The upcoming regular session will partly be defined by the massive piles of federal money and surplus cash lawmakers will get to spend. The session will also be noted by issues from the right side of the political spectrum, like those involving transgender athletes, critical race theory, abortion and vaccines.
But there’s one more factor that could shape the mood of the non-fiscal session that convenes March 14 — fiscal issues.
During even-numbered years like this one, lawmakers are prohibited from filing instruments that would create new taxes or increase existing ones. Legislators are also expected to steer clear of state tax exemptions, exclusions, deductions and credits.
However, there is a gray area in these Constitutional guidelines. Lawmakers can still tinker with certain elements of tax law just as long as the end product doesn’t boost revenues for the state. It’s within that gray area lawmakers expect to work this year.
Louisiana’s sales tax structure may be on the table in a major way, starting with the temporary .45 percent portion that expires in 2025. There’s a growing appetite inside the rails of the House and Senate to be proactive about that fiscal cliff, especially with $2.8 billion in one-time money available to appropriate due to an avalanche of aid from the federal government and state budget surpluses.
“With all of this money available, is this the time to reduce the sales tax and get a jumpstart on the .45?” asked Rep. Jack McFarland, chair of the Conservative Caucus. “That’s something Caucus members are interested in and something that’s being explored. We want to do it responsibility.”
Jason DeCuir, co-owner and partner of the tax advisory firm Advantous Consulting, said he expects to see a few different approaches filed during the regular session. “There is absolute chatter about that sales tax reduction, but I don’t know if there’s any common agreement,” said DeCuir.
Emerging from the same area of tax law, many legislators anticipate House Speaker Clay Schexnayder will return this session with another constitutional amendment to centralize sales tax collections. Such an amendment was rejected by last year, but the speaker may present the issue again in another form or fashion.
Senate Revenue and Fiscal Affairs Chairman Bret Allain said he’s not directly working on anything related to sales taxes, aside from a pro-business proposal that seeks to limit the number of local audits that can take place at once. “Imagine doing business in every parish of the state and all of them being able to audit you simultaneously,” Allain said. “There has got to be a better way.”
Allain said his top priority for the upcoming regular session will be reforming the storied inventory tax. Lawmakers have long targeted the tax program for changes, but local officials rely so heavily on the complicated financial scheme that lawmakers in Baton Rouge rarely get the proverbial ball rolling.
“We believe we’ll be able to take up legislation on the inventory tax,” said Allain. “We’re developing a proposal and have already had some discussions with assessors. We’re meeting with the sheriffs next, and reaching out to other interested parties.”
Individual lawmakers this year will also push bills to:
Extend the deadline for applying for rebates in the Louisiana Quality Jobs Program
Reduce the severance tax rate for oil over a certain period of time
Require the annual occupational license tax levied on certain computer programming businesses to be set at a flat rate
Provide for term limits for tax assessors
Suspend certain provisions of law relative to insurance compensation taxes
Create an extension of the Competitive Projects Payroll Incentive Program
Reallocate severance taxes to parishes for use as part of the Parish Transportation Funds program
Establish an automatic filing extension for individual income tax returns
Of course, there’s only so much lawmakers can do with tax topics during non-fiscal sessions. Next year, though, the House and Senate will be able to advance instruments that impact the state’s cashflow.
That’s when a complete phase out of the income tax could be explored, especially as Mississippi moves toward an elimination of its own.