Tax Reform and More on Agenda with Days Left in Regular Session

With days left to go in the 2021 Regular Session, centralized sales tax collection has received legislative approval, and approval of the M.J. Foster Promise Program – a top priority for 1A’s 55 by 25 initiative – is expected early this week. Legislators are now focused on finalizing tax reform and transportation funding negotiations before they must adjourn no later than 6:00 PM this Thursday, June 10.

Here is an update on key legislation 1A is engaged on and monitoring:

Centralized Sales Tax Collection

• HB 199 by Speaker Clay Schexnayder – This Constitutional Amendment establishes the State and Local Streamlined Sales and Use Tax Commission to modernize and simplify our tax system for Louisiana’s small businesses. This new 8-member Commission will have equal representation from state and local governments and will administer sales tax collection, auditing, and dispute resolution. This common-sense reform puts Louisiana’s businesses on a level playing field with online retailers like Amazon and Wayfair. Last week, both the House and Senate unanimously adopted the Conference Committee Report, sending the Constitutional Amendment to the statewide ballot for voter approval this October.

Read more from The Center Square >>

Individual and Corporate Income Tax / Franchise Tax

• SB 159 by Sen. Bret Allain – This Constitutional Amendment caps the maximum allowable rate of individual income tax at 4.75%, and it removes the mandate for a deduction for federal income taxes paid. The Senate is expected to consider the Conference Committee Report sometime this week.
• HB 278 by Rep. Stuart Bishop – This measure reduces individual income tax rates to 1.85% on the first $12,500 of net income, 3.5% on the next $37,000 of net income, and 4.25% on net income in excess of $50,000. The bill also eliminates the federal income tax deduction and includes a trigger that automatically lowers income tax rates as the economy and tax revenue grows. The Senate unanimously approved HB 278 last week and the House is scheduled to concur with the Senate amendments on 6/7.
• SB 161 by Sen Bret Allain – This bill aids small businesses by permanently eliminating the corporate franchise tax on the first $300,000 of taxable capital. The measure also reduces the rate for capital above $300,000 from .3% to .25% and creates a trigger that automatically reduces rates as tax revenue grows. The Senate adopted the Conference Committee Report last week and the Report is now pending House consideration.
• HB 292 by Rep. Neil Riser – This bill reduces the amount of corporate income tax brackets, lowers rates for all corporations, and eliminates the federal income tax deduction to offset the cost of the rate decrease. The measure passed the Senate unanimously last week and House concurrence with the Senate amendments is scheduled for 6/7.

Additional Tax Reform

Two other tax reform measures authored by Senate Revenue & Fiscal Affairs Chairman Bret Allain have cleared both the House and the Senate. At the request of Chairman Allain, the Conference Committees were discharged and the Senate voted unanimously to concur with the House amendments. These measures now head to the Governor for signature.

• SB 157 by Sen. Bret Allain – This measure exempts nonresident mobile workers who work in the state for fewer than 30 days from individual income tax and their employers from withholding tax. This change was recommended by both the Multistate Tax Commission (MTC) and the Council on State Taxation (COST).
• SB 160 by Sen. Bret Allain – This good-government bill simplifies tax administration for businesses by aligning state partnership reporting adjustments to federal taxable income with current federal partnership audit adjustments.

Unemployment Compensation

The Senate recently passed HB 642, Speaker Clay Schexnayder’s plan for spending the first tranche of Louisiana’s federal American Rescue Plan Act funds. Per amendments made by the Senate, the bill directs $300 million to begin replenishing the state’s depleted Unemployment Compensation Trust Fund (UC Trust Fund) and $190 million to repay federal loans taken out when the Fund ran dry in 2020. HB 642 is currently pending in Conference Committee.

Legislators have been working to provide stability for businesses as officials plan for solutions to shore up the UC Trust Fund:

• SB 89, SCR 3, and SCR 5 by Sen. Mike Reese would ensure that both UC tax rates for businesses and benefit levels for recipients would remain the same for the next year. These measures each unanimously passed the full Senate and House. SCR 3 and SCR 5 now go into effect and SB 89 has been sent to the Governor.

Employers in Acadiana and across the state continue reporting worker shortages as Louisiana issues $300 per week in federal supplemental unemployment benefits on top of the state’s $247 per week benefit, making unemployment a competitive alternative to returning to work. More than a dozen other states have already opted to end the supplemental benefits, but Governor Edwards’ office recently announced Louisiana will continue issuing boosted payments. Following this news, the Legislature moved multiple measures last week aimed at getting more of Louisiana’s labor force back to work.

• HCR 109 by Rep. Chris Turner – This concurrent resolution requests that the U.S. Congress discontinue federal enhanced unemployment benefits in light of ongoing negative impacts to Louisiana’s economic recovery. HCR 109 was supported in the House by a vote of 71-21 and is now pending the Senate Labor and Industrial Relations Committee.
• SCR 70 by Rep. Katrina Jackson – This resolution requests that Louisiana’s congressional delegation reevaluate the enhanced unemployment benefit and consider using those funds to create financial incentives for individuals who return to work. SCR 70 passed the Senate unanimously and now heads to the House.
• HB 180 by Rep. Jonathan Goudeau – This bill adds an additional condition for individuals seeking unemployment benefits, mandating that they provide a verification form, signed by the interviewer, proving that they attended a scheduled job interview. HB 180 was unanimously approved by the House and Governmental Affairs Committee as a substitute and became HB 712. The bill is now pending House consideration.

M.J. Foster Promise Program

• SB 148 by Sen. Page Cortez – This bill creates the M.J. Foster Promise Program, a key priority of 1A’s 55 by 25 educational attainment initiative. Named after former Louisiana Governor Mike Foster, the M.J. Foster Promise Program will provide financial support for Louisiana adults to earn credentials that align with high-demand jobs in industries like construction, healthcare, information technology, and manufacturing. The program will serve as a “last dollar” award, open to Louisiana residents over the age of 21. Last week, the Senate voted to send the bill to Conference Committee to work out final details. The Conference Committee Report is scheduled to be considered this week.

Workforce & Education Data Sharing

• HB 459 by Rep. Barbara Freiberg – This bill would require the Louisiana Workforce Commission (LWC) to report certain occupational and employment information to the Board of Regents for economic research and occupational forecasting. These statistics will enable data-based decision making to ensure Louisiana’s educational programs are meeting our current and future workforce needs. 1A supported HB 459 in the Senate Finance Committee, where it was reported favorably last week. The bill is now pending Senate consideration.

Dual Enrollment

• HB 60 by Rep. Ken Brass – This measure extends the sunset date of the Dual Enrollment Framework Task Force, ensuring the Task Force can continue studying and making recommendations to guarantee universal access to dual enrollment credit for Louisiana high school students. Last week, the House voted unanimously to concur in the Senate amendments and HB 60 now heads to the Governor’s desk for signature.

Steve Carter Literacy Program

• HB 85 by Rep. Scott McKnight – This legislation creates the Steve Carter Literacy Program. Public school students in grades K-5 who read below grade level, are at risk for reading difficulties, or meet certain other criteria identified by their educators or state assessments would be eligible for up to $1,000 per school year for eligible services intended to improve their reading or literacy skills. The program would give priority to economically disadvantaged students. HB 85 passed the Senate unanimously on Sunday and is currently pending House concurrence in the Senate amendments.

Infrastructure Funding

• HB 514 by Rep. Tanner Magee – This bill to provide for a state sales tax on medical marijuana was amended on the Senate floor by Sen. Rick Ward to include a new funding source for road and bridge projects. As amended, the bill would make permanent the state’s currently temporary .45-cent sales tax and dedicate those revenues to the Construction Sub Fund of the Transportation Trust Fund (TTF). DOTD would be required to prioritize construction of certain megaprojects, including I-49 South. The amendment also phases out the state sales tax on business utilities by 2031. HB 514 was reported favorably by a vote of 7-4 is now pending Senate consideration.

Read more on HB 514 from The Advocate >>

• HB 511 by Rep. Jack McFarland – This bill phases in dedication of the motor vehicle sales tax to the Construction Subfund of the Transportation Trust Fund (TTF). By Fiscal Year 2030-2031, 100% of the revenue collected from the tax would be deposited into the Subfund, totaling nearly $500 million annually in new revenue for transportation projects throughout the state, without raising taxes. The legislation also mandates study and review of DOTD’s budget and expenditures. HB 511 was reported favorably by the Senate Finance Committee on Sunday and is now pending Senate consideration.
• HB 40 by Rep. Mark Wright – This bill prevents DOTD from using TTF dollars to pay for employee salaries and pensions by gradually removing those funds from DOTD’s operating budget beginning in FY 2022-2023. The bill passed the House by a vote of 65-31 was reported favorably by the Senate Finance Committee on Sunday and is now pending Senate consideration.

Employee Data Privacy

• HB 456 by Rep. Rick Edmonds – This bill pertains to employee data privacy. Currently, employee data – including names, Social Security Numbers, home addresses, wages, and other personal information – from companies who have contracts with Louisiana Economic Development (LED) is subject to public records requests. However, the same information is protected in contracts with other State agencies, posing privacy concerns for companies who work with LED on economic development projects. HB 456 ensures this data is protected from public records requests, consistent with the protections provided for contracts with other State agencies. 1A supported HB 456 in the House, where it passed by a vote of 59-38. Last week, the Senate and Governmental Affairs Committee voted 4-3 to defer the bill, ending its chance to reach the Governor’s desk.

Redistricting

In preparation for redistricting after the final U.S. Census population counts are delivered later this year, legislators are advancing HCR 90 by Speaker Clay Schexnayder. This concurrent resolution issues guidelines for how the Legislature will draw Congressional, Legislative, Supreme Court, BESE, and Public Service Commission districts. The measure requires that redistricting plans comply with the 14th and 15th Amendments to the U.S. Constitution and the Voting Rights Act of 1965. Districts must be geographically contiguous, voting precincts cannot be split, and lines must adhere to political boundaries and natural geography as much as possible. HCR 90 was reported favorably by the Senate and Governmental Affairs Committee and is currently pending Senate consideration.

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