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The Second Full Day of the Current Louisiana Special Session of the Legislature Has Reinforced That It Will Be Very Difficult To

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The Second Full Day of the Current Louisiana Special Session of the Legislature Has Reinforced That It Will Be Very Difficult To The second full day of the current Louisiana Special Session of the Legislature has reinforced that it will be very difficult to get consensus on adding revenue to meet the fiscal shortfall for the next fiscal year. The House Ways and Means Committee, which is where all new taxes must begin, rejected the governor’s proposed sales tax increase in favor of a smaller one from House Republican Delegation Chairman Rep. Lance Harris. It is still not known how the House plans to deal with the appropriations bill, which must also be passed in this current special session. Below is our summary of the two committees that met today. The House Committee on Ways and Means met again today and began voting out legislation for discussion by the full House: · HB 3 by Rep. Neil Abramson, D-New Orleans, is the Omnibus Bond Act. The bill passed without objection. · HB 28 by Rep. Abramson is a supplemental capital outlay bill that adds two projects that were not included in the regular session’s HB 2, the capital outlay bill. The bill was amended to only include a project providing roads at the New Orleans airport. The bill passed without objection. · HB 29 by Rep. Abramson is a supplemental appropriations bill and provides for improvements at the Port of Lake Charles. Abramson indicated that, since it is a spending bill, it will be turned over to Rep. Cameron Henry, R-Metairie, to handle on the floor and subsequently. The bill passed without objection. · HB 11 by Rep. Terry Landry, D-New Iberia, dealt with all sales tax imposition statutes and adds a permanent half-cent to the current four-cent sales tax and “cleans” the other four pennies from existing credits, exemptions and deductions. It provides a “broader, more uniform and permanent tax base.” The bill taxes business utilities at four cents, industrial business utilities at two cents, electricity rates for stripper wells at 2 percent and protects manufacturing machinery and equipment on all four-and-a-half cents of sales tax. The bill was defeated on an 11-5 vote after substantial debate. • This was the cornerstone of the governor’s package. • The fiscal note shows an average annual total of $575.8 million ($2.879 billion over five years). • Dawn Starns with the NFIB asked the committee to consider reducing all business utility sales tax to 2 percent to provide parity. • The Louisiana Chemical Association, the Louisiana Association of Business and Industry and the Louisiana Mid-Continent Oil and Gas Association spoke in opposition to the bill on the merits of the business utility tax on manufacturing inputs involved in the “cleaning” of the pennies. • The bill was involuntarily deferred after substantial debate. · HB 25 by Rep. Kenny Havard, R-Jackson, would have provided for making permanent the exclusions and exemptions to state four-cents sales and use tax levies that have been in effect temporarily and would have added a half-cent sales tax going forward. The bill failed to pass on a vote of 8-6. · HB 23 by Rep. Ted James, D-Baton Rouge, imposes a state sales and use tax and dedicates a portion of the proceeds for support of public education, including teacher salaries, early childhood education, the Louisiana Go Grants Program and TOPS. The bill was voluntarily deferred. · HB 27 by Rep. Lance Harris, R-Alexandria, changes the rate of the temporary state sales and use tax from 1 percent to .33 percent and extends the sunset of the tax from 2018 to 2023. It also provides the continuation during that period of four-cents of the exclusions and exemptions to the state sales and use tax levies, which were expiring. Manufacturing, machinery and equipment is exempted and purchases of utilities made by businesses defined as industrial users would be subject to only two percent of the tax. The bill passed on a vote of 11-6 after substantial debate. The fiscal note on this legislation indicates that it will provide $369 million for fiscal year 2018/19. · HB 4 by Rep. Pat Connick, R-New Orleans, changes the rate of the temporary 1 percent state sales and use tax by decreasing the rate to 0.5 percent and by making the levy permanent. The author said it represents a $450 million tax decrease. The bill was defeated. · HB 21 by Rep. Rob Shadoin, R-Ruston, reduces the amount of the individual income tax deduction for excess itemized deduction. The bill was defeated on a 12-5 vote. · HB 9 by Rep. Walt Leger, D-New Orleans, reduces the amount of the individual income tax deduction for excess federal itemized deduction. Since the bill is identical to Rep. Shadoin’s, the bill was voluntarily deferred to another time. · HB 20 by Rep. Jay Morris, R-Monroe, removes the July 1, 2018, sunset provision with respect to the "suspension" of applicability of various exclusions and exemptions from state sales and use tax. The author said he wanted the bill to proceed so there would be more than one measure available on the floor. Rep. Major Thibaut, D-New Roads, asked if Morris would be willing to include a piece of the “fifth penny” if necessary. He said he has learned to “never say no.” The bill was defeated on a 10-7 vote. So, the bill that will progress is HB 27 by Rep. Lance Harris, which makes permanent a third of the “fifth penny” and sunsets it in 2023. Earlier, the Senate Committee on Revenue and Fiscal Affairs met and quickly approved three bills and deferred a fourth. The bills are as follows: · SB 3 by Sen. Ronnie Johns, R-Lake Charles, deals with the Louisiana Quality Jobs Program incentives. It authorizes exceptions to application filing requirements for projects with an advance notification. · SB 7 by Sen. JP Morrell, D-New Orleans, repeals the sunset date and makes permanent changes to the credit for individual income taxes paid in other states. In addition, it provides that the credit shall not exceed the proportion of the net income tax payable as the income subject to tax in the other state and also taxable to the taxpayers entire income upon which the net income tax is imposed. It further provides that for taxes paid on or after January 1, 2018, an individual partner or member who pays another state’s entity level tax that does not have a capital component but is based solely on net income shall be allowed a deduction of their proportionate share of the entity level tax paid. · SB 8 by Sen. Morrell defines the term dealer for purposes of collecting and remitting use tax on remote sales. In connection with remitting the catalogue tax from Louisiana customers, it adds to the definition of “dealer” those individuals or businesses not physically present in the state, but sell over $100,000 of goods or services into the state, who engage in 200 or more separate transactions with Louisiana customers, or who voluntarily register to collect and remit the catalog tax. Its effectiveness is contingent upon the United States Supreme Court rendering a decision in favor o the state of South Dakota in South Dakota v. Wayfair, Inc. · SB 6 by Sen. Jay Luneau, D-Alexandria, which would have made permanent reductions to credits and rebates under the Enterprise Zone, Quality Jobs and Competitive Project Payroll programs was deferred because of the absence of Sen. Luneau. Later in the day, the full Senate met briefly and adjourned until Monday at 5 p.m. .
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