Louisiana Governor Issues Call for Second Special Session of 2018 to Address Fiscal Cliff
Louisiana Governor John Bel Edwards (D) has now issued his anticipated call for a second special legislative session in 2018 (from May 22nd to June 4th). This 14-day special session is meant to address a stated $648 million budget shortfall, commonly known as the “fiscal cliff.”
A copy of the Governor’s call can be found in its entirety here.
The Governor’s press release regarding the call can be found here.
According to the House Fiscal Office, $1.4 billion in state revenue is set to expire on June 30, 2018. This “fiscal cliff” in the budget results from the scheduled roll-off of incoming revenue from the additional 1% “clean penny” state-level sales tax, as well as the sunset of several temporary haircuts to various exemptions and credits. These measures, which were put in place during the 2015 and 2016 legislative sessions, were considered “temporary” while the legislature worked toward longer-term taxing and spending reform. The Governor has proposed maintaining a portion of that revenue, resulting in a $400 million “net tax cut” for the people of Louisiana.
The first 2018 special session called by the Governor in February was also an attempt to address this upcoming revenue roll-off; however, no significant tax measures were passed by the legislature at that time.
If no new revenue is generated by the legislature in the upcoming special session, then the legislature will be required to balance the fiscal year budget and related “fiscal cliff” solely with budget cuts – largely to the areas of higher education and health care.
The Governor’s new call allows the legislature to consider, among other things, the following items:
Adjustments to brackets for state income tax
Adjustments to state sales tax rates, exclusions, and exemptions
Sales taxation of sales of services
Amendment to the definition of “dealer” for sales tax purposes
Adjustments to various tax incentives (credits, rebates, deductions)
Adjustments to individual income tax deductions
Potential adjustments regarding depreciation and expensing of property for purposes of state income tax (likely as a result of recent federal tax reform measures)
As previously noted, 2019 is a gubernatorial election year in Louisiana. Therefore, budget issues, tax reform, and the raising of taxes will surely continue to be infused with a heavy dose of politics from all sides.