakers that prioritized funding increases for early childhood education, K-12 needs and higher education institutions, including additional resources for TOPS scholarships. Those goals fell by the wayside due to COVID-19 cases and the associated economic downturn, but many lawmakers are hoping to get back on course.
Then there’s the budget. Lawmakers and the administration were anticipating a multimillion dollar budget surplus to kick off the new term. Instead, the coronavirus became an immediate drain on local, parish and state coffers. From March to May tax revenue overall was down 28 percent in Louisiana, compared to the same period in 2019. When coupled with falling oil prices, the novel coronavirus created a $900 million hole in state revenue projections. Federal aid and borrowing along with a reprioritizing of the budget helped fill the hole and temporarily right Louisiana’s unemployment fund, but no longterm fixes were adopted.
This Christmas holiday will be an opportune time to decompress and reflect on what was and wasn’t accomplished in 2020. Hopefully everyone in state government will soak up the good cheer of December, because after that there will be plenty of work waiting in the New Year.
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