On this week’s show, Hy and Christopher wonder if a deal could coming together to preserve the Film, Live Performance, Digital, Quality Jobs and Historic Restoration tax credits?It looks like a compromise may be in the works, according to highly placed sources who spoke to The Louisiana Weekly on the condition of anonymity, but it remains less clear how the Landry administration could plug an additional $500-million hole in the budget. Retaining those credits would create such a deficit. Absent other tax changes, the legislature would find it difficult to achieve the governor’s desired three percent flat income tax rate on individuals, 3.5 on corporations, abolition of the state corporate franchise tax, as well as enacting a permanent $2,000 per year pay increase for teachers. In fact, the potential fiscal hole may have grown even larger after the La. House rejected a slew of sales tax hikes on Thursday, November 14, 2024. That decision alone created the potential of an additional $500 million deficit.In the Special Session’s first week, a series of tax changes (including a constitutional amendment) comfortably earned better than a 2/3 majority of the Louisiana House of Representatives, but one major piece of legislation failed by one vote. Many GOP legislators felt deeply uncomfortable instituting several new sales taxes – especially on boat storage. Revenue Secretary Richard Nelson maintained in the House Ways & Means Committee a week prior that the package had to pass in its entirety, as written. He argued that eliminating any element would unbalance the revenue-neutral nature of the entire reform. That was also the case that Gov. Jeff Landry made in a private Thursday morning meeting less than 15 hours after he opened the Special Session on Tax Reform on Nov. 6, 2024. Landry asked several skeptical legislators to support the entire package of bills in the House, both in committee and on the floor. However, the Governor reportedly added would be willing to reconsider the sunset of several of the more popular credits and exemptions by the time the package of bills reached the La. Senate Revenue & Fiscal Affairs committee. Nevertheless, Landry’s pleas ended up being insufficient to save HB10 one week later to pass certain sales tax hikes, but pressure from the governor proved enough to convince the House members to sunset some of the most popular tax credits for the arts and historic restoration. By better than 80 votes, the La. House voted to abolish the Louisiana Quality Jobs Program which rebates up to 6 percent of annual payroll expenses for up to 10 years and costed $153.3 million in 2023; the Film, Digital, and Live Performance Tax Credits which cost collectively $250 million and provide 25 percent rebate on production costs and 35 percent on labor costs; and the Historic Restoration Credit which covers 20 percent of construction costs at just over $100 million. In addition, companion legislation had sought to renew the soon-to-expire .45 cent “temporary” sales tax along with imposing sales taxes on services previously untaxed. It was the imposition of many of these new sales taxes which ran into trouble. One of the two bills barely passed, while the other failed. House Bill 10 crossed the 2/3 finish line by one vote, 71-33. In fact, to insure passage, the legislation had to be amended to replace the expiring 0.45-cent state sales tax with an 0.4-cent sales tax, a reduction of .05-cents. As a result, the La. Treasury would receive roughly $50 million per year less per year. After approving another 47 amendments without objection, House members did deft Landry by maintaining some sales tax exemptions—including those for the purchase of diapers and Bibles.Despite the pressure which the governor put on wavering state representatives exactly seven days before, House Bill 9 (which would have raised sales taxes on may of items listed below) failed by one vote on Thursday, November 15. Landry vowed to push for another vote. Interestingly though, the failure of HB9 in the House might provide a pathway for a key Senate committee to also save the Film, Live Performance, and Historic Restoration Tax Credits in the coming week.Originally, HB9 and HB10 would have placed sales taxes on: 1 Storage for boats and vessels of less than 50 tons load displacement and trailers along with auto club services and fees; 2 Car wash services; 3 Coin-operated machines; 4 Computer software installation, repair and maintenance; 5 Condominium timeshare and exchange services; 6 Dating services and marriage bureaus; 7 Delivery, shipping, freight and transportation services associated with taxable sale of tangible personal property; 8 Non-medical diet and weight reduction services; 9 Immovable property repair, maintenance and installation services (excluding new construction, reconstruction and capital improvements); 10 Information services such as research publications, ...
