Irony can have a balancing, even curative effect on the governing process. Case in point: The h Senate, which killed some of Gov. Jeff Landry’s worst ideas in previous legislative sessions, now presents the of rescuing his ambitious tax reform plan.
Landry has rightly pitched his plan as a package that lawmakers must adopt in toto for it to work. For a while, it appeared the House of Representatives would, as it has done in past sessions, .
The House, unlike the Senate, has scores of legislative rookies who haven’t had to cast painful but necessary votes.
Until now.
Last week, under intense pressure from lobbyists and citizens, at Landry’s proposal to impose sales taxes on a long list of services as outlined in House Bill 9. That bill is the linchpin to Landry’s plan because it would have raised $500 million a year to help offset $1.3 billion in revenues lost under the governor’s proposed individual income tax cut.
The House had previously voted for the sweet part of Landry’s plan — massive tax cuts — but it gagged on the bitter pill that would have helped keep the plan in balance.
That came as no surprise to veteran Capitol watchers. As one soon after the governor unveiled his plan, “The new folks up here have no idea what’s in store for them.”
Well, they do now.
And now, the Senate has the herculean task of rescuing Landry’s plan — even as senators plan to water down the governor's proposal to repeal tax credits for the film industry and historic restorations. That will add another $100 million or so that needs to be offset.
Time is short. The session must end by 6 p.m. Monday. Senate President Cameron Henry, R-Metairie, and other Senate leaders are scrambling to find ways to salvage Landry’s plan.
It won’t be easy, but I’ve seen governors and legislative leaders pull rabbits out of hats before. This is an opportunity for Landry and Henry to prove their mettle.
As Landry himself acknowledged in recent days, making laws is like making sausage — the process is messy, but the result tastes just fine.
In fact, the House may have done Landry a favor. He and senators now have a chance to make the plan better, or at least more palatable.
One excellent suggestion, made by the business-oriented , is to “link all of the tax reform bills together, such that all elements of the plan succeed or fail as a package.” That mirrors Landry’s pitch to lawmakers, and it would discourage recalcitrant House members from cherry-picking the sweet parts of the governor’s package while rejecting the necessary, bitter parts.
Lawmakers may find that the easiest way to make the plan revenue neutral is to renew the expiring 0.45 sales tax — but raise it to an even halfpenny.
While technically a tax increase, it would be a very small one. Compared to what we currently pay under the temporary sales tax, which was approved under Democratic former Gov. John Bel Edwards, we’d have to spend $20 to pay an additional penny in sales tax.
One more penny for each $20 spent ain’t much — and h voters generally prefer sales taxes and other forms of taxation, according to pollster (and former state lawmaker) Ron Faucheux. “Even many people in lower-income groups say they prefer sales taxes, which is surprising,” Faucheux told me.
While its impact on wallets would be minimal — and politically safer for lawmakers — even a small boost in sales tax rates would generate significant revenue.
But it still wouldn’t be enough to offset the income tax reductions. That presents a trickier problem for Landry and lawmakers, who appear adamant about lowering personal income taxes to a flat 3%.
Among the ideas under consideration are tweaking the reduction in corporate income taxes. A previous Legislature lowered the top bracket from 15% to 7.5%, but that’s still the highest rate in the Deep South.
Landry wants to cut the rate to 3.5% — after lowering it to 5.5% for one year. To salvage his plan, Landry may have to accept matching Mississippi’s 5% rate, or something similar.
These are just some of the many ideas being discussed.
As the clock ticks down to Monday, the pressure to compromise will increase — along with some tax rates, if Landry is going to succeed.
Whatever happens, the Senate will once again be the fulcrum that leverages the outcome.