On a close vote, the Louisiana House advanced Sunday night contentious legislation aimed at addressing a recent court ruling on an obscure sales tax issue that exposes local governments to tens of millions of dollars in lost revenues and millions more in refunds.

Representatives voted 55-46, two more than the minimum needed to pass, approving House Bill 27. Its sponsor, Rep. Chris Broadwater, said the legislation “split the baby” between local government, which relied on the obscure sales taxes for years, and manufacturing corporations, which point to May 23rd Louisiana Supreme Court ruling that invalidated its collection.

Local governments “are projecting significant losses of sales tax revenues that they traditionally have collected,” said Broadwater, R-Hammond.

The companies, on the other hand, argue that the Supreme Court basically said the taxes are not legal, despite having been collected for years. And many of the firms are using the same logic the Supreme Court used to demand refunds for taxes paid in the past.

Broadwater argued that in HB27 both sides are taking a hit.

“Local government should see a little bit of stability,” Broadwater said. “They won’t get the whole shebang … But business won’t be paying more than they have been paying.”

The issue has been the subject of intense negotiations behind closed doors, right up until the House convened Sunday evening.

Broadwater said his “compromise” amendment was not backed by the Louisiana Chemical Association and the Louisiana Association of Business and Industry. But some manufacturers were okay with the change.

The Supreme Court had ruled in a case involving taxes charged a Lake Charles company that bought limestone to limit harmful emissions while making power. When the limestone was finished for that use, the company ended up with ash, a by-product that it could sell.

Traditionally, local governments had been charging sales taxes on entire transaction, which the high court said was improper because such transactions were not included in the tax base.

Broadwater proposed to follow the logic presented by Justice John L. Weimer, of Thibodeaux.

Weimer, who concurred in part in the majority opinion, wrote that taxes should charged on the end user of each product, meaning the buyer of the raw materials pays it taxes and then the buyer of the by-product pays its taxes.

“We’re splitting the baby,” Broadwater said. The amendment was adopted without objection before the House narrowly approved the measure

Voting FOR House Bill 27 (54): Reps. Abraham, Adams, Anders, Armes, Bacala, Bagley, Berthelot, Billiot, Bouie, Broadwater, C. Brown, T. Brown, Carpenter, R. Carter, Chaney, Connick, Cox, Dwight, Foil, Franklin, Gaines, Gisclair, Glover, Hall, Havard, Hill, Hoffmann, Hunter, Jackson, Jefferson, Jenkins, R. Johnson, Jones, Jordan, T. Landry, LeBas, Leger, Lyons, Marcelle, G. Miller, Montoucet, Moreno, Jay Morris, Norton, Pierre, Pope, Price, Pylant, Reynolds, Shadoin, Smith, Stokes, Thibaut and Willmott.

Voting AGAINST HB27 (47): Speaker Barras and Reps. Abramson, Amedee, Bagneris, Bishop, Carmody, G. Carter, S. Carter, Coussan, Cromer, Davis, DeVillier, Edmonds, Emerson, Falconer, Garofalo, Guinn, J. Harris, L. Harris, Henry, Hensgens, Hilferty, Hodges, Hollis, Horton, Howard, Huval, Ivey, James, M. Johnson, N. Landry, Leopold, Mack, Magee, McFarland, Miguez, D. Miller, Jim Morris, Pearson, Pugh, Richard, Schexnayder, Schroder, Simon, Talbot, White and Zeringue.

Absent from Chamber and NOT VOTING (4): Reps. Danahay, Hazel, Lopinto and Seabaugh

Follow Mark Ballard on Twitter @MarkBallardCNB.

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