The Republican Party of Louisiana and its two announced gubernatorial candidates will be spending a lot of time and money over the next three months trying to convince voters that Democratic Gov. John Bel Edwards is a wild tax-and-spend liberal. We have talked about this bogus tax issue before, but perhaps it’s time for a review.
None of the major gubernatorial candidates in 2015 knew what the winner would inherit from eight years of the Gov. Bobby Jindal administration. The worst thing that happened on Jindal’s watch was repeal in 2008 of the Stelly tax plan, one of the best tax reform measures passed in recent state history.
The Stelly plan increased personal income tax rates in exchange for exempting sales taxes on prescription drugs, food purchased for preparation at home and residential utilities. The plan didn’t put the income tax increases in the state constitution, but the exemptions are in there and it’s unlikely voters will ever tax those items again.
Those tax exemptions in fiscal year 2016-17 totaled $1.1 billion. The income tax increases in the Stelly plan were designed to replace those lost funds, but they were repealed. Jindal initially opposed the repeal, but he caved in to what really amounted to token opposition.
Jindal had signed the “no-tax pledge” of Americans for Tax Reform, and state agencies began to feel the effects of budget reductions that occurred over the next eight years. That is why Edwards inherited a $2 billion budget deficit when he took office.
Since then, it’s been catch -up time. In 2016, tax increases passed over two special sessions and fee bills approved in the regular session raised an estimated $1.6 billion to erase most of that $2 billion deficit.
Governors don’t pass taxes. Legislators have to do it. One GOP senator who refuses to accept that fact said governors control the Legislature. However, he and everyone else knows House Republican leaders have fought Edwards since the first day he took office.
Edwards has tried for four years to get legislators to raise the $7.25 per hour minimum wage and to get lawmakers to vote for equal pay for women. He hasn’t come close, even though polls indicate voters agree with him.
Passing taxes is extremely difficult. It takes a two-thirds vote, which means at least 70 votes in the 105-member House and 26 votes in the 39-member Senate.
The major revenue producer approved in 2016 was a 1 percent, twoyear increase in the state’s 4-percent sales tax. It was projected to bring in $880.6 million annually over the next two years.
In 2016, Republicans controlled both chambers. The House approved the sales tax 76-28. The 33 of the 61 House Republicans who voted for the tax put their people’s interests above their political party and personal interests. The Senate vote was 36-3, and 22 of the 25 Senate Republicans voted for the tax.
The GOP state party and its two candidates conveniently ignore the fact no taxes would have been approved without significant Republican support.
State budgets were fairly stabilized. However, the day of reckoning was coming. The 1 percent state sales tax increase was going off the books on July 1, 2018, and a deficit of about $600 million was expected.
House GOP leaders refused during two 2018 special sessions to agree to renew any of the 1 percent state sales tax increase. Rep. Paula Davis, R-Baton Rouge, then stepped up to the plate at the third special session to sponsor legislation increasing 0.45 percent of the 1 percent tax. It was projected to raise $463 million. The House approved it 74-24 and the Senate 33-6. Once again, 32 House Republicans and 20 GOP senators voted for the tax increase.
Sales taxes are still too high, but it isn’t because of the state’s 4.45 percent tax. Some local sales taxes that were approved by voters in individual cities and parishes are as high as 7.7 percent. And many of those local sales taxes don’t include exemptions on prescription drugs, food and residential utilities.
The small 0.45 percent increase in the state tax has made it possible to start restoring adequate funding to vital state services that saw nearly a decade of budget cuts.
Teachers and school support workers got their second raise in a decade. Local school districts also got a rare increase in funding. Millions more were budgeted for early childhood education, higher education, TOPS scholarships, educational services for 4-year-olds, services for more foster children, parish councils on aging and motor vehicle offices.
None of this would have been possible without new taxes, and Louisiana’s taxes are still among the lowest in the country.
Those taxes that were approved in 2016 and 2018 wouldn’t have passed without strong Republican support. GOP moderates demonstrated courage in doing what they thought was best for their state and its people, and it wasn’t because Edwards asked them to do it.