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Edwards speaks on state finances on first day of Legislative session

6 months 1 week 16 hours ago Monday, April 10 2017 Apr 10, 2017 April 10, 2017 5:04 PM April 10, 2017 in News
Source: Associated Press

BATON ROUGE - Gov. John Bel Edwards will make his case Monday for rewriting Louisiana's tax laws to legislators slogging back for another session where debate will heavily focus on state finances, budget cuts and government spending levels.

Louisiana's two-month regular session opens at noon, with little consensus emerging about how to remedy the cycles of unstable state finances. Edwards will lay out his proposals to the House and Senate an hour later, pushing a tax overhaul that aims to end the budget gaps by more heavily taxing businesses.

"The current tax and budgeting practices simply aren't working for Louisiana and don't provide a level playing field for both individuals and businesses," Edwards said in a statement.

Republicans, particularly House GOP leaders, haven't embraced the Democratic governor's ideas. Rather than support a tax plan to raise more dollars for the state treasury, they're suggesting reductions in state government spending — though without offering a roadmap so far of what programs they'd like to eliminate or what services they want to cut.

Edwards' tax package is intended to replace $1.3 billion in temporary taxes set to expire in mid-2018, while also raising another $400 million for next year's budget that the governor wants to spend on the TOPS college tuition program, K-12 education and other items.

The proposals would continue the planned drop in state sales taxes from 5 percent to 4 percent, while charging the tax on new items such as cable television, telephone services and digital streaming services. Some tax breaks would be lessened or eliminated. Individual income tax rates would drop. The corporate franchise tax would be phased out.

Many parts of the package would require hefty, two-thirds votes from lawmakers, including the centerpiece proposal, a new tax on gross receipts called a Commercial Activity Tax, estimated to raise up to $900 million a year from businesses.

Edwards says the plan is aimed at making sure businesses are paying "their fair share," and he cites data that showed of 149,000 corporate income tax filers in Louisiana, more than 129,000 didn't pay state income taxes in 2015. He said his proposals would lower the tax bills of 90 percent of personal income taxpayers.

Business groups and many GOP lawmakers say the gross receipts tax would harm companies working on tight margins by not accounting for profit or expenses. They say it can have a pyramiding effect, applying to every transaction in a production chain. And they worry it could chase away business in a state with one of the nation's highest unemployment rates.

Stephen Waguespack, president of the Louisiana Association of Business and Industry, described it as a "tax on all commerce in Louisiana."

The gross receipts tax proposal hasn't been filed yet, so there's only minimal information about which businesses it would most directly affect. Rep. Rob Shadoin, a Ruston Republican who often works with the governor, said he doesn't see much support for the tax so far.

"We don't have a whole lot of time once we get to spinning and ginning down there to sit back and evaluate and analyze, especially a new idea like this," he said. "I might be surprised, but right now I just don't see a lot of momentum behind that."

Lawmakers also will consider whether to raise Louisiana's gasoline tax for the first time since 1990 to improve roads, bridges and ports in the state.

They'll haggle over whether to rewrite criminal sentencing laws to end Louisiana's tenure as the state with the highest incarceration rate. They'll debate whether to raise the minimum wage, enact equal pay legislation and eliminate the death penalty.

The legislative session must end by June 8.

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