Many promises were made during Louisiana’s gubernatorial and legislative campaigns, and the men and women who assume those offices next January are facing monumental problems in delivering on those promises. The solutions some of them proposed, like cutting the state budget, aren’t going to get the jobs done.
Like many other states, Louisiana hasn’t been able to properly maintain its infrastructure and build new roads and bridges. The maintenance and construction backlog totals over $14 billion. Mega-projects, like new Interstate 10 bridges needed at Lake Charles and Baton Rouge, total an additional $15 billion.
Efforts to raise the state’s 20-centper-gallon state tax on gasoline ran into problems at recent legislative sessions. More than 4 cents of that tax goes to pay off bonds issued to finance 16 major projects in 1989. The other 16 cents is worth about 7 cents in today’s dollars.
Lawmakers in 30 states have raised or reformed their gas taxes since 2013. Louisiana last raised it gasoline tax 29.3 years ago. Only two other states have waited longer. Alaska hasn’t done it in 49 years and Mississippi in 30.3 years.
Pennsylvania has the highest state gasoline tax at 57.6 cents per gallon. Alaska’s tax is the lowest at only 14.65 cents per gallon. The average gas tax by state is 29.15 cents per gallon. There are 23 states higher than that and 27 where gasoline taxes are lower.
An effort was made in 2017 to raise the Louisiana gas tax by 17 cents, which would have brought in about $552 million annually. No votes were taken even after the author lowered the proposal to 10 cents per gallon because there was so much opposition.
Raising that tax over the next four years will probably be just as difficult because there is so much anti-tax sentiment in Louisiana and elsewhere. So don’t expect any miracles to see much changing in the road and bridge area anytime soon.
Tax and budget reform was promised in 2017, but the Republicans who control the House where those bills originate ignored reform completely. Some of their party members had excellent legislation that would have done the job.
Rep. Julie Stokes, R-Kenner, for example, earlier this year had legislation designed to reform the state’s personal income tax. It would have eliminated the deduction of federal income taxes paid when computing state income taxes and established a flax income tax rate of 3.95 percent.
That federal tax deduction cost state income taxpayers millions because of the Trump-backed federal tax cut. It was a major reason why the state had surpluses during two budget years. Those surpluses didn’t come because of sales tax increases made over the last four years.
Stokes has been an outstanding legislator, particularly in the field of taxation. Although Stokes never said so, frustration about the inability to make important tax changes had to figure in her decision not to run for re-election. She will be missed.
Rep. Tanner Magee, R-Houma, had a bill that would have authorized the Legislature to establish centralized collection of all sales and use taxes levied in Louisiana. The many local governments in the state insist on collecting their own sales taxes, and they haven’t budged for years.
Every tax reform study made in recent years has called for centralized collection of sales taxes, but the state is no closer to it today. Eliminating some of the $7 billion in annual tax breaks has only been partially successful.
Rep. Barry Ivey, R-Central, wanted to eliminate the corporate franchise tax, which is another recommendation of tax reform studies, but he couldn’t get the House votes he needed. Ivey sponsored a number of other unsuccessful tax reform bills at recent legislative sessions.
An effort was made at the session this year to lower auto insurance rates, which are the second highest in the country, but it was rejected. The Greater Baton Rouge Business Report in June said nothing has been done because there are deep disagreements among powerful groups over how the problem should be fixed — if it can be fixed at all.
This year’s bill failed to prove it would lower auto insurance rates, and that was a major reason the measure failed. Some said it wasn’t a consumers’ bill, but was legislation benefiting insurance companies.
A number of candidates said their major goal will be to reduce taxes because recent surpluses should be returned to taxpayers. Some also want to end a 0.45 percent increase in the state sales tax earlier than its 2025 expiration date.
Those surpluses are helping to build up the state’s rainy day fund that has been depleted over the years and pay off some retirement debt. Other surplus funds have to be spent on one-time capital projects, and many of them like maintenance of buildings on college campuses have been delayed much too long.
Anyone who ran for governor or the Legislature thinking it would be an easy job had better guess again. Merlin the Magician would have a difficult time solving some of this state’s problems.