Can Louisiana eliminate income tax facing $600 million budget shortfall next year?

Gov. Jeff Landry's goal of transforming the tax structure has shifted from eliminating the state's income tax to reducing it for now. Louisiana faces three years of annual budget shortfalls from $600 million to $700 million, which could require major cuts to higher education and healthcare.

Landry's Louisiana Department of Revenue Secretary Richard Nelson on Tuesday prepped members of the Legislature's House tax-writing committee on the coming issues they will face in 2025.

"There are significant challenges that require big changes to fix," Nelson said during the House Ways and Means hearing.

Nelson said the goal is to lower the income tax rate initially with new "revenue triggers in place that will reduce it to zero," he said in a text to USA Today Network.

The biggest culprits creating what Nelson described as the "fiscal cliff" are the expiration of a 0.45% temporary sales tax that generates $455 million in annual revenue and the expiration of a temporary 2% sales tax on business utilities that generates $211 million in annual revenue.

Nelson said addressing the "huge problem" will require "comprehensive changes" including the reduction of billions of dollars in tax exemptions, exclusions and credits that will allow Louisiana to reduce its personal and business tax rates.

That will make Louisiana more competitive with its southern peers like Florida, Tennessee and Texas, which have no state income tax and have seen their populations and economies enjoy explosive growth, he said.

"Let's look at the states that are successful and what changes we can make," he said.

Nelson noted that Louisiana's population, meanwhile, has dropped by 120,000 during the past eight years, making economic growth almost impossible.

"That's about the population size of Lafayette," he said. "It's a significant challenge."

More: Most Louisiana residents have negative outlook on direction of state: Here's why

Greg Hilburn covers state politics for the USA TODAY Network of Louisiana. Follow him on Twitter @GregHilburn1. 

This article originally appeared on Shreveport Times: Can Louisiana eliminate income tax facing $600 million budget shortfall?