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Alford: Taxes give legislative leaders a reason to dig in - Greater Baton Rouge Business Report

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Senate President Page Cortez turned heads last week when he said a special session might be needed later this year to address tax issues that either won’t survive or won’t be introduced for the regular session.

Speaking at Ellevate’s Legislative Leadership Conference, Cortez, R-Lafayette, blamed the strings attached to incoming federal stimulus money. States aren’t allowed to take their whole share of the coronavirus relief dollars if their lawmakers pass major tax breaks without revenue offsets.

So, if that interpretation is indeed true, Louisiana lawmakers may have to call themselves into a special session later this year—presumably outside the shadow of the federal stimulus package—if they want to dole out any lucrative tax breaks.

Prior to this term, the Legislature rarely called itself into special session, opting instead to follow the lead of sitting governors. Now we may see this constitutional mechanism used two years in a row by lawmakers.

On the other hand, the Senate president’s special session pronouncement may have been a signal that the legislative leadership is willing to flex some muscle this year to get its tax priorities passed. 

There’s no argument that muscle will be needed to make changes to the state’s sales tax collection system, the inventory tax, income tax rates and a handful of other issues that have been debated—and altered very little, if at all—by lawmakers in recent decades. 

“If we can’t get the package through, we’re going to do it again and again and again until we get some concessions,” Senate Revenue and Fiscal Affairs Chairman Bret Allain, R-Franklin, said last week.

That approach would at the very least match the enthusiasm the leadership showed last year for its centerpiece tort reform bill, which took more than one session to pass. This year’s task of passing substantive tax reforms, however, will be trickier.

Speaker Clay Schexnayder, R-Gonzales, introduced his centralized sales tax collection bill last week. Despite months of work by a legislatively created task force, it seems like a few more meetings will be needed. The speaker’s own press release on the bill offered this assessment: “Moving forward, all the stakeholders involved have pledged to work together to find solutions to any issues that arise, with the collective hope of getting this bill through the legislative process ….”

On the infrastructure front, Rep. Jack McFarland, R-Jonesboro, also made the surprise announcement last week that he was abandoning a proposal to increase the gas tax due to a new stream of federal money that can be used for the same purposes. Instead, McFarland’s GRIT Act is now a package of bills that would rededicate and protect existing tax revenue to quintuple the amount of Transportation Trust Fund money available for roads and bridges. The package would also redesign certain Department of Transportation and Development fee schedules to make the overall plan revenue neutral.

Allain says the leadership’s tax package that he’s co-sponsoring with House Ways and Means Chairman Stuart Bishop, R-Lafayette, is evolving as well. For example, a sizable tax break attached to the team’s income tax rate proposal had to be scaled back due to concerns over the offset provisions in the federal stimulus bill. 

Efforts to overhaul the franchise tax in Louisiana have been transformed, too, with supporters focusing more on a temporary suspension rather than a permanent phase-out. “That needs a bit more work,” Allain says of the franchise tax proposal. “We’ll be developing it further as we move along.”

That’s all to say that the upcoming regular session, which convenes April 12, is a work in progress—much like other regular sessions that came before. What’s different is the determination in the voices of legislative leaders, who refuse to acknowledge the unshakable nature shared by their top policy issues this year.

Then again, you never know. This could be the year lawmakers finally crack the (tax) code and usher in substantive changes. As Allain pointed out in a recent budget hearing, it’s difficult to predict what the Legislature will do on any particular issue until a bill is filed, then publicly debated and finally voted on by those lawmakers in attendance.

“Until then,” Allain says, “you don’t know what you don’t know.”

Jeremy Alford publishes LaPolitics Weekly, a newsletter on Louisiana politics, at LaPolitics.com. Follow him on Twitter, or on Facebook. He can be reached at JJA@LaPolitics.com.

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