The Louisiana Legislature should consider revising the state’s tax system, including increasing personal income taxes, to solve the state’s fiscal crisis on a long-term basis, a panel of experts said Monday at the Acadiana Press Club’s Newsmakers Forum.
Legislators met in special session for three weeks ending March 9 to fill a mid-year budget hole. While they managed to generate some revenue, the legislature failed to completely fill the gap. Now they’re meeting in regular session where they face the additional task of balancing the budget for the next fiscal year that begins July 1.
One of the biggest achievements in the special session was adding a 1-cent sales tax, bringing the total state sales tax to 5 cents, and removing exemptions on some things like alcohol, cigarettes and car rentals. Some of the taxes and tax exemption changes are temporary, expiring in July 2018.
“We now have the highest combined sales tax in the country, of any state,” overtaking Tennessee, Robert Scott, president of the Public Affairs Research Council said. But, unlike Tennessee, Louisianans also pay income tax, he said.
One mistake the legislature made, Scott said, was to remove the sales tax exemption on manufacturing machinery and equipment that was implemented under former Gov. Kathleen Blanco via public mandate to make the state more competitive.
Dawn Starns of the National Federation of Independent Businesses said Louisiana is not a competitive state and small business, particularly, gets hit with sales tax increases. She urged the legislature to think about the ripple effects its decisions have on small-business owners.
Jan Moller, director of the Louisiana Budget Project, said the legislature had three jobs during the special session: Balance the current fiscal budget, short $950 million; deal with the next fiscal budget; and fix structural problems in the state budget.
“They went 0 for 3,” he said.
There’s a sense that state government “is a bloated beast we need to cut down to size,” Moller said. But some agencies, having been cut over and over, can’t sustain more cuts.
“We need to get serious,” he said, “about raising revenues in a permanent way to fund government that exists today. We need to look at personal income taxes.”
Jason El Koubi, president and CEO of One Acadiana, said the regional chamber of commerce believes the legislature needs to build a long-term foundation for stability and sustainability in the state’s fiscal structure.
With the failure thus far to achieve long-term fiscal stability, adequately fund K-12 education and higher education, among other things, El Koubi said there needs to be a serious debate about what ought to be the principles and priorities of state government.