2021 Legislative Session to Focus on Issues that Could Be Gamechangers

The legislative session starts this week and it’s a fiscal session in more ways than one. Not only is it that every-other-year session where the focus is mostly on money matters, but it’s one where lawmakers will try to sort out a plan for spending a windfall of federal covid-relief dollars. The combination of those two could make this session one of the most significant legislative gatherings in years.

The great recession that kicked off a nearly decade-long budget crisis in the state also reignited an off-and-on conversation that had been going on for years – how can we improve Louisiana’s tax structure and make the state more competitive? It prompted a lot of discussion, multiple studies, and some fairly consistent recommendations, but ultimately didn’t get very far.

In 2019, CABL teamed up with the Public Affairs Research Council and the Committee of 100 for Economic Development on an election-year initiative we called RESET Louisiana’s Future. It focused on four areas: education, transportation, criminal justice reform, and, significantly, state fiscal policies.

RESET’s framework for fiscal reform largely mirrored the findings of the various study groups and initiatives all three of our organizations had been a part of, but in that election year it seemed to find the interested audience that had been missing before.

Now, in this the first fiscal session since the election, a number of measures to improve our tax system are on the table and set to get the serious discussion they deserve. Big items include creating a centralized sales tax collection system to replace the current hodgepodge that sets us apart, lowering our relatively high individual and corporate income tax rates, and trying to do something about our outdated corporate franchise and inventory taxes.

The goal is not to raise or lower taxes for the state in general, but to fix a broken structure in a revenue-neutral way that moves Louisiana more into the mainstream of forward-looking states. Given the fact that the chief proponents of much of this legislation represent the key leadership in the Legislature, prospects for success look far greater than anything we’ve seen in years.

But the other big issue is what to do with the $3.2 billion the state is set to receive in federal covid-relief payments. Certainly, a portion of that can and should go to offsetting pandemic-related revenue losses. But there are greater opportunities to consider. This round of payments has fewer strings attached than prior ones and the legislation seems to envision using some of these revenues for things that could be big and lasting. Louisiana should take advantage of that.

It’s one-time money, so it shouldn’t be used for recurring expenses, as tempting as that may be. What we should do is create a vision and a framework for doing something significant, coordinate the state dollars with the additional billions of dollars that will also be pouring in to local governments and school boards, and target the revenues to a few things that could be gamechangers.

This session presents an unprecedented opportunity to improve our tax system and develop a strategy for investing billions of dollars that a year ago no one could have foreseen. Our goal should be to think big and focus on ideas that will strengthen Louisiana, make us more competitive, and leave a lasting and positive impact on our state.

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