As he gave the opening speech last week for a special session called mainly to overhaul Louisiana’s tax code, Gov. Jeff Landry didn’t wait long to take a not-so-veiled shot at anyone defending the status quo.
“This tax code is holding our state back,” he said, while holding a hefty green soft-cover volume of Louisiana statutes. “The nearly 1,400 pages are filled with special interests, carve-outs, loopholes, and latent benefits for a few.”
He would come back to the theme of a tax system rigged in favor of those with political connections at the expense of the rest of the state more than once, though he also offered a promise to some of the effort’s biggest skeptics.
“We will work to make sure our local governments are made whole,” he said, acknowledging the parish presidents and police jury administrators in the House chamber’s balcony.
And he urged lawmakers to resist the temptation to break up the wide-ranging package.
“The structure of this package makes its success dependent upon its entirety,” Landry argued. “Let us take the whole, rather than just a slice.”
But some lawmakers are doubtful that the broad overhaul Landry is pushing can be fully accomplished in a session lasting less than three weeks. According to the call, they can go until Nov. 25, the Monday before Thanksgiving.
The House voted last week (over Democrats’ objections) to suspend the rules and start hearing the administration’s bills almost right away.
But while revenue bills must start in the House, many Louisiana politicos will be more focused on the Senate, which buried Landry’s attempt at a constitutional convention without so much as a vote.
Asked about his members’ comfort level with the package, Senate President Cameron Henry says they are working through the details with local officials in their areas, with an eye toward potential changes that could be made in committee.
He says senators want to make sure any revenue increase is offset by income tax reductions, but they also don’t want to create future deficits.
“I haven’t gotten a feel for what they’re for or against just yet,” Henry says. “There’s nobody dug in on anything yet.”
For now, some legislators are reluctant to go public with their concerns. No sense getting crossways with the governor’s team before you have to.
But senators generally express openness to the general thrust of what the governor is trying to accomplish, while acknowledging that the details can and will change.
“I think we need substantial changes to our tax code, and I’m willing to work with anybody and everybody to get there,” Sen. Robert Allain says. “We have a vehicle to do it, and let’s see if everybody can agree on what model car to get there with.”
Business lobbyists probably won’t give up the incentives Landry wants to eliminate without a fight. Lt. Gov. Billy Nungesser is among the prominent figures going to bat for the programs that support film productions and restorations of historic buildings.
Some local officials don’t think the administration’s math adds up, nor do they like the uncertainty that comes with moving the fundamentals of property taxation out of the state constitution. Many legislators will be very reluctant to support the effort without a thumbs-up from their locals.
In a nod to local concerns, the package is expected to be altered to allow parishes to continue to tax manufacturing machinery and equipment, commonly referred to as “MM&E.” Potentially losing that revenue was a big deal for the industrialized River Parishes.
“I’m really comfortable with it,” Senate Commerce Chair Beth Mizell says of the package. “I know there’s pain involved, but I believe we can make it where the pain is shared across all the stakeholders.”
She adds that some of those stakeholders will want to carve out their piece, and she’s hoping that doesn’t happen “to the point where the pieces don’t fit.”
Sen. Ed Price says his Democratic colleagues have a “wait-and-see attitude” at this point. Asked if the teacher pay raise Landry has incorporated into the plan would boost its popularity with Democrats, Price points out that the mechanism envisioned in the plan (liquidating existing education funds to pay down retirement debt, then requiring school districts to use the money they save on debt payments to fund raises) could be enacted even if the rest of the plan goes nowhere.
But in other cases, Price says, changing one aspect of the plan could have ripple effects that will be difficult to sort out during the short session.
“When you try to satisfy one group, then you got to satisfy another group and another group,” he says. “And where does it end?”
Senate Judiciary C Chair Jay Morris says any tax reform will leave some people happy and some unhappy, but improving the state’s overall tax climate is worth the effort. While he can’t guarantee that he’ll vote for bills that haven’t gotten to him yet, he says he’s inclined to work toward improving instruments that are giving people serious concerns to make them more palatable.
If the package gets to the Senate, there’s a good chance most of it passes in some form or fashion, Morris says.
“Overall, I think the ideas they came up with make sense,” Senate Transportation Chair Patrick Connick says. “Everybody’s getting a haircut.”
