Will the Highest Sales Tax in the Country Be Extended?

Date: October 17, 2017

Related Content: News Economy Louisiana Money Taxes

Louisiana lawmakers are still searching for a budget-balancing solution as well as a plan for a surplus.

In the coming months before the 2018 legislative session begins, Gov. Edwards and lawmakers are searching for plans for both allocating the expected surplus left over after the last fiscal year as well as how to close a pending $1 billion budget hole that will hit in mid-2018.

Unfortunately, the $100 million (or more) surplus can’t be put toward the shortage, thanks to the Louisiana constitution, which stipulates that surplus dollars can only be spent on specific one-time expenses, such as coastal work, construction projects, and debt payments, rather than ongoing expenses and programs. Additionally, a minimum of 10 percent of the surplus is supposed to pay down retirement debt, and 25 percent is supposed to go toward the state’s rainy day fund. House Speaker Taylor Barras wants to use the full amount to replenish the rainy day fund since $99 million was drawn this year to help overcome a budget deficit. Senate President John Alario wants to set the money aside and take time to decide how it should be used.

The total surplus amount hasn’t been determined yet, and tax revenue still must be run against spending levels for the 2016-2017 fiscal year.

Meanwhile, it remains to be seen whether Louisiana will keep its highest-in-the country sales tax. Mid next year, a slate of temporary sales taxes will expire, leaving behind a more than $1 billion budget shortfall. Elected officials must decide whether they will let these taxes expire, renew some or all of them, make drastic cuts, or come up with a new revenue plan, such as eliminating a variety of tax breaks.

NFIB/LA will continue to monitor the issue as tax plans begin to take more shape.

Related Content: News | Economy | Louisiana | Money | Taxes

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