As lawmakers convene for a special session that
could last almost two weeks, five groups have coalesced over dealing with an
impending deficit for next fiscal year’s budget. The expiration of temporary
taxes, most prominently a one cent levy on sales, at the end of this fiscal
year means current spending patterns exceed expected existing revenues by
almost $1 billion.
A small group of Republicans don’t want to see any
restoration of temporary taxes, much less new permanent ones, and hope a
combination of efficiencies and user fees, plus revenue boosts from federal tax
changes, make up the difference. Their opposite number of Democrats, also few,
want to see only permanent income tax increases focused on corporations and on those
individuals above lower-income status.
Another grouping of Republicans as the only option will allow some portion of the cent to continue temporarily, buying time for genuine fiscal reform to brew. The last two appear as the only ones with substantial bipartisan membership, one of which would remove exemptions in the existing sales tax on a permanent basis in exchange for jettisoning the extra cent while another would keep a portion of the penny permanently with lopping off exceptions.
Making convergence more difficult, the Constitution
requires that any new/renewed tax, which includes stripping of exceptions
permanently, must receive two-thirds support in each chamber. This can create interesting
dynamics, for any combination of two groups in the House likely would contain
enough members to constitute more than a third of the membership to deny other options.
(With the pox-on-all-taxes GOP faction in the Senate essentially nonexistent,
consensus there should not pose as nearly a problem as in the House.)
Thus, working on the sales tax seems the path most
probable to gain consensus, with questions revolving around whether to go with
a temporary bridge or a permanent scrubbing of exceptions, or a combination.
But troubling signs for House Republican discipline have emerged that could tip
the balance in favor of permanent tax increases.
One comes from an expected corner, that of perhaps
the most pro-big government Republican in the House, state Rep. Rob Shadoin.
His HB 13
would raise income taxes for those above the lower-income level, and his HB 22
would eliminate certain corporate income tax deductions.
Conservatives can’t chalk this effort up as a mere
nuisance in light of what happened during the second special session of last
year. Poised to roll back government spending by sequestering a small portion
of budget authority to act as a buffer in case of negative fiscal surprises, Shadoin
emerged as a leader to scuttle
the deal and join a handful of GOP defectors to spend to the limit as
Democrat Gov. John
Bel Edwards hoped.
Worse, while Shadoin – identified as one of the
least friendly Republican legislators to tax and spending restraint in a legislative scorecard
put out by the Louisiana Association of Business and Industry – predictably would
make such a move, a few of the friendlier GOP representatives to limited government
identified by LABI joined him. A repeat performance on these bills would doom fiscal
restraint.
And there’s a less virulent House bill that might
have a greater chance of catching the handful of GOP defectors necessary to
impose permanent tax increases. Republican state Rep. Stephen Dwight –
another LABI-identified legislator on the spectrum opposite from Shadoin – has introduced
HB 23
that would impose a permanent half-cent increase plus excise some exemptions.
Again, it’s a bad sign when normally fiscally-prudent lawmakers seem willing to
lock in permanently inflated government.
If his sympathies lie with right-sizing state government,
Republican Speaker Taylor Barras
will face a stiff challenge to keep renegade GOP representatives from backing
Democrats’ efforts to sabotage this desire. Louisianans must hope he can do so.
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