Jeremy Alford: Expectations are low for tax changes

The Louisiana Legislature is now in the second week of its fiscal session. This kind of session occurs every other year, during odd-numbered years like 2023, so lawmakers can introduce and debate tax-related topics.

Our state’s policymaking structure hasn’t always been this way. Many moons ago, lawmakers could introduce tax bills during any session they chose.

But anti-tax advocates didn’t like the idea of putting Louisiana’s tax structure on the dining table on an annual basis. So the current framework was adopted, limiting lawmakers to talking tax policy every other year.

That means money and taxes are on the front burner for this legislative session, which will adjourn June 8. In fact, out of all of the Legislature’s subject-matter panels, none has more bills awaiting agendas than the tax-writing House Ways and Means Committee. 

When it comes to sway in the legislative process, the Ways and Means Committee punches above its weight. Most all tax matters must originate in the House, by law, and those bills almost exclusively start their journeys in the Ways and Means Committee. 

The sheer volume of tax-related bills is why Ways and Means Chairman Stuart Bishop, R-Lafayette, insisted on holding three meetings last week and scheduled three more for this week on Monday, Tuesday and Wednesday. 

“I think we’re going to see even more bills, too,” said Bishop, adding, “We have a very heavy load.”

Wednesday of this week is the deadline for lawmakers to introduce five additional bills for consideration, which will, as the chairman stated, cause the session’s bill count to climb. There are already a couple hundred pieces of legislation that in some way address or orbit Louisiana tax policy.

According to Jason DeCuir, a partner at the tax firm of Advantous Consulting, lawmakers are looking to pursue a number of different tax topics this session, including but not limited to phasing out the individual income tax; phasing out the corporate income and franchise taxes; reducing the temporary 0.45 percent state sales tax rate; and phasing out the inventory tax. 

“I think lawmakers want to go back home and run on tax reform,” said DeCuir.

While there may not be enough support to pass some of these hefty tax issues, many lawmakers are prepared to make a tough push nonetheless. That will help when representatives and senators return home this fall to ask friends and neighbors for their votes.

Positioned to attract the most attention the session are personal income tax proposals and a property tax package from Senate Revenue and Fiscal Affairs Chairman Bret Allain, R-Franklin, which pulls in the Industrial Tax Exemption Program and the inventory tax.

What to do about the state’s expiring temporary sales tax will benefit from a lengthy conversation as well.

But will anything actually pass?

“I don’t think anything significant as it relates to taxes or tax reform will pass,” said Louisiana Chemical Association President Greg Bowser. “It’s normally hard to pass any kind of tax changes in a non-election year. The pressure of legislators having to be on the ballot this fall makes it extremely hard to pass any tax changes.”

That became evident this week when a high-profile proposal to eliminate the individual income tax was put to rest after the Ways and Means Committee’s first hearing on the bill this session. Rep. Richard Nelson, R-Mandeville, has been promoting the proposal for months and made it the centerpiece of his campaign for governor.

Still, that wasn’t enough to convince the lawmakers to adopt such an aggressive plan. During election years, that’s usually the case.

While members of the Legislature’s tax committees focus on ways the state brings in money, the budget-writing committees have an entirely different problem — how to spend a notable amount of surplus dollars. 

The state has so much money to spend, in fact, that lawmakers will need to vote to bust the constitutionally-protected spending cap. 

Many conservatives would rather save the money, setting up a vote worth watching.

“It sure is nice to have a surplus that we are dealing with this year,” said Rep. “Big” John Illg, R-Metairie, a member of the House Appropriations Committee. “It seems as though everyone has an item or project on their wish list. While we hope to accommodate as many as we can, we are hesitant to commit too much to recurring expenditures rather than a one-time ask. Everyone loves to be Santa Claus without setting us up to be the Grinch in the future.”

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