When Louisiana’s new governor, Democrat John Bel Edwards, floated the prospect of imposing higher taxes and slashing corporate tax breaks to a largely Republican energy industry crowd struggling through a prolonged downturn due to collapsed crude prices, he wasn’t booed off the stage.
Indeed, reaction to Edwards’ revenue-raising proposals, made in a speech Thursday to the Louisiana Oil and Gas Association, was anything but hostile: He was greeted by standing applause before he started his speech and after he finished.
“He’s got an incredible challenge ahead of him,” said Chris John, president of the Mid-Continent Oil and Gas Association who attended the LOGA event in Lake Charles. “I think there was relief that we’re finally going to face our fiscal challenge in Louisiana.”
“At least he’s not talking about kicking the can down the street,” said John, a reference to the budget practices of Louisiana’s last governor.
Edwards was sworn into office in early January and walked into a financial mess: a $750 million hole in the current-year budget, and a projected $1.9 billion deficit in the 2016-17 fiscal year that begins July 1. And there is no money left in the various funds that former Gov. Bobby Jindal used to plug budget holes.
Edwards will ask legislators in February to adopt a temporary 1-cent sales tax and to eliminate corporate tax exemptions. Edwards also said he’ll ask the Legislature to call a statewide election on whether to keep the constitutionally protected federal income tax credit.
On Thursday, Edwards poked fun at the fact he was addressing an association that backed his opponent — Republican Sen. David Vitter — for governor last year.
“I may not be that person you supported for governor. … But I am your governor,” Edwards said.
It was Jindal, not Edwards, who received the bulk of criticism in one-on-one conversations among LOGA members.
“I would have preferred to see a Republican candidate win the election,” said Erick Knezek, a Lafayette Parish School Board member who owns an oilfield service company. “Republicans would have addressed (the fiscal crisis) differently.”
Reminded that Jindal was a Republican, Knezek quipped, “Jindal was a presidential candidate for eight years.”
The harshest criticism of Edwards’ plan came from state Treasurer John Kennedy, who repeated his often-used phrase about Louisiana having a spending problem, not a revenue problem.
And he made a prediction: “It will be the largest tax increase Louisiana has ever seen,” said Kennedy, a Democrat-turned-Republican who is running this year for the U.S. Senate.
Don Briggs, who formed LOGA in 1992 and remains its president, acknowledged at a mid-January association meeting in Lafayette that the state’s budget is in tatters. Briggs also said at the time that he was skeptical about how Edwards would find the $2.65 billion needed for this year and next.
“Where are they going to make that up? On the backs of industry,” he said. Briggs added that Edwards is “a good guy, a good man. … But he’s always on the other side of the fence on” issues important to LOGA.
After hearing Edwards in Lake Charles, Briggs said, “I, for one, am excited.”
Edwards has reached into the Republican ranks to pull veteran politicians into his administration: Former Lt. Gov. Jay Dardenne, who also was a candidate for governor last year, is now Edwards’ commissioner of administration. And former Sen. Robert Adley is the executive director of the Louisiana Offshore Terminal Authority.
Adley, a longtime legislator in both the state House and Senate, owns Pelican Gas Management and serves on the Southern States Energy Board.
He introduced Edwards to LOGA on Thursday.
John, of the Mid-Continental Oil and Gas Association, said the governor can expect opposition to his tax plans; erasing the exemption of the industrial utility tax would hit hard the chemical plants the association lobbies for.
“I don’t think any of us is going to lay down on taxes on businesses. We understand our roles,” John said.
But bringing Adley into the loop and enlisting energy industry help “certainly signals to us that (Edwards) wants to work together,” John said.