Governor wants to keep half of temporary sales tax, limit exemptions

By Devon Sanders and Kaylee Poche / LSU Manship School News Service

LAFAYETTE — Gov. John Bel Edwards appealed directly to the public in a speech Tuesday for help in passing his plan to solve the state’s $648 budget shortfall.

The governor’s proposed a half-cent sales tax, the reduction of some tax exemptions for businesses and the elimination of a provision that lets individuals deduct state income taxes in one year from the next year’s returns.

Edwards spoke at the University of Louisiana at Lafayette three hours before the Legislature began its sixth special session in the last three years to try solve the state’s budget problems.

“My hope is that we can shake the divisive partisanship that’s begun to take root, put aside our differences and put in place the solutions the people of Louisiana deserve,” Edwards said. “Now is the time to be Louisianans first and foremost.”

Lawmakers have been struggling to create and pass a budget for the fiscal year beginning July 1. The $648 million gap is partly a result of the expiration of an extra one-cent sales tax and other temporary solutions that legislators approved in 2016 to give themselves time to work out a permanent plan.

That temporary fix raised the state portion of the sales tax to 5 percent from 4 percent, and that extra penny is due to expire this summer. Edwards is now proposing to keep one-half of the extra cent, which would make the state sales tax 4.5 percent.

Edwards also proposed eliminating certain sales tax exemptions for businesses and extending limits on other business tax exemptions that also are about to expire.

Edwards said that the state would lose $1.4 billion in revenue when the temporary revenue measures expire. But thanks in part to a windfall in state tax collections stemming from recent federal tax changes, Louisiana only has to cover a shortfall of $648 million through replacement revenue or budget cuts.

The Republican-led House failed to pass any revenue-raising measures in a special session that ended in early March.

As a result, the Legislature passed a budget during the regular session that called for a 22.4 percent cut to all state agencies and a 30 percent cut in funding for TOPS scholarships. Edwards vetoed that budget last week.