Louisiana Spotlight: Long-term tax overhaul got lost in legislative wrangling

BATON ROUGE — No matter what might have happened in Louisiana’s special session on taxes, one thing was going to be left on the cutting room floor: long-term tax reform.
Talk of reform was all the rage two years ago in the Louisiana Capitol, but disagreements over what that word means and legislative politics have sidelined any comprehensive package to rewrite the state’s tax laws.
That has made some people frustrated and others angry.
“In my short five years here — and they’ve been pretty miserable — I’ve learned the Legislature won’t do anything it doesn’t have to do,” said Rep. Barry Ivey, a Baton Rouge-area Republican who proposed a tax rewrite package last year but failed to gain support from House Republican leaders.
Lawmakers in 2016 agreed to more than $1.1 billion in temporary taxes, mainly sales taxes, described as a bridge to a larger rewrite of Louisiana’s tax laws.
A 13-member task force of economists, tax experts and policy leaders was convened to make recommendations about tax changes that would make the state’s tax laws fairer, put Louisiana more in line with other states and provide stable revenue for the budget.
After months of work, the Task Force on Structural Changes in Budget and Tax Policy advised sweeping changes to Louisiana’s sales, personal income and property tax policies.
The recommendations would lower tax rates, broaden what items are subject to taxes and reduce the number of complicated state tax breaks.
The task force suggested ending an expiring 1 percent state sales tax, in exchange for charging sales taxes on services such as cable television. It suggested lowering personal and corporate income tax rates by removing large tax deductions, and doing away with the corporate franchise tax.
The panel proposed phasing out a local property tax charged on inventory, to save the state millions on a tax break given to businesses paying the tax.
But that rewrite never happened, bogged down amid political and philosophical disputes between Democratic Gov. John Bel Edwards and the majority-Republican House, which bottled up every bill that mirrored the task force recommendations. No other tax overhaul got through the Legislature either.
The ideas barely got any debate.
“We didn’t even try,” Rep. Kenny Havard, a St. Francisville Republican, lamented on the House floor.
Some House Republicans disagreed with the task force approach to mainly focus on taxes. They directed the study panel to look at budget and tax reform, but received few suggestions on how to restructure state spending.
Lawmakers such as Ivey suggest some of their colleagues have focused too heavily on trying to derail Edwards’ re-election bid next year.
“We don’t want a Democrat to get re-elected, and we don’t want to give him a political win by doing tax reform. That was something that was told to me,” Ivey said.
Still others say they just don’t see a way to reach an agreement on what constitutes “reform” in the wide philosophical divides between the majority-GOP Legislature and the Democratic governor.
As lawmakers gathered in a special session look for ways to replace some of the expiring taxes and stave off deep budget cuts in the financial year that begins July 1, they’re considering enacting some things the task force recommended against doing.
They’re considering passing another round of temporary taxes — and renewing part of the sales tax that is expiring.
“We still would like to see the Legislature address budget and tax reform in a thoughtful and meaningful way for the long-term. Yet, clearly, little of that can be done during this special session,” the nonpartisan policy group Council for A Better Louisiana, which was part of the tax policy task force, wrote in a letter to lawmakers.
But the organization, known as CABL, said since lawmakers and Edwards are skipping the wholesale rewrite, they should at least avoid temporary fixes.
“In just the short time they have been in place, they have created uncertainty for businesses, harmed our economic development efforts, caused concerns for college students and families and threatened increases in the amount of interest we pay on state debt,” CABL wrote.
Melinda Deslatte has covered Louisiana politics for The Associated Press since 2000. Follow her at http://twitter.com/melindadeslatte