Louisiana is long overdue for a serious, strategically minded conversation about taxes.
Sorry, Louisiana Legislature. This isn’t it.
The Legislature’s all-important effort to fill a $1.6 billion budget hole has instead set off a mad scramble to find or free up revenue, all while keeping within the narrow lane that Gov. Bobby Jindal has defined. That, as we all know by now, means no new revenue without corresponding spending offsets.
To get there, lawmakers are attempting to rewrite the tax code on the fly, focusing on areas that could provide a quick infusion of cash to support health care and higher education — the two major priorities that don’t have their own dedicated funding streams — without asking the governor to sign anything that could be cast out on the presidential trail as a tax increase.
If there was any doubt that this would result in a whole lot of confusion, it was put to rest Wednesday during an unsettling hearing of the Senate Finance Committee.
At issue was the inventory tax, a levy that companies currently pay directly to parishes only to be refunded by the state. Jindal, who presided over seven years of big business giveaways before suddenly claiming to have discovered a deep aversion to “corporate welfare,” identified eliminating much of the rebate as a way to help balance the budget.
This particular tax landed on his radar not for some high-minded policy reason but because the state often cuts checks to companies whose refunds exceed their tax liabilities. In Jindal’s view — and just as importantly, in the opinion of the national group Americans for Tax Reform — ending the excess payments counts as a desirable spending cut, not an unacceptable tax hike.
The obvious flaw in that logic is that doing so would in fact amount to an effective tax increase on the companies, who would still pay the parishes but lose out on their state rebate.
So instead of pushing Jindal’s plan, state Sen. Robert Adley, R-Benton, and Senate leaders are eyeing a constitutional amendment to eliminate the tax entirely. That has business lobbyists happy, but it’s created another class of potential victims: parish governments that rely on the inventory tax to generate a collective $500 million or so a year for local services.
Alarmed local leaders have been lighting up the phone lines to lawmakers, and they showed up en masse at Wednesday’s hearing to plead that the buck not stop with them. East Baton Rouge Parish Sheriff Sid Gautreaux was there, noting that his office would lose $6 million should the measure pass. St. John the Baptist Parish President Natalie Robottom came, too. She raised the specter of losing 42 percent of her parish’s annual revenue and said her constituents shouldn’t be on the hook for a “deficit they had no part in creating.” Meanwhile, St. Bernard Parish schools Superintendent Doris Voitier voiced concerns over the measure’s effect on the Minimum Foundation Program, the state per-pupil funding for K-12 education.
No need to worry, Adley and other committee members assured these and other local officials. They’d be made whole.
How exactly, you might wonder, as several committee members did aloud.
“Where are we going to get the money to fund this program anyway?” asked state Sen. Greg Tarver, D-Shreveport. “I don’t want to go home and make sure the locals are OK and lose the hospitals in this state, close the universities in this state.”
Adley’s best answer, which he repeated over and over again, was that they had his word.
That’s hardly reassuring, given that the state would have to find yet another pot of money to send the parishes’ way, or else come up with a creative maneuver to allow them to raise more on their own. But it was enough for committee members, who voted 9-1 to approve the measure. Even Tarver, despite his obvious misgivings, went along; the only nay vote came from New Orleans Democrat Ed Murray.
In his closing statement to the committee, Adley pitched his bill as a courageous move, a way for the legislative branch to finally declare its independence from the governor. If his colleagues don’t go along with it, he said, he can always push Jindal’s version instead.
Adley’s other main point was that the Senate needed to act in order to give House members, who must originate revenue bills, the comfort to do the same.
All that was missing was a good case for why this is a good tax to cut and some basic semblance of how lawmakers hope to make this all work out for everyone.
But hey, trust them. What on Earth could go wrong?