Businesses would pay hundreds of millions of dollars more in new taxes under another passel of revenue-raising measures approved Wednesday night by a key Louisiana House panel.
It’s the third day in a row that the House Ways and Means Committee advanced bills that would take away exemptions businesses have used to lower their taxes.
Approval of this kind of legislation marks a sharp departure by the Legislature, which during the past seven years under Gov. Bobby Jindal frequently sought to lower business taxes.
But lawmakers need to raise about $1 billion as part of a larger plan to close a $1.6 billion deficit in projected revenues. Because state law requires a balanced budget, failing to raise enough revenues could easily translate to deep cuts in financing for public colleges and for health care.
Passing all these tax bills is part of the bigger plan, Ways and Means Chairman Joel Robideaux, R-Lafayette, told clearly anxious business and industry lobbyists who packed the hearing room.
“I realize that adds a lot of anxiety to the business community out there,” Robideaux said. “We’re trying to craft a solution that doesn’t pick on any one industry.”
He identified about 60 bills that would raise revenues, mostly by rolling back tax exemptions and credits given businesses as incentives.
The panel will meet again on Monday and Tuesday to advance the remainder of the bills to the full House. Then, like a giant jigsaw puzzle, legislative leaders will mix and match measures that can win support to the revenue needs in the state budget, Robideaux said in an interview after the hearing.
Of the 87 corporations with the highest revenue in Louisiana in 2012, only 22 of them actually paid corporate income taxes in Louisiana, a recent study by the state Department of Revenue found.
Working after the full House adjourned for the evening to attend one of three parties being thrown by various associations for legislators, Ways and Means Committee members spent a couple hours questioning the details of the measures. Panelists even rejected a bill — the second out of about two dozen considered since the hearings started Monday.
The business community hears Robideaux’s reassurances but still isn’t entirely comfortable given that the bills being passed amount to tax increases for private sector enterprises. Any bill that makes it to the floor is a step closer to getting passed.
“Those are real bullets in those guns,” said Stephen Waguespack, who heads the Louisiana Association of Business and Industry, an influential trade association.
Legislators should be commended, he said, for providing the laws that helped private businesses build and expand over the past seven years.
“We hope they don’t lose that focus now,” Waguespack said.
Too much emphasis is being placed on business and industry, but people forget that individuals also received credits and exemptions that have translated into lower taxes, he said. And expenditures, such as the escalating costs of state pension plans, also are draining revenues.
“These need to be put on the table, too,” Waguespack said. “There’s a false choice being presented here.”
A handful of resolutions considered Wednesday night concerned a sales tax exemption industrial users receive when buying power, one of a manufacturer’s largest expenses.
House Concurrent Resolution 8 wanted to suspend 1 percentage point of the 4 percent sales tax on electricity (it would raise $103 million), while House Concurrent Resolution 9 would suspend the entire 4 percent (that would raise $421 million).
Gregory Bowser, of the Louisiana Chemical Association, a trade association representing more than 60 chemical manufacturers, said the exemptions are used to entice businesses to come to Louisiana or to help companies expand their operations. Neighboring states either exempt utility sales taxes or are quickly phasing them out.
“To reinstate that tax takes some of our edge away,” Bowser said.
Robideaux said he voted for the exemption in 2008, when natural gas cost $8 or $9 per MMBTU, the thermal units in which the commodity is sold. A 4 percent tax significantly increased the price manufacturers had to pay. But the price of natural gas has been hovering around $2.60 for the past week or so and 1 percent may not be as onerous, he said.
HCR8 passed on a 10-8 vote. HCR9 failed.
Tyler Bridges, of The Advocate Capitol news bureau, contributed to this report.