BATON ROUGE, LA (WAFB) - The Louisiana governor made his opening offer to state lawmakers Monday, outlining his tax plan to fill in the state's project $1 billion fiscal cliff.
The ideas Governor John Bel Edwards offered are largely familiar. Many have been debated before at the state capitol, before being voted down or dying in committee. "It's time we stop looking at the options. We know what the options are. We have to move forward," Edwards said.
Starting in fiscal year 2018 - 2019, roughly $1 billion in temporary taxes will fall off the books. Most of that revenue comes from a temporary 1 cent boost to the state sales tax. Without that revenue, the governor says higher education and healthcare would be on the chopping block. "If we don't fix the cliff, no one is going to want to put their name on the cuts that are necessary," Edwards said.
Some of the proposed changes impact business. For example, the plan calls for taxing utilities while at the same time maintaining certain reductions to tax exemptions and deductions. Other ideas impact families directly, such as applying the sales tax to certain services like cable TV. The plan also calls for removing a long list of exemptions to the state's sales tax.
"I'm going to be flexible. I look forward to compromising with the legislature," the governor said.
One idea is already facing pushback. The governor's plan calls for compressing individual income tax brackets. Details of the plan are limited. The governor's office says they will not announce specific tax brackets until they see what Congress does with the federal tax bill.
Small business owners worry any changes to tax brackets could cause them to take a hit. "Somebody's going to be paying more in his version of this and that we know will fall on the backs of small business owners," said Dawn Starns, state director for the National Federation of Independent Business.
Changing brackets could also boost taxes on some middle and upper class families. Even so, Jan Moller with the Louisiana Budget Project says that increase could be balanced by reducing the state sales tax. A temporary 1 cent boost to the state's sales tax is already scheduled to go away next fiscal year. "I think we need to look at this in total and I also think we need to look at what would be lost if we have to cut a billion out of this budget, because that's going to impact everybody," Moller said.
Starns says the business owners she represents support extending the 1 cent boost to the state sales tax. However, the governor says he opposes such a move.
Edwards is asking for feedback from lawmakers on his plan. He hopes to call a special session in February to deal with the fiscal cliff. However, he says he will not do so unless lawmakers agree to a plan.