Nobody wins, really, when the state faces such a tragic financial situation that an emergency sales tax increase is needed to balance the budget.
Nor do we like a sales tax hike in general, although we understand the rationale for it in this crunch.
But in coming together to deal more honestly with the state’s finances for the first time in a long while, both the Legislature’s Republican majority and Democratic Gov. John Bel Edwards appear to be working together constructively to put the budget on a more sustainable course.
The big win, 76-27 on the main tax bill Thursday, was above the two-thirds vote of 70 needed. It levies a new sales tax for 18 months, a deadline that was pushed by the GOP as a way of keeping up the pressure for long-term tax reform.
The sales tax bill and other levies now go to the Senate. That’s where the details of the sales tax bill should be assessed to determine the scope of the tax hike, and necessary adjustments made; House members included an exclusion for manufacturing equipment purchases, for example.
Senate President John Alario, R-Westwego, will seek to reconcile the tax proposals with some budget cuts pushed by House Republicans. Both are still needed, with an estimated $900 million to be cut from this year’s budget. As the budget year ends June 30 and most government expenditures are in payroll and mostly spent, there was no realistic way for agencies to absorb that kind of damage.
The more than $200 million that the sales tax is expected to bring in during the budgetary fourth quarter is essential, along with budget cuts and some use of one-time money, to stabilize the situation. After years of Gov. Bobby Jindal’s borrowing from other funds and tapping vast sums of one-time money to pay for operating costs, there just simply isn’t enough loose change to make up the difference.
Edwards’ budget team, headed by former Lt. Gov. Jay Dardenne, has put together a package that earned support across party lines. And we believe Edwards when he says the sales tax is not something he’s thrilled with either.
What the House has done, by insisting on a “sunset” date for the sales tax, has put on the front burner the need for lawmakers and the governor to settle on a more far-reaching tax reform package. The sales tax increase for the new fiscal year, beginning July 1, should be a bridge and not a permanent crutch.
The exact proportions of the tax increases required for the longer term will be a subject for debate. No one can argue plausibly — least of all the legislators of both parties who went along with too many of Jindal’s budgetary gimmicks — that getting rid of one-time money and other short-term maneuvers can be righted without more revenue.
So we know that ending the practice of one-time money for recurring expenses is going to cost all of us more in taxes, day to day. But it is ultimately a conservative agenda of sound money in the state budget, instead of funny money and imaginary numbers.
Most of us don’t like the notion of paying more at the register, but the sales tax increase is intended to be temporary — if the State Capitol can get its act together on a new and more effective tax code for Louisiana.