By MELINDA DESLATTE
BATON ROUGE, La. (AP) — Louisiana lawmakers not only passed a tax deal to avert immediate and deep budget cuts, they backed an agreement in the latest special session that gives the state more financial certainty than it’s had in years.
After a decade of short-term, patchwork budget fixes through former Gov. Bobby Jindal’s tenure and in the first year of Gov. John Bel Edwards’ term, lawmakers agreed to a seven-year tax. That’s practically a lifetime in the Louisiana Capitol, extending through this Legislature’s term and the next four-year term as well.
“The ghost of Bobby Jindal has finally left the building,” declared House Democratic Caucus Chairman Robert Johnson of Marksville.
The 0.45 percent sales tax approved before lawmakers wrapped up their work Sunday will expire in mid-2025. It was a partial renewal of an expiring, temporary 1 percent sales tax, which will move the state sales tax rate to 4.45 percent on July 1. Several sales tax breaks for people and companies also will be scaled back during the period.
The tax bill will raise an estimated $463 million for the budget that starts in a week and about $500 million annually after that.
Edwards and the bipartisan mix of lawmakers who supported the seven-year tax hope it will give them breathing room, ending constant uncertainty surrounding Louisiana’s budget. They hope that will impress credit rating agencies that have repeatedly raised concerns about Louisiana’s piecemeal budget fixes as they downgraded state ratings.
The governor has called seven special sessions since 2016, all involving the state’s shaky finances.
“The fiscal cliff is now gone and we have predictability ahead of us,” the governor said Sunday night, celebrating the agreement passed in this year’s third special session.
Edwards and lawmakers did use one short-term fix to balance the budget, shifting $46 million in oil spill recovery money earmarked for savings accounts to pay for operating expenses instead. That’s a one-time move.
Louisiana has grappled with self-created budget gaps for a decade. The shortfall just closed by lawmakers was tied to the loss of temporary taxes passed in 2015 and 2016.
Jindal and lawmakers raided savings accounts, drained trust funds, sold off state property and delayed bill payments to keep the budget in balance amid tax breaks that siphoned away more and more money from the treasury. They refused to cut government to match the recurring tax and fee money Louisiana receives or to raise taxes to match the programs they wanted to provide.
Those decisions kept causing new budget holes, creating continual cycles of uncertainty.
Edwards and the majority-Republican Legislature stopped most short-term financing maneuvers to piece together budgets. But they passed temporary taxes in Edwards’ first year, claiming that would be a bridge to a rewrite of Louisiana’s tax structure. That rewrite never happened, blocked by House GOP leaders amid disagreements with the Democratic governor.
Republicans who voted for the latest sales tax lamented passing a tax at all. Democrats preferred income taxes to a sales tax that more heavily hits the poor. But both sides noted it will keep a semi-permanent revenue base in place for years.
“There’s going to be a bunch of folks that get beat up on this,” said Sen. Norby Chabert, a Houma Republican. “But remember when you go home … you provided stability.”
Daniel Erspamer, CEO of the conservative Pelican Institute for Public Policy, lamented the sales tax renewal, calling it in a statement the “broken status quo.”
“The only way to truly create a long-term, sustainable and thriving economy is to closely evaluate and consider reforms to our tax structure, while also streamlining our government’s spending,” he said.