NEW ORLEANS, LA (WVUE) - Governor John Bel Edwards says the federal tax reform package may help the state deal with a massive budget deficit.
Edwards is trying to cobble together a budget without a 5th penny of the sales tax, which is set to expire next year, and he says the new federal tax bill offers hope.
Edwards warns his budget for next year, could be dire, but things might change, thanks to newly passed federal tax reform.
"If we know what the impact is, that can help us with the cliff," said Edwards.
The so-called fiscal cliff, is a billion dollar budget hole, expected when the 5th penny of the state sales tax expires, in June of next year. But the governor says the new tax reform law might make a difference,
"Generally speaking if there's a federal tax cut for corporations, and individuals, the income tax to Louisiana from corporations and individuals, that revenue should increase, because we have deductions for those taxes that are paid, and if you pay fewer taxes, deductions get smaller, so you pay more state taxes," said Edwards.
While that may be bad news for some, overall, Republican lawmakers say the new tax reform measure, will help most taxpayers.
"You're gonna see companies hire, wages go up...and economic growth," said Rep. Steve Scalise (R-La).
Local CPA Kemberly Washington agrees.
"If you're an individual filing single and make $35,000 a year, you will see a savings of 1.2 %," said Washington.
Washington also says higher earners benefit too.
"If you're an individual making $90,000 on a joint tax return, you will save 3.6 % not a huge difference, but you will pay less this year," she said.
If the governor's early assessment is correct, the challenges faced by state bean counters, could lessen, but there are many unknowns.
"It is too early to estimate what the impacts might be because of those changes," said Edwards.
But the governor says those changes will likely factor in to the budget presentation he plans to make, a month from now.
Governor Edwards has proposed eliminating rebate programs, among other things, in order to help balance the budget once the 5th penny of the sales tax expires in June of next year.