Let’s face it. When your ultimate goal is to plug a massive budget hole with new revenue and still label the scheme “revenue neutral,” you’re already down the rabbit hole.
So in a sense, the weekend letter from House Ways and Means Chairman Joel Robideaux and 10 fellow lawmakers to a Washington interest group honcho fits right into the legislative session’s main storyline.
The dispatch essentially asks Americans for Tax Reform’s Grover Norquist to give Gov. Bobby Jindal permission to stop demanding that the Legislature adopt an almost universally derided fee and corresponding tax offset. Jindal is threatening to veto the budget if it violates Norquist’s absolutist interpretation of ATR’s no-new-tax pledge, and the measure is a key part of the equation.
Sen. Jack Donahue’s proposal would create something called the SAVE tax credit. The measure — try to follow along — creates a $1,500 “fee” for students at state colleges and universities that they are not expected to pay. Instead, they can claim an equivalent tax credit. And because the fee doesn’t count as a tax increase and the credit does count as a tax cut, the budget can include roughly $350 million in new revenue from unrelated sources such as higher cigarette taxes and rollbacks on some corporate tax exemptions — and still be “revenue neutral” in ATR’s estimation.
That way, Jindal can tell everyone listening when he announces his expected presidential run later this month that he balanced the budget without raising taxes, which is the point of this silly endeavor.
A majority of senators have responded to the challenge with eye-rolling resignation, but House members have bristled at the demand. (For his part, Norquist responded Monday that the tax swap wasn’t his idea. “If you don’t like the SAVE Act, why not find other offsetting tax cuts that are more to your liking?” he wrote.)
It’s worth noting that this is anything but a partisan fight.
The letter’s authors are Republicans, and several are leaders of the fiscal hawks group that has long criticized Jindal for using one-time money to pay for recurring needs. Four of the signers — Cameron Henry, Kirk Talbot, Joe Harrison and John Schroder — have themselves signed ATR’s “taxpayer protection pledge,” which states that the legislator in question will “oppose any and all efforts to increase taxes.”
And they raise legitimate points.
They argue that the use of the elaborate fee-credit swap amounts to a slippery slope. By purposely obscuring the actual impact of increased taxes, it creates a mechanism for potentially massive hikes in the future, all under the guise of revenue neutrality.
“Surely this cannot be what it means to adhere to the ‘no tax pledge’ of your organization. If so, it would be profoundly ironic for ATR to suddenly become, albeit unintentionally, the most liberal and dangerous tax policy organization in the United States of America,” the letter says.
The letter-writers also argue that ATR’s definition of “revenue neutral” is arbitrary.
One way the Jindal administration is trying to sell its plans is by claiming that the numbers can balance out not in the next fiscal year, but over the next five. Revenue Secretary Tim Barfield has even said that “it’s OK to have some things front-loaded,” which means the plan can include increased income for Jindal’s final budget, then factor in future cuts over the next four, on the next governor’s watch.
But Robideaux and his colleagues point out in the letter that they’ve cut taxes drastically during Jindal’s tenure — so drastically, some would argue, that they’ve contributed mightily to the current crisis. They make a case that the revenue-neutrality formula should factor that in, as well.
“Louisiana’s taxpayers should not be punished for having already cut taxes over the last 7 years, rather than today,” they wrote. “We have a hard time believing this is what ATR wants to occur in states all over America as a result of the ‘no tax pledge’ which is the very foundation of your organization’s credibility.”
In an ideal world, it shouldn’t matter to Louisiana taxpayers what Norquist and ATR want, but we’re an awfully long way from that world these days. So even if the letter amounts to little more than a stunt in this craziest of budget battles, at least it makes serious arguments. That’s a lot more than we’re getting from the Governor’s Office lately.