Possible sales tax increase by April part of plan to balance budget
BATON ROUGE - Governor John Bel Edwards proposed, among other things, a one-cent sales tax increase to help balance the budget.
The plan was revealed at a news conference Tuesday afternoon. Edwards discussed ways he plans to fill a $750 million shortfall in the current budget and a shortfall up to $1.9 billion in the next budget cycle.
"This is not the budget plan I want to bring in my second week in office, but these problems are bigger than our state has ever seen," Governor Edwards said.
To deal with immediate budget needs, the governor suggests using the state's Rainy Day Fund, redirecting BP oil spill payments not earmarked for coastal issues to state accounts, cutting 10% from discretionary spending and a laundry list of tax adjustments.
The sales tax increase could generate about $216 million before June 30, 2016, the governor estimated. Sales tax on items except groceries, prescription drugs and residential utilities will grow from four to five percent. The tax could start as early as legislation is passed, possibly by April.
In the coming years, the governor wants to change state income tax brackets, re-organizing state filings that are related to federal filings, alter business tax rules and credits and create a 5% flat tax rate for landline and cell phones instead of varying 2 to 3 percent taxes.
Edwards also wants to require businesses to collect sales tax for items purchased on the Internet.
Other longer-term proposals include raising the tobacco tax to $1.08 per pack of cigarettes, raising other excise taxes, reducing tax credits and the way corporation and business taxes are handled.
"Raising taxes is not my first, second, or even third option when seeking to fill the state's budget shortfall," Governor Edwards said in a prepared statement ahead of his news conference. "We will begin with painful, across-the-board cuts to a wide range of discretionary state funds. Unfortunately, those cuts will not be enough to bridge the enormous shortfall we face today and in the next fiscal year. We must enter a season of shared sacrifice – enormous sacrifice – to fix the systemic budget problems in Louisiana. If we do this hard work together, Louisiana will emerge stronger over the long-term."
The governor continued, "We must fix this or continue catastrophic cuts that would result in our hospitals closing, universities and community colleges filing for bankruptcy, the erosion of the TOPS scholarship program and severe reductions to our public K-12 schools."
JBE says there will be honest and straightforward budgets going forward. Comparison to Jindal. #lalege— Mark Armstrong (@TV_MarkA) January 19, 2016
Lawmakers will address the state's financial issues in a three-week special session to begin in February.
You can read the proposed list from the governor's office HERE.