Bid to rework Louisiana sales tax deal rejected by senators

Posted at 3:42 PM, Apr 22, 2019
and last updated 2019-04-22 18:32:06-04

Associated Press

BATON ROUGE, La. (AP) – Republican lawmakers seeking to rework or repeal a Louisiana sales tax compromise passed last year seem unlikely to gain traction for the ideas in the Senate, where the tax committee on Monday shot down the first proposal to reach debate.

The Senate Revenue and Fiscal Affairs Committee voted 5-3 against a measure by Shreveport Republican Sen. Barrow Peacock to steer some of the 0.45% state sales tax approved in 2018 to road and bridge work in the future. Other GOP proposals seeking to eliminate the 0.45% tax entirely would have to pass through the same committee.

Democrats, who represent a majority on the committee, objected to taking any of the sales tax dollars from general government operations, saying last year’s hard-fought compromise ended years of budget instability.

Peacock said his legislation would make general government operations less dependent on a sales tax that is scheduled to expire in mid-2025, by earmarking the dollars to highway projects. He proposed to shift the dollars over five years, starting in the 2020-21 budget year, phasing in larger slices of the sales tax revenue each year.

“We all know we need to invest in roads and bridges,” Peacock said.

More than $43 million would be dedicated to the roadwork in the first year, under the bill, growing to nearly $131 million by the second year and $218 million by the third year.

Opponents, including Democratic Gov. John Bel Edwards’ administration, said lawmakers in the majority-Republican Legislature haggled over seven special sessions since 2016 about Louisiana’s budget gaps, before striking a seven-year tax deal that included the 0.45% sales tax at its center. They said it made no sense to tinker with that compromise.

“We just fixed this less than a year ago,” said Sen. Gerald Boudreaux, a Lafayette Democrat. He said to take the dollars from general government operations would mean “we’d be right back in another fiscal cliff.”

Democrats objected to the measure even after Sen. Eddie Lambert, a Gonzales Republican, limited the scope of the proposal to redirect 0.15% of the sales tax to road and bridges, rather than the full 0.45%.

Revenue Secretary Kimberly Robinson spoke in opposition on behalf of the Edwards administration.

Other Republican lawmakers also have targeted the 0.45% sales tax with bills that seem a long-shot for passage.

Rep. Dodie Horton, of Haughton, is proposing to repeal the tax on July 1, or at least suspend it for more than a year. Alexandria Rep. Lance Harris, leader of the House Republicans, is proposing a more gradual approach, to phase out the sales tax by July 1, 2023.

While the effort to rework the 0.45% sales tax hit a roadblock Monday, a separate measure to restore Louisiana’s annual sales tax holidays – which were suspended as part of last year’s tax deal – easily won approval from the House. A 93-2 vote sent the bill by Republican Rep. Jay Morris of Monroe to the Senate for debate. If approved there, it would cost the state an estimated $5 million annually to again hold the sales tax holidays.