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Louisiana Senate rejects tax break aimed to kickstart gaming opening

Gaming is one of Louisiana’s biggest sources of tax revenue along with the oil and gas industry, both of which have taken major economic hits.

BATON ROUGE, La. — A Senate committee on Friday rejected a resolution that would have suspended taxes on promotional play wagers in the gaming industry and cost the state $29 million in tax revenues. 

The Senate Revenue and Fiscal Committee voted 4-3 against the proposal by Sen. Barrow Peacock, R-Bossier, with three of his fellow Republicans among those opposing it.

The resolution was an attempt to fuel the gaming industry’s reopening following a nearly three- month halt in the wake of the COVID-19 pandemic. It was one of several proposals this week by Republican lawmakers to provide tax breaks to help businesses that have been hurt by the virus. 

The House Ways and Means Committee pass resolutions to suspend severance taxes on oil and gas and suspend business franchise taxes for a year to help companies and their workers rebound from the shutdown. 

But other lawmakers expressed concern that the tax breaks would add to the $1 billion in revenue losses that the state faces as a result of the virus. That would make it harder for the Legislature to balance the budget and could force it to make larger cuts in health services and higher education.

Legislative analysts estimate that suspending the oil and gas severance tax would result in a loss of nearly $514 million in revenues for the state in the fiscal year beginning July 1. Suspending the franchise taxes levied on many types of business operations would decrease state revenue by  $378 million. 

In debating Peacock’s bill, multiple senators voiced concern about the cost of the resolution. That tax break also would have expired after one year. 

“We would be voting to cut $29.3 million dollars out of next year’s budget,” said Sen. Eddie Lambert, R-Gonzales, who opposed the resolution. “And on that hope, we would be hoping that it’s going to generate more money in revenue than we’re giving away?”

Gaming is one of Louisiana’s biggest sources of tax revenue along with the oil and gas industry, both of which have taken major economic hits.

RELATED: Louisiana's gambling industry shutdown comes with big costs

Speaker of the House Clay Schexnayder, R-Gonzales, said the proposals to suspend the oil and gas and the franchise taxes marked an attempt to spur the state economy and help local businesses reopen. 

The lost revenues would likely have a large impact on state-offered services unless the federal government offers further aid. Given that much of the state’s spending is specifically mandated in laws or the state Constitution, the Legislature typically has to cut funding for higher education, healthcare and social services, all of which receive funding from the state’s general fund. 

Louisiana received $1.8 billion from the federal CARES act, the first stimulus bill that Congress passed to deal with the cost of the pandemic. But the U.S. Treasury Department gave strict guidelines that the money received may not be used to fill budget shortfalls. 

Democrats in Congress have proposed another stimulus bill to help states and cities deal with the tax-revenue losses from the shutdown, but President Donald Trump and Senate Majority Mitch McConnell, R-Kentucky, have so far opposed providing more aid.

A concurrent resolution suspends a law for a period of time, set in the legislation. It requires a majority vote in the House and the Senate, but does not require the governor’s signature. 

The four senators who voted against the proposal were Eddie Lambert, R-Gonzales; Patrick McMath, R-Covington; Rogers Pope, R-Denham Springs; and Jay Luneau, D-Alexandria.

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