The Louisiana House on Thursday advanced a Republican measure to roll back part of the state sales tax central to last year’s budget deal, after the top House Democrat changed it to send $42.5 million to early childhood education.
State Rep. Lance Harris, R-Alexandria, said he pushed House Bill 599 because the state “extracted too much” money from taxpayers with its sales tax deal struck last year, evidenced by the state’s current budget surplus.
The House voted 73-21 to advance the bill, which faces a tough road to passage as it heads to the Senate.
Gov. John Bel Edwards has argued the bill would threaten the state’s newfound financial stability. He said he won’t sign any “high-dollar” tax expenditures, like Harris’ measure.
The head of Louisiana’s House Republican caucus on Monday began a push to roll back the part of the state sales tax that lawmakers implemented…
But state Rep. Walt Leger III, an ally of the governor, got on board with Harris’ bill after successfully tacking on an amendment that would take 0.05% of the 0.45% sales tax at issue and redirect it to early childhood education. That represents about $42.5 million a year, he said.
“I don’t support what Rep. Harris is trying to do,” said Leger, D-New Orleans. “(But) I see it as a vehicle to potentially accomplish something that is transformative to the state of Louisiana.”
Edwards spokeswoman Christina Stephens said Thursday evening the administration is still against the proposal.
"We remain opposed to the effort to roll back the bipartisan compromise we reached in (the) Legislature last year, after we stabilized our budget for the first time in many years," she said.
The bill would begin shrinking the 0.45% sales tax hike in the 2020-21 fiscal year, ultimately repealing it by 2023. It would represent a $913 million hit to the state general fund over five years, not accounting for Leger’s amendment.
The bill would be phased in, and would not have an effect on next year's budget, as has been standard practice among lawmakers seeking to make revenue and budget changes this session. In 2020-2021, it would cost about $87 million, and gradually cut the sales tax by $392 million in 2023-2024.
“In order for government to function they have to extract money out of someone’s pocket,” Harris said. “When you do have a surplus that means you’ve extracted too much.”
Harris said the state has been on a "tax binge" and should return the money to taxpayers by cutting the sales tax sooner.
The 0.45% sales tax hike passed last year is already set to expire in 2025.
That portion of the sales tax was the key part of a tax and budget deal that ended seven special sessions dedicated to ending years' worth of fiscal crises. The figure represented a compromise between the Democratic governor and House Republicans.
The House has passed several bills that would change the sales tax, exempting certain items from being taxed. The Senate has already rejected some such efforts.
“Here we finally achieved some level of stability and the Legislature introduces a slew of new exemptions and so forth,” Edwards said recently. “For the most part these are things we should not be considering at this point in time.”