Ever since Gov. Bobby Jindal issued his proposed $24.6 billion state budget last week, the phrase “money laundering” has been running through my head.
That’s not quite the right term, and what Jindal proposes is not illegal. But is there such a thing as label laundering?
If so, that’s one way to characterize the extent to which the governor has tailored his proposal to meet the terms of an outside political group’s pledge against raising taxes.
The encouraging news is that the administration’s actual anti-revenue fever is finally beginning to break. Jindal, so transparently fixated on keeping his record pure enough to pass muster with anti-tax absolutists such as Americans for Tax Reform, has acknowledged that the state can’t just cut another $1.6 billion without causing dreadful repercussions.
Jindal’s budget proposal contains ideas for new money, something that’s been off the table for years now.
The disappointing, but entirely predictable, news is that Jindal’s plan was concocted and contorted to give him deniability, to allow him to continue to claim he’d never, ever even consider violating the pledge.
The upshot is that specific ideas weren’t chosen on merit but because they can be rhetorically cast as revenue-neutral.
Rather than pick tax credits that don’t give the state a bang for its buck, for example, Jindal proposes to end the state refund of an inventory tax assessed by and paid to local parishes — at least the amount that exceeds a business’ tax liability to the state, so that the proposal can be described not as a tax hike but as a reduction in spending.
Jindal officials claim it meets the purity pledge because it does not raise state taxes, and that’s true. What it does, business groups were quick to point out, is increase the burden on companies that will still have to pay the local assessments but no longer receive a rebate from the state.
Not surprisingly, the idea landed with a thud, even amid Jindal’s ideological allies.
The conservative Hayride blog called the administration’s defense of the proposal “egregiously ludicrous.”
While technically accurate, “as a matter of reality you really couldn’t tell a more pants-on-fire lie than this.” That blog item was tweeted out by the Louisiana Association of Business and Industry, the powerful lobby now headed by former Jindal Chief of Staff Stephen Waguespack, who quickly emerged as a vocal critic of the proposal.
“If you just repeal the credit, it is a tax increase of $462 million on employers,” Waguespack said. (The administration said it would support a constitutional amendment repealing the entire inventory tax, but that’s a much dicier and longer-term proposition, one that would create a new set of problems by blowing big holes in many a parish budget).
About the only person to come to Jindal’s defense was Americans for Tax Reform state director Patrick Gleason, who wrote a piece for Forbes.com defending Jindal’s adherence to the pledge. It was helpfully emailed out by Jindal’s official gubernatorial press office.
Elsewhere in the budget proposal is a convoluted idea to bail out state colleges and universities. Jindal wants to assess a fee on students, then use money from a higher tobacco tax to refund those payments.
Why make it so complicated? Because just raising cigarette taxes and sending the money to higher ed would be considered a net tax increase, Commissioner of Administration Kristy Nichols told confused lawmakers during an initial hearing last week.
“Our guardrails are very clear. We won’t raise taxes without an offset,” she said.
The whole exchange seemed to give lawmakers a headache. At one point, state Rep. Lance Harris, chairman of the Republican Legislative Delegation, asked Nichols to give lawmakers a “very clear and concise definition” of “what you would consider a tax increase or what your boss is going to veto.”
That such a definition is needed — and that the request is coming from Jindal’s own party — pretty much tells us where we are as a wrenching legislative session looms.
While the administration has finally conceded that accounting gimmicks, raids on trust funds and use of one-time money won’t solve the budget’s major structural problems, it’s also pretty much given up on the idea that there should be a policy purpose behind its proposals.
That’s a step backward even from Jindal’s last major tax plan, his 2013 attempt to eliminate the state income tax and raise sales taxes. That too drew immediate fire from both lawmakers and LABI — although it also had the backing of Americans for Tax Reform — but at least Jindal tried to sell it as a way to compete with no-income-tax states such as Texas.
This time, he’s not even bothering to offer a rationale at all, other than to explain how it meets the terms of the no-tax pledge.
The upshot is that the governor is severely limiting the state’s options, all for the sake of semantics. Unlike money laundering, that’s not a crime. But that doesn’t mean it’s not an offense.