Louisiana's Revenue Secretary Richard Nelson joins the show to discuss Amendment 2, which aims to rewrite Article 7 of the state's Constitution, which deals with revenue and taxation. This article is the longest and most amended part of the Constitution, with nearly 80% of amendments affecting it. The amendment seeks to address long-standing issues in Louisiana's tax system by implementing several key changes.Firstly, it lowers the maximum income tax rate and doubles the standard deduction for senior citizens over 65, allowing them to receive $25,000 tax-free. It also includes provisions to make it harder to pass special interest tax breaks, aiming to clean up the state's tax system and prevent future special interest loopholes.
Additionally, the amendment increases the balance of the state's rainy day fund to $3 billion, making it one of the best-funded savings accounts in the country. It also gives the legislature more control over corporate and severance revenues.Another significant aspect of Amendment 2 is the payment of $2 billion towards the retirement debt of the teachers' retirement system, which saves about $300 million annually and approximately $1 billion in interest. This savings is used to provide teachers with a permanent pay raise. The amendment was passed by a bipartisan supermajority in the legislature and is supported by the governor.Nelson explains that the need for Amendment 2 stems from the inefficacy of the current Constitution, which has been amended hundreds of times since its adoption in 1974. He emphasizes that the amendment incorporates recommendations from various committees and consultants over the past 50 years, aiming to make Louisiana more competitive.
The amendment also includes a government growth limit, ensuring that recurring expenses do not grow faster than population and inflation.Overall, Amendment 2 represents a fundamental change in how Louisiana is run, aiming to streamline the Constitution, improve fiscal policies, and enhance the state's competitiveness.