Related topics

Louisiana tax rewrite officially dead as last bills scrapped

June 3, 2017 GMT

BATON ROUGE, La. (AP) — Any last chance that Louisiana legislators would make substantive changes to the state’s tax system before their lawmaking session ends was snuffed out Saturday.

Republican Reps. Barry Ivey and Julie Stokes shelved their tax reform proposals in the Senate tax committee, rather than face certain rejection of them. The pair was proposing a flat tax plan they said would improve Louisiana’s rankings among other states.

The bills wouldn’t have raised revenue for the state or cut it. And that was the problem in the Senate Revenue and Fiscal Affairs Committee. Senators wanted a more comprehensive package of tax changes that could help address a looming, $1 billion budget gap in mid-2018.

But Ivey and Stokes, who both proposed far more extensive overhauls of Louisiana’s tax system, couldn’t get their bills through the conservative House if they were considered tax hikes. They had to pledge revenue neutrality to their House colleagues in order to get favorable votes.

Frustration was evident.

Senators were angry that the House, where most tax bills must start, bottled up anything that could be considered a tax hike.

“I’m not willing to listen to this part of the conversation until the revenues come over,” said Sen. Gerald Boudreaux, a Lafayette Democrat.

Lawmakers spent months talking about how this legislative session would focus on a tax overhaul to stabilize Louisiana’s finances and end boom-and-bust budget cycles. A year earlier, the majority-Republican Legislature passed more than $1 billion in temporary taxes, giving them mid-2018 expiration dates, so lawmakers could do a more substantive overhaul this session.

“This massive reform that was supposed to happen this year has not happened,” said Committee Chairman J.P. Morrell, a New Orleans Democrat.

Ivey and Stokes, likewise, were irritated their House colleagues seemed disinterested in a broad tax overhaul and they could only scrape out a few bills, rather than a package they felt could improve the state tax structure while also addressing the budget gap.

“It’s hard to watch Louisiana fall on its face, which is what I do believe we are seeing at the moment,” said Stokes, of Kenner. “Instead of solving our crisis and finding that opportunity, this Legislature has persisted — through three years and six sessions — to simply prolong the crisis.”

Ivey, of Central, told senators: “I can assure you that no one is more disappointed than me that we have solved no problems.”

The bills up for debate Saturday would have eliminated the tax deduction that people and businesses can take on state tax forms for the federal income taxes they pay, and gotten rid of the graduated system of tax rates paid based on income levels. In exchange, they would have enacted flat, single tax rates for individuals and businesses.

Ivey and Stokes said that would get rid of a heavily-criticized tax break that ties Louisiana’s system to the fluctuations of federal tax policy.

Senators applauded the work Ivey and Stokes had done. But they said they wouldn’t pass those tax bills without also reworking the billions Louisiana gives away annually in tax breaks.

Ivey predicted that lawmakers, who are expected to return in a special session before the temporary taxes expire next year, won’t reach an agreement on taxes.

“If the will does not exist now, it will not exist in a special session. My prediction is going off the fiscal cliff is absolutely inevitable,” Ivey said.

Senators seemed bleak as well.

“Maybe we need to crash and burn and start all over,” Boudreaux said.


Follow Melinda Deslatte on Twitter at http://twitter.com/melindadeslatte