After a week of negotiations and failed votes, the House adjourned the fiscal session yesterday.
The Governor called the Legislature into session on February 19th with the goal of addressing an estimated $1 billion state budget shortfall when temporary taxes expire this summer. The Governor's Executive Order limited the session to several narrowly defined sales and income tax proposals, and to a specific list of budget reforms requested by legislators, including Medicaid, a transparency website, and a spending cap.
The major legislative items that were debated during the fiscal session would have affected Louisiana businesses in several ways:
• Reduced the temporary 1% state sales tax to .25%;
• Permanently imposed a 2% state sales tax on utilities;
• Expanded the state sales tax to certain services;
• Permanently reduced certain income tax exemptions, including deductions for dividends, the Quality Jobs incentive, and the credit for taxes paid in other states.
Tax reform was not on the agenda. Republicans rejected new revenue from income taxes, and Democrats rejected new revenue from sales taxes. The resulting stalemate led to finger-pointing, and the blame game ruled the day.
Early news reports indicate the Legislature could adjourn the regular (non-fiscal) session a few weeks early in May and move into to a second special fiscal session to again attempt to raise tax revenue and close the budget gap that sets in July 1.