Aided by a better election calendar, at least some chunk of fiscal reform stands a good chance of making it into the Louisiana Constitution prior to hammering out the fiscal year 2027 budget next year.
After the defeat of the Third Extraordinary Session of 2025’s Act 1 that became this spring’s Amendment 2, due to a motley coalition of big government advocates on the political left and panicked conservatives, reformers went back to the drawing board to try again. This time, reformers offered an omnibus bill like previously but also filed four others taking parts of that bill that could be decided upon discretely.
The omnibus bill this time around, HB 472 by Republican state Rep. Julie Emerson, mutated by substitute into her HB 678 which then stalled in Senate committee. The reduced bill would have represented the portion of the amendment that basically would have folded the Revenue Stabilization Fund into the Budget Stabilization Fund and redirected mineral royalty funds. It floundered because some of the emptied fund could have gone to prop up tax cuts proposed in other bills if revenues dipped too much as a result of the cuts.
Perhaps because of the flak it received this spring, a portion that would have removed constitutional protection for any property owned by a nonprofit resurfaced in HB 448 by Democrat state Rep. Mandie Landry, a big government advocate who had not been associated with reform. Perhaps predictably as it went even further to put a prohibition in the Constitution to exempt any commercially-used nonprofit property, it went nowhere.
Finally, falling on the Senate floor was GOP state Rep. Larry Bagley’s HB 294 for would have given a greater cut to parishes of mineral royalties, also connecting it back to HB 678. Revenue concerns also sunk this one.
Succeeding was HB 366 by Republican state Rep. Daryl Deshotel. It, with companion legislation, tries to entice parishes to wean off taxing business inventory by giving these a one-time payment from the Revenue Stabilization Fund (and giving another reason to keep this for now), and it produces another incentive to do so by reducing the taxable portion of that inventory. Another bill makes changes that would reduce further the advantage of having such taxes.
Presently, the state picks up the tab for these property taxes exempted under the Constitution, so this could add hundreds of millions of dollars to state coffers should it go through. Only nine states allow full taxing of business inventory, and no other turns it into a state-to-local government revenue transfer as does Louisiana.
The other success was HB 473 by Emerson, which raises the ante on pay hikes for school employees. The past couple of years the state has awarded annual bonuses outside of the Minimum Foundation Program of $2,000 for employees with teaching certificates and $1,000 for others (school staff). The amendment would make this permanent by eliminating three education trust funds and plowing the money into elimination of the unfunded accrued liabilities in teacher pension fund as constitutionally required over the next few years. Currently, school districts pick up that tab separately, so the idea is that districts instead of using the money for defeasance that they plow it into higher salaries.
This version sweetens the pot to attract support, making the salary guarantees $2,250 for teachers and $1,125 for others. It would continue outside the MFP but count for that as an own-resources effort for formula computation.
So, ending up with a couple of bite-sized items that will induce some, but not likely all that is needed, fiscal reform may end succeeding next spring when going whole hog this spring didn’t make it.
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