Now it’s the Louisiana House’s turn.
On Monday and Tuesday, the House tax-writing committee — Ways and Means — is planning to vote on measures that could raise hundreds of millions of dollars in taxes to help close the state’s massive $1.6 billion budget deficit.
House leaders scheduled the action at Ways and Means after a Senate committee on Wednesday approved a measure involving the business inventory tax that would save the state some $500 million per year.
State Rep. Joel Robideaux, R-Lafayette, who chairs Ways and Means, said his committee members wanted to make sure that senators were willing to do their part before they did theirs.
The House and Senate will have to agree on a budget balancing plan by the last day of session — June 11 — that Gov. Bobby Jindal will accept. The final budget will undoubtedly include various tax increases but will have to meet Jindal’s guidelines that they don’t amount to a net increase in taxes.
On Monday, Ways and Means will consider measures that would raise the state’s cigarette tax (House Bill 119), eliminate certain business tax deductions (five different bills would do this) and make the state’s solar energy tax break less attractive (House Bill 779).
The committee also will consider legislation sought by Jindal that would no longer allow companies to get refunds they receive after paying 12 different taxes — refunds that cost the state $526 million last year and that Jindal calls “corporate welfare.” This measure is House Bill 366, and the sponsor is state Rep. Bryan Adams, R-Terrytown.
On Tuesday, Ways and Means is scheduled to consider measures that would phase out the state’s film tax credit (House Bill 276), impose a tax on products bought online (House Bill 355) and reinstitute 1 cent of the state sales tax that had been exempted on the purchase of certain items (House Bill 565).
“This is an opportunity to close some corporate loopholes and exemptions not giving the returns that were expected when they were put in place,” said House Speaker Chuck Kleckley, R-Lake Charles. “We need to get some of these measures moving through the legislative process to solve the budget hole.”
Legislators are struggling to find the combination of taxes that are acceptable to the entire Legislature and Jindal and that will raise enough revenue.
By all accounts, Senate President John Alario, R-Westwego, and the dean of the legislative delegation, will play the pivotal role in settling on the final plan.
The level of uncertainty was visible Wednesday afternoon as he rushed into an elevator in the Capitol. “We got a lot of talking to do,” Alario called out to Tim Barfield, the state secretary of revenue and the Jindal administration’s point person on taxes.
“We have a lot of work to do,” Barfield agreed to a reporter. “The devil is in the details.”
If legislators cannot ultimately settle on a plan, many of them thought they had a simple fallback: temporarily end exemptions on certain taxes that past legislatures had granted. They could enact a one-year suspension of the tax exemptions through a resolution that Jindal could not veto.
But Jindal told reporters on Thursday that he would veto the entire budget if it raised taxes by suspending the tax exemptions.
In the meantime, Ways and Means will get to work.
It’s not a coincidence that the first tax measure before the committee on Monday would raise the cigarette tax from 36 cents per pack to $1.54, the national average. Going to $1.54 would raise $240 million per year.
Republicans and Democrats favor a higher cigarette tax for Louisiana, which has the third lowest rate in the nation. The ultimate tax they approve could depend on whether they want to match neighboring Texas’ rate ($1.41) or Mississippi’s (68 cents). State Rep. Harold Ritchie, D-Bogalusa, is sponsoring the measure.
On Tuesday, the highest profile measure would drastically limit the state’s generous tax subsidy to film and television producers next year and eliminate it by 2019. The legislation, sponsored by state Rep. Lance Harris, R-Alexandria, would impose a $50 million cap next year on a program that cost the state $223 million last year.
Robideaux is planning to hear additional tax bills in the coming weeks, including other measures that would limit how much the state spends to subsidize the movie and television productions.
Kleckley said he wants Ways and Means to move as quickly as possible because the House Appropriations Committee is waiting to know the amount of taxes that House members are willing to accept before the committee approves its version of next year’s state budget and sends it to the House floor for consideration.
“We can’t move the budget until we have the fixes in place,” said Kleckley, referring to the need to raise enough revenue in next year’s budget to minimize or eliminate cuts to the state’s colleges and universities and public health care system.
As Ways and Means begins considering its tax bills, Alario said the full Senate will not act on the Senate Finance Committee’s decision Wednesday to scrap the inventory tax. That measure is Senate Bill 177 by state Sen. Robert Adley, R-Benton.
Repealing the tax would generate the $500 million or so in savings for the state because businesses pay the tax to local governments and then turn around and get a dollar-for-dollar credit from the state that eliminates their state tax bill and even generates refunds.
So killing the inventory tax — which would require a statewide vote in October to amend the constitution — would save the state the $500 million or so at the expense of local governments. Adley and other state senators supporting his bill promised skeptical local government officials that they would take the necessary steps to offset the lost revenue.
Repealing the inventory tax is key to legislative leaders’ plans to balance the budget because Jindal considers it to be a spending reduction that can be offset by an equivalent amount of tax increases — and maintain his pledge of no net increase in taxes.
So if scrapping the inventory tax would raise $500 million, legislators could increase taxes by another $500 million to net $1 billion more for the state and get them close to the $1.6 billion they ultimately need. But at the same time, they will have to come up with extra money to fulfill their pledge to local government officials to make their budgets whole.
Follow Tyler Bridges on Twitter, @TegBridges. For more coverage of the State Capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog/.