Louisiana Attorney General’s Office & Governor’s Office at Odds Over Tax-cutting Restriction in COVID Relief Bill
Tucked into the American Rescue Act that was recently signed into law is a requirement that says states that accept aid are restricted from cutting taxes through 2024. Attorney General Jeff Landry joined other Republican AG’s in opposing the tax cut limitation. Solicitor General Liz Murrill says because the Act is already law "we’re going to have to probably file a lawsuit if we want to get an injunction to stop that section of the law from becoming applicable."
$350 billion of the $1.9 trillion plan was set aside specifically as assistance for states.
“We’ve never seen those kinds of conditions placed on federal money before where we tie the hands of our Legislature,” said Murrill, who said the mandate is unlawful and unconstitutional.
Per the AG’s office, the wording of the stimulus bill forbids states from using COVID-19 relief funds to “directly or indirectly offset a reduction in net tax revenues.” 21 AG’s signed onto a letter sent to the Treasury Secretary opposing the language and asking for regulatory intervention removing it.
Governor John Bel Edwards says he has no problem with the requirement, and it doesn’t change any of his plans. He says he’s committed to pursuing tax reform, but only if it is revenue-neutral "so we don’t create a structural budget-deficit like the one that I inherited when I became governor."
The Governor has unilateral authority to accept or reject the federal funds, and the mandates that come with them.
Meanwhile, in the latest budget hearings with lawmakers, Edwards proposed using more than $600 million in enhanced federal Medicaid payments to help balance his $36 billion-plus spending proposal for the budget year that begins July 1.
State senators, though, expressed concerns about using the short-term federal cash to pay for ongoing services and programs. Members of the Senate Finance Committee on Monday questioned whether the state will have enough cash in later years to offset the federal aid when it disappears.
Commissioner of Administration Jay Dardenne says the administration believes Louisiana’s economy will continue to rebound from the effects of the coronavirus pandemic.
Lawmakers will spend weeks combing through Edwards’ budget proposal.
(Story written by Jeff Palermo/Louisiana Radio Network & Melinda Deslatte/AP)