BATON ROUGE, La. (AP) — A key group of House Republicans announced Wednesday its objection to a Senate-led effort to permanently keep a 0.45% state sales tax that is otherwise scheduled to roll off the books in four years, opposition that could doom the proposal’s chance of passage.
Still, senators plowed ahead with their effort to strip the tax’s expiration date and steer the money to road and bridge work, starting in 2025. The Senate Finance Committee voted 7-4 to send the proposal to the full Senate for debate.
But the Louisiana Conservative Caucus — 41 GOP lawmakers in the House — released a statement calling the Senate proposal “an irresponsible sales tax increase at a time when we’ve had billions of dollars come into our state” from the federal government that could pay for infrastructure.
Those lawmakers represent more than one-third of the 105-member House, enough to stall the bill that requires a two-thirds vote to pass. The caucus joins a bipartisan list of opponents to making the tax permanent.
The Conservative Caucus is led by Republican Rep. Jack McFarland, of Winnfield, who initially proposed a gas tax hike this session to pay for road and bridge projects. But McFarland scrapped the bill before the legislative session even began, citing the influx of federal coronavirus aid.
Unless senators can sway enough of the caucus members to change their minds, the sales tax proposal will be unable pass. And senators are clearly split on the idea, with Republicans and Democrats on both sides of the issue.
Republican Sen. Rick Ward, of Port Allen, said an influx of up to $400 million a year in sales tax money for infrastructure would give the state a chance to address a $15 billion backlog of road and bridge needs in Louisiana.
“We have fixed our budget. We are on a good path. But now we need a new commitment. We need to fix our roads and fix our bridges,” he said.
Sen. Cameron Henry, a Jefferson Parish Republican, raised concerns about making financial decisions that will box in lawmakers in future terms.
“That’s just a lot of money to tie up with so much federal money coming in,” he said.
When Louisiana lawmakers passed the 0.45% sales tax in 2018 to stabilize state finances, they pledged the tax hike would be temporary, a bridge to balance the budget while lawmakers gained time to work on a larger tax overhaul. The temporary tax is scheduled to end in mid-2025, dropping the state sales tax rate from 4.45% to 4% at that time.
Ward — with the support of Republican Senate President Page Cortez — attached the sales tax renewal language to a separate House bill that sought to levy a tax on raw, smokable cannabis in Louisiana’s medical marijuana program. Senators voted 27-10 to add the sales tax renewal and then sent the bill to the Senate Finance Committee for review. It now heads back to the Senate floor for a second vote. If approved there, it would move to the House for consideration, where the Conservative Caucus position comes into play.
Louisiana currently has the second-highest combined average state and local sales tax rate in the nation at 9.52%, falling behind only Tennessee, according to the Washington, D.C.-based Tax Foundation.
Opponents say the permanent sales tax proposal would renege on a promise made to Louisiana residents that the tax would be temporary. They note that sales taxes take a heavier share of poor residents’ income than other consumers and that the tax would be kept even as businesses get a tax break.
Ward’s amendments to the medical marijuana tax bill would phase out a temporary sales tax levied on business utilities — while making the temporary 0.45% sales tax on all consumers permanent.
A specific set of transportation projects would be prioritized when the sales tax dollars shift to infrastructure on July 1, 2025.
The bill is filed as House Bill 514.