Analysis: Despite A Year Of Talk, Tax Reform Questionable

New Orleans Sen. J.P. Morrell

BATON ROUGE (AP) — When Louisiana's lawmakers wrapped up a divisive stretch of financial debates last year, they had cobbled together short-term budget fixes with pledges of tax and spending reform to come this year, to finally stabilize the state's never-ending budget seesaw.

         As the session opens today, it appears a distinct possibility the year of talk could lead to little action.

         There's wide disagreement on what constitutes reform, deep philosophical divisions between Democratic Gov. John Bel Edwards and the Republican House leadership and questions about whether the political will exists to make the difficult decisions to overhaul a state's tax structure.

         Republican and Democratic lawmakers sound pessimistic that substantive change to end Louisiana's nearly decade-long cycle of budget woes will be accomplished in the 60-day session.

         "I tend to be dripping with optimism, but right now I could see us maybe having a lot of activity, but not making any progress on what we need to do," said Rep. Rob Shadoin, R-Ruston, who often bucks the House leadership and works with the governor.

         Republican Rep. Jack McFarland, from Jonesboro, echoed the sentiment: "I think we're just going to trim around the edges. I don't know if we'll really get to the meat of the problem."

         New Orleans Sen. J.P. Morrell, a Democrat who chairs the Senate tax committee, said: "The collective will is not yet there to do something substantive and far-reaching."

         There shouldn't be a lack of urgency. Louisiana's governors and lawmakers have had to close 15 midyear budget gaps in nine years. Meanwhile, the sales tax hikes the Legislature used last year to raise more money were only temporary, with a mid-2018 expiration date that will help to create a $1.3 billion budget hole.

         The legislative session that starts today is the last regular session in which lawmakers can change tax laws. If they don't tackle taxes before June 8, they either have to return for a special session or find a way to cut $1.3 billion in spending from a $9.5 billion state general fund.

         Few lawmakers say they think Louisiana can rebalance its budget through cuts alone, and no specific ideas have been offered about where such steep slashing would be made. But while a lot of ideas have been floated on taxes, none seems to have gathered strong support.

         "There's not an appetite for the big stuff," McFarland said.

         In the House, where most tax bills must start, the tax committee has been stacked by House Speaker Taylor Barras, R-New Iberia, with a strong contingent of anti-tax members. That makes it difficult for proposals to reach the full House for debate. On the House floor, tax legislation also has tough hurdles in the conservative chamber.

         "We have real challenges on our side getting a consensus as far as the spending priorities, and we're going to have that same problem in the session," Rep. Franklin Foil, a Baton Rouge Republican who has voted for some tax measures, said at a recent pre-session event.

         Lawmakers created a task force of tax experts, economists and others that recommended a tax-rewrite blueprint, saying the approach would offer stability and fairness.

         Edwards included many of the ideas in his tax package — but added a curveball, proposing a new tax on gross receipts for businesses that wasn't included in the report. That idea faces pushback from business groups and lawmakers who worry the tax could discourage economic growth in a state struggling with a recession and one of the nation's highest unemployment rates.

         Ideas like allowing the temporary 1 percent increase in Louisiana's sales tax to expire in exchange for expanding what's subject to sales tax face complaints because of items that could be newly taxed, including cable television, Netflix and other digital streaming services.

         Individual lawmakers are pushing proposals. Rep. Barry Ivey, R-Baton Rouge, filed a long list of tax change measures. Morrell wants to lessen tax breaks.

         Already chatter has started about renewing the temporary sales tax increase. Democrats oppose the idea, saying the tax disproportionately hits low-income residents. Shadoin also isn't onboard.

         "We told the people that this was going to be temporary. I think we're going back on our word if we extend that," he said. "It is for some the path of least resistance, but not me."

         – by AP Reporter Melinda Deslatte


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