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Week two of the legislative session was a bit slower and less hectic than week one; however, next week looks to have a few bills going to committee that we’ve been keeping a close eye on as we discussed in the Bill Review Call with members. The House wrapped up yesterday afternoon with a small handful of bills being debated on the floor (and returning a few highly controversial tax bills to the calendar without debate); the Senate adjourned the evening before. Both chambers took up several bills in committee this week, and again, while we’re in a fiscal-only session, several non-fiscal bills are on the move or will be on the move in the coming weeks.
This Wednesday marked the bill filing deadline for post-session introduction and a handful of bigger-ticket tax-related items have been filed. One of the newly-filed items that could likely receive considerable attention in the coming weeks is HB 693 by Rep. Paula Davis, R-Baton Rouge, which dedicates a percentage of the .45% state sales and use tax over time to the state’s Construction Sub-fund and specifically identifies transportation projects throughout the state. This measure makes use of a percent of the temporary half-cent sales tax which passed two years ago and is set to expire in 2025; the bill is an alternative approach to an increased gas tax that has been unsuccessful in garnering support over the last few years.
In addition, we’re closely monitoring SB180 that states it is focused on reverse auction technology and related to pharmaceuticals; however, wording suggests the potential to loop in all “professional services”. We are continuing to work with those involved to find a positive solution in keeping with current laws and legislation.
A few of the bills AIA LA is currently keeping a close watch on (some favorable; some of concern, so please feel free to email the office should you have questions, concerns, or specific insight into any that you wish to share):
HB 27 | Miller, Gregory(R) | Applicable to certain licensing boards.
HB 220 | Miller, Gregory(R) | Provides relative to public works contracts.
HB 294 | Romero, Troy (F)(R) | Relative to retainage as relates to subcontractors.
HB 302 | Bishop, Stuart(R) | Provides relative to capital outlay.
HB 323 | Gadberry, Foy (F)(R) | Relative to architectural and engineering services.
HB 361 | Johnson, C. Travis (F)(D) | Relative to the adoption of the IRC.
HB 437 | Gadberry, Foy (F)(R) | Relative to enforcement of state uniform construction code.
HB 451 | Davis, Paula(R) | Relative to the FORTIFIED program and similar.
SB 111 | Womack, Glen (F)(R) | Relative to public contracts.
SB 166 | Smith, Gary(D) | Relative to the historic rehabilitation tax credit.
SB 180 | Mills, Fred(R) | Relative to procurement using of reverse auction technology.
SB 182 | White, Mack "Bodi"(R) | Provision regarding access to documents in public bidding.
Following is a quick overview of other big-picture bills of interest:
Streamlined Sales Tax Collection
Speaker of the House Clay Schexnayder, R-Gonzales, received well over the 70 votes (two-thirds) necessary to pass his HB 199 off the House floor this week. This constitutional amendment creates a new political subdivision that will be responsible for streamlining receipts and management of sales and use taxes. The goal here is to finally begin improving the state’s confusing and onerous sales tax collection process, and this bill reflects compromise language from business advocates and local government officials.
Package of Tax Bills Move Before Stalling
Three massive tax overhaul-related bills by Rep. Richard Nelson, R-Mandeville, (HBs 475, 526 and 612) were amended and reported favorably this week from the House Ways and Means Committee. This package of bills contains rewrites of the state’s tax code and, frankly, face very slim chances of passage…much of that evidenced yesterday when Rep. Nelson, a freshman lawmaker, returned HB 612 to the calendar without debate. See below for an article highlighting this package.
Article of interest
Bill aimed at revamping Louisiana's tax system, which would eliminate ITEP, moves forward
by Tyler Bridges | Baton Rouge, LA - The Advocate | April 20, 2021
When lawmakers praise a plan as “bold,” as members of the House Ways and Means Committee repeatedly did for a colleague’s bill Tuesday, that’s usually the kiss of death, the equivalent of “you’re a nice guy, but….”
But the committee members approved, albeit narrowly, a far-reaching plan from a freshman lawmaker that would completely revamp Louisiana’s widely-derided tax system.
The state’s corporate and individual income taxes? They would disappear under the proposal by state Rep. Richard Nelson, R-Mandeville. So would the state’s corporate franchise tax.
In all, eliminating those taxes could cost the state about $4 billion, Nelson estimated.
He proposes to make up that revenue by shifting spending from the state to local governments and giving local governments new ways to raise revenue.
“The overarching theme is to give locals the ability to control their own destiny, to decide how much to spend and how to raise it rather than going to beg to Baton Rouge,” Nelson said in an interview. “This is a conceptual idea. I’m just trying to drive the conversation.”
Under his plan, state spending on education – under what is known as the Minimum Foundation Program – would drop by one-third. Local governments could make up the spending.
The sacred $75,000 homestead exemption? That would be cut to $25,000 under Nelson’s plan, a move that would be a big money-raiser for local governments.
The equally sacred Industrial Tax Exemption Program that costs local governments an estimated $2 billion per year? That would disappear, too, over time, and so would the $90 million in revenue sharing that the state sends to local governments every year.
Local governments would raise even more money by eliminating the blanket exemption from tax exemption for nonprofits. Their property would remain tax-exempt only if they used it directly for the group’s main activities.
Nelson proposes to raise the state sales tax of 4.45% to 6.1% while capping the local government sales tax rate at 3%. That would give Louisiana a combined local and state sales tax rate of 9.1% - compared to an average rate today of 9.52%, which is the second-highest in the country.
“I commend you for not shying away from putting big ideas before this place,” said state Rep. Mark Wright, R-Covington, who voted for the various pieces of Nelson’s package, House Bills 475, 520, 526, and 612. The committee passed all but HB520, which didn't advance because of a 7-7 vote.
“Locals don’t have control of their own destiny,” said state Rep. Barry Ivey, R-Central. “It’s an idea worthy of additional consideration.” He also voted for the plan.
“I like the boldness of it,” chimed in state Rep. Beau Beaullieu, R-New Iberia. He, too, voted for it.
State Rep. Malinda White, D-Bogalusa, raised the biggest concerns, saying she worries about its impact on the poor and retirees on fixed incomes.
Nelson acknowledged that his bill had something everyone can dislike – but that could be the beauty of it, too.
Afterward, Nelson said he couldn’t explain why representatives of local governments – school boards, sheriffs, district attorneys, and municipal governments – didn’t testify on the bill.
He also acknowledged that he doesn’t believe that his plan will ultimately pass the Legislature and be put before voters in a statewide referendum.
An attorney and engineer, Nelson said he devised the bill himself without help from outside groups.
“This is the scope of change that Louisiana needs, but I hope it will prompt a conversation going forward and be part of the next governor’s race,” he said.
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