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Capitol Views: Governor’s centerpiece sales tax proposal rejected

May 24, 2018
Originally Posted on Greater Baton Rouge Business Report

The first big vote of this special session went against Gov. John Bel Edwards this morning when a committee buried the administration’s key proposal for the state sales tax structure: making permanent a half-penny of the expiring penny state sales tax.

Edwards called lawmakers into a special session, which is set to end June 4, to address a $648 million budget shortfall for the next fiscal year. However, instead of moving forward with Edwards’ sales tax solution, members of the House Ways and Means Committee are expected to advance another sales tax bill authored by the chairman of the House Republican Delegation.

With just 11 full days remaining in this term’s sixth special session, the committee’s anticipated decision sends a clear signal that the Legislature will fall short of the governor’s $648 million ask. If so, another special session will be needed prior to the July 1 start of the new fiscal year.

Committee members, entering their fourth hour of debate this afternoon, were expecting smooth passage for HB 27 by Rep. Lance Harris, R-Alexandria. The proposal would renew a third of the temporary penny tax that’s expiring from the state sales tax structure and eliminate certain sales tax breaks—but only for the next five years. But, even if that instrument is passed by the committee, its chances on the House floor, where a supermajority is required, are uncertain. 
“It’s going to be difficult to get 70 votes,” Harris conceded during today’s meeting.

Echoing that sentiment, Rep. Robert Johnson of Marksville, the chairman of the House Democratic Caucus, added, “You’re going to have some trouble on the House floor getting votes.”

In part, that’s due to the desire by some Democrats to link the passage of a sales tax change to more substantive reforms, like compressed income tax brackets or alterations to the earned income tax credit.

Edwards wanted the committee to get behind his HB 11, which was being carried by Rep. Terry Landry, R-Lafayette. That bill would have reduced the temporary penny in state sales tax down to half a penny. It failed in a 6-11 vote, with only Democrats voting in favor. Several business groups, like the Louisiana Chemical Association and the Louisiana Association of Business and Industry, had concerns about certain provisions in the bill, like the taxation of business utilities.