A Louisiana Chemical Association lawsuit attacking the legality of a recent tax exemption rollback will move forward, but not with Gov. Bobby Jindal as a defendant, a Baton Rouge state judge ruled Monday.
Attorneys for the Louisiana Department of Revenue and the Legislature asked District Judge Mike Caldwell during a hearing to dismiss the LCA suit, arguing the group had no legal standing to sue, but the judge denied the request.
Caldwell, however, did agree with Emily Andrews, an attorney for the Governor’s Office, that Jindal should not be a party to the case.
If successful, the LCA suit could blast a $103 million hole in the $25 billion state operating budget for the fiscal year that started July 1.
The legislatively approved House Concurrent Resolution 8, which temporarily suspended 1 penny of the 4-cent sales tax exemption on the purchase of power by businesses such as chemical plants, is expected to generate $103 million in revenue for the cash-strapped state.
The LCA argues the measure was improperly passed because it failed to win backing from two-thirds of the legislators. House Speaker Chuck Kleckley, R-Lake Charles, has said the tax credit suspension did not require a two-thirds vote.
LCA attorney Linda Akchin told Caldwell that several association members, including Formosa Plastics, PSC Nitrogen and Louisiana Pigment Co., have paid the tax under protest and are suing for a refund.
The LCA, whose mission is to foster the state’s chemical industry and make it competitive, is attempting with the suit to “keep the burden of doing business in Louisiana as low as possible for its members,” she argued in defending the LCA’s right to sue.
Antonio Ferachi, an attorney for the state Revenue Department, argued the LCA is neither a taxpayer nor consumer affected by the tax exemption rollback.
Alfred Speer, representing the Legislature, said litigation is not part of the LCA’s lobbying mission.
In one brief moment of levity during an otherwise serious hearing, Akchin — while arguing to keep Jindal in the suit — noted that state Revenue Secretary Tim Barfield serves at the pleasure of the governor, which makes Jindal an interested party.
“I might question that,” said Caldwell, who — in an obvious reference to Jindal’s relentless presidential campaign — quipped he’s not sure the governor is interested in what’s going on in the state right now. The judge’s remark drew chuckles from the courtroom audience.
In the end, Caldwell found that the LCA has standing to sue both as an association and taxpayer. Economic development, he said, addresses the issue of taxation or the removal of a tax exemption. The judge also said LCA members are taxpaying consumers.
Caldwell noted that Jindal didn’t have control over enforcing the tax law.
Others have filed suit challenging the measure, including Entergy Louisiana, Entergy Gulf States Louisiana, Entergy New Orleans and Entergy Arkansas.