8 minute read
Business interests
WINNERS: Business interests scored multiple victories during the recently completed legislative session.
The 2021 legislative session was one of the best in recent years for the business community. BY STEPHANIE RIEGEL
THE 2021 LEGISLATIVE session didn’t make everyone happy.
But business organizations and good government groups overwhelmingly give the six-week session that ended June 10 high marks for being one of the most successful in recent memory.
“This has been an extremely collaborative session, where legislators worked together to develop innovative solutions for the good of the people of Louisiana,” says Stephen Waguespack, president of the Louisiana Association of Business and Industry.
That innovation and bipartisanship was enabled in large part by the pending arrival of a $1.6 billion federal windfall, courtesy of the Biden administration’s American Rescue Plan. With that kind of money headed to Louisiana, it was a lot easier for lawmakers to find creative solutions.
Still, that’s only part of the reason the session was hailed as a success by so many. The other is the passage of a package of tax reform measures that address many, though not all, of the problems that have long been cited for making the state’s Byzantine tax code complicated and anti-competitive.
Granted, in order for the changes to take place, voters have to approve several constitutional amendments on the ballot this fall, which is no small feat. But nonpartisan analysts say the measures include much-needed reforms that will benefit many in the state, not just business owners and wealthy individuals.
“A lot of these changes are good policy, based on good, sound recommendations going back for years,” says Robert Travis Scott, president and CEO of the Public Affairs Research Council. “This Legislature was determined to get it done and we saw some tremendous leadership.”
There was another big win, too, for the business community: the passage of a bill that would redirect $300 million in vehicle sales tax revenues to long overdue highway and bridge construction projects, including a new span across the Mississippi River in Baton Rouge.
But that bill faces an uncertain future: Gov. John Bel Edwards has serious concerns about the measure because of its impact on the state general fund, and it was unclear as of press time whether he would let it become law or veto it.
Even without the transportation funding bill, the tax system changes, which have been at the top of the business community wish list for years, are significant enough to make the 2021 session go down as one of the most successful in recent memory, in the opinion of Baton Rouge Area Chamber President and CEO Adam Knapp.
“When you look at Louisiana passing tort reform last year and tax reform this year, it’s the most consequential, pro-business, two-session run—maybe ever,” he says. “It’s incredible to see bipartisan solutions get done in a divided government.”
Here’s a look at how issues of importance to the business community fared in the session.
TAX REFORM
Several bills are lumped under the tax reform umbrella. Taken together, they address several problems with the state’s tax system, though critics note that lawmakers did little to address the state’s heavy reliance on sales taxes, which disproportionately affect low-income taxpayers.
HB199 by House Speaker Clay Schexnayder, R-Gonzales, is a constitutional amendment that, if approved by voters this fall, will create a more simplified state and local sales tax system by establishing a new statewide political subdivision that will be responsible for streamlining filings, remittance and audits of sales and user taxes.
It’s significant because Louisiana is the only state in the country with the cumbersome,
MARIE CONSTANTIN
STEPHEN WAGUESPACK, president, Louisiana Association of Business and Industry
archaic, dual-collection system currently in place, and this measure would not only make things easier for business owners but would also put Louisiana’s brickand-mortar retailers on equal footing with e-retailers.
Another set of bills will eliminate the federal income tax deduction on both personal and corporate income tax while reducing the brackets and lowering the rates. The changes would give Louisiana the lowest top personal income tax rate in the Southeast, excluding those with none, and fourth-lowest overall for states with an income tax. To become law, these tax reform changes also must be approved by voters in the Oct. 9 election.
Finally, SB161 by Sen. Brett Allain, R-Franklin, removes the franchise tax for capital under $300,000 and reduces the rate from .3% to .275% on capital over $300,000. Existing tax policies have long made Louisiana an outlier nationally and these changes will put the state in line with peer averages and drastically improve business competitiveness, BRAC and LABI say.
The Legislature made a few additional significant reforms that went largely under the radar, according to BRAC. Among them were bills that: provide individual and corporate income tax exemptions for state and federal pandemic relief benefits; provide an individual income tax exemption on 50% of the gross wages on taxpayers who qualify as a “digital nomad;” and allow for a net operating loss to be carried forward until the loss is fully recovered.
TRANSPORTATION INFRASTRUCTURE
The business community notched another major victory in the final days of the session when lawmakers passed HB514, which would redirect $300 million a year in vehicle sales taxes to a dedicated construction subfund of the transportation trust fund. Some 75% of the money would be used for new mega projects including a new bridge across the Mississippi River in Baton Rouge and a new bridge across the Calcasieu River in Lake Charles. The other 25% would go to maintenance of existing projects.
The bill is significant because it’s the first major source of recurring revenue the state has identified in decades for transportation infrastructure, which would make it easier to qualify for federal matching funds and, therefore, enable work to get started more quickly. That’s no small thing, as a new bridge in Baton Rouge will take the better part of a decade to complete once construction begins, and that’s still at least two years away.
The challenge is that Edwards may veto the measure. As of publication, the governor had not said what he would do, though he has registered his concerns about the negative fiscal impact the bill will have on the state general fund by 2025, when a .45-cent sales tax extension expires.
ENDING ENHANCED UNEMPLOYMENT
This was another significant victory for the business community. HB183 by Rep. Chad Brown, D-Plaquemine, ends the weekly $300 enhanced federal unemployment benefits July 31, though it adds $28 a week to the state’s nearly lowest-inthe-nation unemployment benefits, beginning in January.
Lawmakers also approved a bill that will maintain the current levels of employer taxes and benefits through 2022, continuing a policy adopted during the pandemic that prevents employers from paying higher unemployment taxes.
CAPITAL OUTLAY
Though it went largely unnoticed, several priority projects for the Capital Region received favorable funding through Capital Outlay, including funding to regional colleges and universities and the revitalization of the LSU/ City Park lakes. In addition, the Greater Baton Rouge Economic Partnership received $1 million to be used as an incentive for attracting new direct flights out of Baton Rouge Metropolitan Airport.
ECONOMIC DEVELOPMENT
SB227 by Sen. Regina Barrow, D-Baton Rouge, establishes the Plank Road Business Economic Development District, which was hailed as a key milestone in accelerating economic development in north Baton Rouge. The district includes Plank Road from its southern origin to Hooper Road and surrounding areas. The board will identify capital improvement projects and also potential funding sources. The bill does not tax existing businesses in the district.
WORKFORCE DEVELOPMENT
The Legislature passed two measures that will enable the state to better measure workforce and career educational outcomes as well as job readiness.
HB459 by Rep. Barbara Freiberg, R-Baton Rouge, allows for data sharing between the Louisiana Workforce Commission and the Board of Regents. The legislation aims to make it easier for the state to determine what workforce-readiness programs are working and which need to be improved.
A companion bill, HB711 by Rep. Ray Garofalo, R-Chalmette, allows the Board of Regents and Louisiana Department of Education to share data, which will provide greater accountability for K-12 education.
Business groups supported both bills, touting them as a way to allow for “cradle-to-career data” to measure the effectiveness of the state’s educational programs.
EDUCATION
The business community also got behind several K-12 education bills:
HB85 by Rep. Scot McKnight, R-Baton Rouge, will create a literacy program named after the late Rep. Steve Carter for students struggling to read on grade level.
SB10 by Sen Cleo Fields, D-Baton Rouge, makes kindergarten attendance mandatory. Meanwhile, legislation that legalizes sports betting in the state will dedicate a small portion of revenues to early childhood education programs.
SB148, by Senate President Page Cortez, R-Lafayette, will create the M.J. Foster Promise Program to provide $10.5 million annually in scholarships to upskill and retrain adult learners through the state’s community and technical college system.
BAN ON DECEPTIVE ATTORNEY ADVERTISING
SB43 by Sen. Barrow Peacock, R-Bossier City, outlaws deceptive advertising practices used by some lawyers in Louisiana. Longtime advocates of tort reform say this bill will improve our state’s legal climate by ensuring attorneys cannot use advertising that masquerades as independent professional, medical or government advice.
MARIE CONSTANTIN
