Lawmakers end impasse on taxes

BATON ROUGE (AP) — Lawmakers in the Louisiana House broke through their gridlock Sunday, reviving tax bills that had stalled the special session and avoiding a collapse of talks to plug a nearly $1 billion budget gap.
The Ways and Means Committee advanced two major tax bills as lawmakers continue working to broker a deal to lessen the shortfall: a sales tax bill favored by House GOP leaders and an income tax bill sought by Democrats.
The deal is far from complete as the 17-day session entered its second week.
It remains unclear if either measure can win support from the full House. Also, the tax package doesn’t fill the entire hole caused by the expiration of temporary sales taxes when the new financial year begins July 1.
After a week without votes on tax bills, the House committee voted 12-5 Sunday to advance a measure that would temporarily renew one-quarter of an expiring 1 percent sales tax and temporarily eliminate some sales tax breaks, to raise an estimated $300 million a year.
Louisiana’s current state sales tax rate is 5 percent. It drops to 4 percent on July 1. The bill by Rep. Stephen Dwight, a Lake Charles Republican, would move the rate to 4.25 percent. But 0.25 percent of the tax would again be temporary, with an expiration date in mid-2021.
The sales tax proposal is backed by House GOP leaders, but opposed by some anti-tax Republicans and by some Democrats who say it’s a heavier hit to the poor. On the floor, it would take a two-thirds vote to pass, needing both Republican and Democrat support.
A separate 10-7 vote advanced a proposal by Rep. Walt Leger, a New Orleans Democrat, that would cut tax breaks for middle- and upper-income taxpayers who itemize deductions on their income tax returns, to raise $79 million a year. The approach is backed by Democrats.
Rep. Barry Ivey, a Baton Rouge Republican, opposed the tax measures, lamenting that state lawmakers have refused efforts to do a more wholesale rewrite of Louisiana’s tax laws. Lawmakers spurned Ivey’s proposals last year, along with a tax package recommended by a task force of tax and policy experts.
“It’s a money grab to solve a legitimate problem,” Ivey said. “We’re basically doing the lazy, easy thing.”
Leger replied: “It’s become obvious that real, long-term structural reform is not possible at this time.”
Also approved Sunday were measures to continue reductions to certain tax break programs for businesses and for taxes paid to other states.
To send the bills to the full House for debate required support of some Republicans. But lawmakers who agreed to advance the measures haven’t necessarily agreed to support them on the House floor.
Edwards called the 17-day special session to close a $994 million shortfall in the financial year that begins July 1. The governor wants replacement taxes passed, saying that without them, deep cuts would be forced on the TOPS college tuition program, health services and public safety spending.
Rep. Alan Seabaugh, a Shreveport Republican, opposed the tax proposals, saying the state still doesn’t have a good idea of what the true size of the shortfall might be.
“I think this is premature,” he said.
The package of bills approved Sunday would be about $260 million short of closing the budget gap, even including a bump in personal income tax collections expected in Louisiana because of the federal tax changes.
The House Health and Welfare Committee advanced two Medicaid bills that Republican leaders have said must pass in exchange for the tax votes. One proposal is aimed at combating Medicaid fraud and the other seeks to enact work requirements on some Medicaid patients. The work requirement proposal was heavily watered down before passing.