A plan to phase out a temporary state sales tax before it ends in mid-2025 was dismissed by the Senate tax committee on Monday.

Without objection, the Senate Committee on Revenue and Fiscal Affairs postponed House Bill 438thus ending the House’s shrinking effort for the legislative session which ends in three weeks on June 6.

Prairieville Republican Rep. Tony Bacala touted the proposal as a way to ease the $450 million impact in mid-2024 when the additional 0.45 cent sales tax goes away. Under HB438, the temporary sales tax that costs just under half a cent would drop to 0.30 cents in mid-2023 and 0.15 cents in mid-2024. The House approved the idea on a 67-30 on May 9.

Under the bill, the amount of money lawmakers would have to come up with would be $138 million by July 1, 2024, up from $450 million.

A temporary state sales tax would phase out rather than all at once in three years, under legislation approved by the House on Monday.

“Let’s do something so that only certain parts can be paid but don’t lead to a $450 million cliff for the next legislature,” Bacala said. The 105 deputies and senators are due to be elected next year and will take office in January 2024.

In 2016, when the state had to find $1 billion to balance the budget, newly elected lawmakers agreed to raise the state sales tax from 4 cents to 5 cents. Over the next few years, lawmakers passionately negotiated to end additional sales taxes. Lawmakers agreed to set the additional sales tax at 0.45 cents – less than half a penny – and end the higher tax on June 30, the day before the start of the 2025 fiscal year on July 1. .

Norco Democratic Sen. Gary Smith said that deal, which no one liked very much, was precisely the reason he opposed cutting the additional tax before its time. “We have a schedule that we put in place through three hard-fought negotiations,” Smith said.

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During his decades in the Legislative Assembly, Smith said he remembers times of crisis after the 2005 hurricane Katrina and Rita recovery funds arrived. income tax cuts, triggering a decade of annual deficits that led to deep cuts in higher education and health care, as well as the sale of state properties and questionable accounting practices to balance government budgets. annual operations.


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“We have money and now the first thing we want to do is start shaking up the stability?” said Smith.

Bacala pointed out that the state’s economy “has been doing quite well” since 2018. The projected revenue from the sales tax increase is not as necessary as initially estimated, he added.

By slowly weaning off the extra revenue, lawmakers can focus on the changes to exemptions and tax structures needed to build a healthier system. “If we know that this (additional revenue) isn’t there, maybe that forces us into this conversation,” Bacala said.

State Sen. Jay Luneau, D-Alexandria, said most of the revenue raised was used as one-time investments to pay off debts, help pay for highways and bridges, rather than being spent on salaries and ongoing projects that should be paid for year after year.

“We spend huge amounts of money on one-time projects that we badly need,” Luneau said.