State Treasurer John Schroder finally has some good news for Louisiana taxpayers. Schroder told the Baton Rouge Press Club Monday three of the nation’s credit rating firms told him the state’s credit rating outlook is trending more positively.
“In general, I think everything sounds positive, Schroder said. “At the end of the day they need to know we have the revenue to cover our debt.”
The state’s sales tax would have reverted from 5 percent to 4 percent on July 1, but the Legislature after three special sessions increased it to 4.45 percent. The increase will be on the books for seven years, and that is the kind of stability credit rating agencies seek.
Louisiana no longer has the highest state and local sales taxes in the country, but it is still in second place at 9.45 percent. Tennessee has the No. 1 position at 9.46 percent. Others in the top five are Arkansas, 9.42 percent, Washington, 9.19 percent, and Alabama, 9.15 percent.
Tax Foundation, a conservative organization, in its “State and Local Sales Tax Rates, Midyear 2018” said local sales taxes are collected in 38 states and can rival or exceed state rates. Louisiana has the second highest local sales tax rate in the country at 5.00 percent. Alabama is first at 5.15 percent.
The foundation said California has the highest state sales tax at 7.25 percent, and Indiana, Mississippi, Rhode Island and Tennessee are all at 7 percent. Louisiana’s state sales tax of 4.45 percent ranks it in 38th place, meaning only seven other states have lower state sales taxes.
Alaska, Delaware, Montana, New Hampshire and Oregon have no state sales taxes. The other states with state sales tax rates lower than Louisiana are Missouri, 4.225 percent; Hawaii, Georgia, Alabama, New York and Wyoming, all at 4.00 percent; and Colorado, 2.90 percent.
Louisiana has another plus. It has one of the lowest average effective tax rates on homeowner property in the country and one that is lower than other Southern states.
Tax Foundation said tax experts recommend that sales taxes apply to all final retail sales of goods and services but not intermediate business-to-business transactions in the production chain. It said Louisiana doesn’t measure up on the first goal, but does on the second.
Louisiana was in 50th place in 2016 when lawmakers increased the state’s 4 percent state sales tax by 1 percent for two years.
Scott Drenkard, director of state projects for Tax Foundation, then noted that Louisiana was ranked 50th because of its high state and local sales tax rate, the complexity of its system with nearly 200 sales tax exemptions, too many tax collectors and the fact that local exemptions varied from parish to parish.
The Legislature took the right step when it created the Louisiana Sales Tax Streamlining and Modernization Commission in 2015, but lawmakers have rejected its recommendations on more than one occasion.
Rep. Julie Stokes, R-Kenner, sponsored some of those reform bills. One 2017 measure dealing with sales tax exclusions and exemptions passed the House 75-23, but both the Senate and then the House refused to consider the bill late in the session.
Stokes refused to give up the streamlining effort and got the sales tax commission renewed at this year’s third special session. However, with a statewide election coming up in 2019, don’t look for any tax or budget reform effort, which was supposed to take place in 2017.
Two excellent roadmaps to reform were completed in 2015. “Louisiana Tax Study, 2015” was done at the request of Senate President John Alario, R-Westwego, and former Speaker of the House Chuck Kleckley, R-Lake Charles.
Tax Foundation completed “Louisiana Fiscal Reform, A Framework for the Future” in cooperation with Louisiana’s Committee of 100. The Public Affairs Research Council of Louisiana has also done a number of budget, spending and tax reform studies.
Unfortunately, the Republican controlled Legislature has refused to follow up on any of those studies. However, most of its major spokesmen are constantly harping on the need for state spending reforms.
Schroder did it again Monday. He said the state’s reliance on sales taxes could create uncertainty because they are less predictable. The treasurer said he’s hopeful lawmakers would consider more structural changes in the state budget.
“We have to get our spending under control. It’s not at a healthy level,” Schroder said.
One of the most surprising comments recently came from political analyst and pollster Bernie Pinsonat. He said he expects partisan rhetoric to start ramping up the closer the state gets to the 2019 statewide elections.
Republican rhetoric against Democratic Gov. John Bel Edwards has been hot and heavy since the day Edwards took office in January of 2016. However, thanks to moderates in the GOP who are willing to put Louisiana first, there have been a number of positive changes in state government.