Tax cuts stall in Senate over concern they're ‘too much, too fast' for fiscal conservatives

Yahoo

02-06-2025

The Louisiana State Capitol building. (Wes Muller/Louisiana Illuminator)
A package of legislation that would have included tax cuts and an overhaul of state budget laws has stalled in the Louisiana Senate and is unlikely to regain momentum before lawmakers end their 2025 legislative session next week.
The package includes a proposed constitutional amendment that would have let lawmakers take $3 billion from an emergency savings account and use some of it to pay for income and sales tax cuts, among other things.
That proposal, House Bill 678, sponsored by Rep. Julie Emerson, R-Carencro, received overwhelming bipartisan support from House lawmakers last month but has been sidelined until next year, according to Sen. Franklin Foil, R-Baton Rouge.
Foil, who chairs the Senate Committee on Revenue and Fiscal Affairs, said in an interview Sunday he and other senior lawmakers met with Emerson and Gov. Jeff Landry last week to discuss HB 678 and other fiscal bills being proposed this session.
'[After] our last meeting that we had with the governor, I don't believe that we'll be bringing that amendment through this session,' Foil said, adding that Emerson's package of fiscal bills had him worried that it was all 'too much, too fast.'
Senate leaders are reluctant to green light more of a fiscal policy overhaul before they even see the results of the one they completed in a November special session. In the fall, lawmakers lowered and flattened both individual and corporate income taxes and increased the sales tax.
Emerson, who chairs the House Ways & Means Committee, and other House Republicans have been on an aggressive path to lower the state income tax until they can eliminate it entirely. In a previous interview, Emerson said her goal is to 'get to zero,' referring to a 0% tax rate.
Emerson's constitutional amendment would have allowed lawmakers to shift about $2 billion from the state Revenue Stabilization Fund into a separate savings account. The remaining $1 billion would be used to pay down debt, freeing up some money currently being spent on interest payments.
But the current version of the amendment also formed the backbone of a plan that included using that extra cash to fund two separate tax cuts and make a pay stipend for teachers part of their permanent salary. Lawmakers have found a new way to pay for teacher stipends for another year and are continuing to work on it through a proposed amendment, but the tax cuts have stalled.
House Bill 667 would have cut Louisiana's new 3% flat income tax to 2.75% and authorized a higher deduction for taxpayers age 65 and older. The bill was contingent on the amendment's approval, and senators were concerned with an analysis from the Legislative Fiscal Office that estimated the measure could deprive the state of more than a billion dollars in revenue over a five-year period beginning in 2027. The Fiscal Office also stressed the difficulty in coming up with any estimate due to the lack of data reflecting the tax changes that took place in November.
'We didn't even hear the income tax bill because that's primarily what it did,' Foil said. 'It was going to reduce income taxes even more than what we did during the special session in the fall. Many of us up here would like to see income taxes reduced, but we need to do it in a responsible way, and…we didn't want to accelerate deficits for us either until we see how the finances level out.'
Another cut was in House Bill 578, which would have lowered the state sales tax from 5% to 4.75%. The rest of the bill restores some minor sales tax exemptions removed from state law during the special tax session last fall. The Senate Revenue & Fiscal Affairs Committee advanced an amended version of the bill Sunday that no longer contains the sales tax rate cut. It is now pending a vote on the Senate floor.
Outside of the committee room Sunday, Emerson, who is typically responsive to reporters, offered only short answers as to how she felt about the setback to her legislation.
'I mean, it is what it is. They took it out,' she said.
The legislative session ends June 12.
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