Louisiana should delay a cut in the state income tax enacted by last year’s Legislature until revenue rebounds, Lieut. Gov. Mitch Landrieu said Monday in an address to the Press Club of Baton Rouge.
Landrieu said that delaying the cut would help lessen proposed budget cuts in fiscal 2010 resulting from an anticipated $1.3 billion drop in revenue.
Voters in 2002 approved a plan, named for Rep. Vic Stelly, R-Moss Bluff, to raise income tax rates in exchange for eliminating the state sales tax on groceries and utilities.
In 2008, the Stelly Plan was repealed by a measure that lowered the state income tax rate on individual incomes between $25,000 and $50,000 to 4% from the 6% authorized by the 2002 proposal. The income level is doubled for married taxpayers filing joint returns.
It is expected to reduce state revenue by $359 million in fiscal 2010, $251 million in fiscal 2011, $262 million in fiscal 2012, and $273 million in fiscal 2013.
“Most of the people who look at these numbers over a three-year period of time, and look at the level of tax cuts that have been put in place, can’t find a way to match those numbers up,” Landrieu said. He added that the Legislature did not consider projections for deficits for the next three years when they repealed the Stelly Plan and approved other tax cuts.
The state had a surplus when the tax cuts were approved and lawmakers repealed the plan because they felt they could provide some relief without harming expenditures for higher education and health care, Landrieu said.
“But unfortunately, something funny happened on the way to the farm, and the world changed dramatically,” he said.
Gov. Bobby Jindal has said he would oppose any delay of the tax breaks approved by the Legislature in 2008.