On arguments that the legislation would pick apart last year’s hard-fought deal to stabilize the state’s revenue collections, a Louisiana Senate committee narrowly defeated a bill that would direct the proceeds of the nearly half-cent sales tax increase to roads and bridges.
Voting 5-3 along party lines the Revenue & Fiscal Affairs Committee effectively rejected Senate Bill 21 by Sen. Barrow Peacock, R-Bossier City. The measure would progressively have sent more of the revenues collected from the .45 percent levy, which now goes to the state general fund to pay services where needed, specifically to highway infrastructure.
Peacock said he hopes to slowly wean the state off the additional funds created when lawmakers agreed to make the state sales tax 4.45 cents on every dollar purchased and suspend more than 100 exemptions for six years. SB21 would have started by redirecting $43.6 million in the fiscal year beginning July 1. The amount taken would have risen to $304.9 million by the 2024 fiscal year.
Following his plan would allow the state to adjust to the loss of the revenues by the time the additional sales tax expires, he said. “What this bill does is help us avoid another fiscal cliff,” Peacock said.
The penny legislators had added in 2016, making state sales taxes 5 cents, expired in July 2018 and would have created a huge deficit in revenues that would have required dramatic cuts to balance the budget but for a last minute compromise to increase the state sales tax from 4-cents to 4.45 cents. Local governments tack on their own sales tax, bringing the sales tax up to 10 cents or so, depending on the jurisdiction.
“If we start willy-nilly, everybody starts coming up with ideas with how we spend money that we fixed just a little less than a year ago we’ll be right back at another fiscal cliff,” said Sen. Gerald Boudreaux, D-Lafayette.
Peacock’s measure is one of about 10 bills, mostly filed by Republicans, that aim to dismantle the deal cut in June.
Some, like House Bill 584, would flat repeal the additional sales tax, others would reduce the additional tax over time, like House Bill 599.
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“For two years with budget in freefall we fought to cut the budget and we failed tremendously,” said Rev & Fisc Chair JP Morrell, D-New Orleans. “What I struggle with constantly is everybody wants to talk about how big government is, but they never cut the budget.”
Louisiana Depart of Revenue Secretary Kimberly Robinson pointed out that it took the Legislature seven special sessions and one regular fiscal session to come up with the deal that should stabilize the state’s finances for the next six years.
Robinson said the economy has gotten better and the state has increased its collections, but those unexpected revenues are coming from incomes taxes, not from the additional near half penny.
Voting to involuntarily defer rededicating additional sales taxes to infrastructure (5): Sens Gerald Boudreaux, D-Lafayette; Troy Carter, D-New Orleans; Yvonne Colomb, D-Baton Rouge; Jay Luneau, D-Alexandria; and Gary L. Smith Jr., D-Norco.
Voting for SB21 (3): Sens Dale M. Erdey, R-Livingston; Eddie Lambert, R-Prairieville; and Neil Riser, R-Columbia.