Lawmakers’ options for budget reform dwindling
BATON ROUGE — The number of bills to reform the state’s budget and tax systems and to raise revenue to help erase a major deficit in 2018 are dwindling.
A major goal of the current fiscal session was to reform the tax and budget systems, but lawmakers haven’t come close to accomplishing it. A second goal was to deal with the $1.3 billion budget deficit officials expect to face when temporary taxes go off the books July 1, 2018.
Some budget reform and tax measures are still in play, but none would implement major changes to how budgets are fashioned. The revenue-raising legislation gained traction in the Senate, but House bills died quickly in the Republican-dominated Ways and Means Committee. A few Senate bills are still alive.
Reps. Julie Stokes, R-Kenner, and Barry Ivey, R-Central, are working together to get bills through the House and Senate to reform the individual and corporate income tax systems. They said they hope to have duplicate bills in both chambers.
House Bill 359, by Ivey, would establish a 3.95 percent individual income tax rate to replace current graduated rates of up to 6 percent. Taxpayers, in return, would not be able to deduct federal income taxes on their state forms. The House approved the bill with a 70-24 vote, exactly the two-thirds needed.
Ivey is also sponsor of H.B. 360, which establish a 6.5 percent corporate rate to replace five rates of up to 8 percent. Corporations too would lose their ability to deduct federal taxes on state returns. It was approved 75-21.
Both bills move to the Senate.
The two legislators said the bills are designed to be revenue-neutral, meaning they wouldn’t raise revenues much different from those collected now. Stokes said Wednesday that some high-income individuals might pay a little more and some low-income taxpayers might pay a little less.
Stokes’ H.B. 353, dealing with the individual income tax, was approved by the House 83-13 and was scheduled for a Thursday hearing by the Senate Revenue and Fiscal Affairs Committee. It is identical to Ivey’s H.B. 359.
The changes would take effect Jan. 1, if voters approve them in a statewide election Oct. 14. The legislators said they hope to combine the corporate and individual changes in one proposed constitutional amendment if their legislation makes it through both houses.
Voters rejected a proposed constitutional amendment to set a flat corporate income tax in November by 56 percent to 44 percent. But supporters said it wasn’t adequately explained or lobbied and that the proposal would have a better chance at succeeding this year as a result of better efforts in both areas.
H.B. 673, another reform measure by Stokes, came up 19 votes short of the 70 required (51-42). It would have streamlined tax exemptions offered by state and local governments. The bill was the result of a recommendation by a group studying the state’s sales tax system. Stokes can bring it up for another vote.
Rep. Rob Shadoin, R-Ruston, on Wednesday sidelined his H.B. 236, which had the potential to raise over $900 million a year by eliminating or amending some constitutional revenue dedications and treasury funds. The final decision would have been made by voters on Oct. 14.
Shadoin said he knew the magic number on his constitutional amendment was 70 votes and that he was 15 to 20 votes shy. He said the odds of his bill being approved were “one in a million.” It got out of the House Appropriations Committee with a 10-9 vote.
“As I understood it, when we left last June, we were going to tackle budget and tax reform,” Shadoin told The Advocate in an interview. “Therefore, I ran with some bills that were suggested by independent studies, and none of them have passed. I am disappointed that we have not handled the people’s business, as I thought we would.”
Rep. Jay Morris, R-Monroe, told the newspaper he wouldn’t be making an effort to bring back his bill, which would have raised up to $173 million a year. H.B. 609 would have removed the July 1, 2018, sunset dates on sales tax exemptions and exclusions.
“There’s no appetite for it,” Morris said.