BATON ROUGE, La. — Efforts to broker a tax compromise in the Louisiana Legislature faltered Wednesday, with lawmakers unable to cobble together the votes to move any major tax bills and disagreements threatening to crater the special session without addressing the budget gap.
The House Ways and Means Committee stalled all big-ticket tax proposals, with Republicans and Democrats at odds over which tax types should be used to help close a $994 million shortfall in the financial year that begins July 1.
The budget gap is caused by the looming expiration of temporary taxes passed in 2016. Gov. John Bel Edwards is pushing replacement taxes, saying without them, deep cuts would be forced on the TOPS college tuition program, health services and public safety spending.
The main approach favored by House Republican leaders, including House Speaker Taylor Barras, includes permanent renewal of one-quarter of the expiring 1 percent sales tax along with elimination of some sales tax breaks.
Rep. Stephen Dwight, a Lake Charles Republican, tried to push the sales tax bill in the House committee only to run into opposition from Democrats.
“I think without this bill, this session is over,” Dwight said.
Democrats prefer income tax changes, particularly cutting tax breaks for middle- and upper-income taxpayers who itemize deductions on their income tax returns.
Rep. Ted James, a Baton Rouge Democrat, told Dwight: “This is not the only bill we have. It’s not the only solution that we have.”
Neither proposal can pass without Republican and Democrat votes.
In the Ways and Means Committee, some Republicans oppose any tax measures, even though they haven’t offered ideas for how to make $994 million in cuts. To get a tax bill out of the committee, even one sponsored by a Republican, will take some Democratic support.
The dividing lines have been drawn for weeks, but House leaders haven’t been able to strike an agreement.
Despite the sideways turn Wednesday, Edwards said he remains optimistic a deal could be struck in the special session he called.
“Compromise is hard,” the Democratic governor said on his call-in radio show. “I believe at the end of the day, we’re going to get it done.”
Edwards has changed his approach.
After saying he wouldn’t support permanent renewal of the expiring sales tax, the governor said Wednesday he’d consider renewing part of the sales tax if it’s not dedicated to a specific spending area. He acknowledged it wasn’t his favored tax type, saying sales taxes disproportionately hit the poor.
“It’s not reform, but it’s something I could do as part of a compromise,” Edwards said.
While taxes remained stalled, lawmakers got a bit of good news about the shortfall: boosted estimates of the windfall Louisiana is expected to receive from the federal tax changes.
Louisiana’s income tax laws are tied to federal income tax policy. Changes lowering federal income tax liabilities will boost state tax collections.
Greg Albrecht, the Legislature’s chief economist, said the state is estimated to collect $302 million more in personal income taxes in the upcoming budget year because of the federal changes, and $271 million annually thereafter.
Those are slightly higher figures than previous estimates — and that money could whittle down the budget shortfall’s size when incorporated into the state’s income forecast.
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