Giving Away Louisiana, Part 3: Film tax incentive program brings notoriety but costs taxpayers hundreds of millions of dollars a year _lowres


It’s known, in shorthand, as the pledge, and it sounds straightforward enough.

“I, ____________, pledge to the taxpayers of the state of ____________, that I will oppose and veto any and all efforts to increase taxes.” That’s the entirety of the “taxpayer protection pledge,” promulgated by the Washington, D.C., group Americans for Tax Reform.

What it means — in general and to one high-profile signatory in particular — is a more complicated question, one that comes up repeatedly in discussions over the runaway cost of Louisiana’s ballooning subsidies to favored industries and the severe disconnect between the state’s robust economic growth and the dire budget challenges facing higher ed and other areas. The Advocate examined six of these lucrative yet controversial programs in its recent series, “Giving Away Louisiana.”

The consensus around Baton Rouge is that, to Gov. Bobby Jindal, the pledge isn’t just a promise to reject new taxes and higher tax rates but also to block anything that would increase revenue unless it’s paired with an equal, explicit offset.

In the past, that’s included a seemingly innocuous extension of a small fraction, just 4 cents, of the state’s notably low cigarette tax. Although the price would have simply stayed the same, Jindal vetoed the extension. Lawmakers upheld his veto under pressure, then made an end-run by attaching it to a constitutional amendment requiring no gubernatorial signature.

These days, the pledge mostly comes up amid efforts to quantify and rein in giveaways to fracking operations, film productions, retail stores and big industrial projects. When it comes to nascent efforts to explore whether the state’s getting a good return on its investments, the Governor’s Office is generally seen as a roadblock, and the pledge is the reason why. Lawmakers say it’s just understood, and even Jindal’s economic development secretary concedes the point.

“One thing that makes it complicated is it would be very important to the governor to make it revenue-neutral,” Stephen Moret told The Advocate. Without an accompanying tax cut, he said, “My very strong sense is that the governor’s view is that it would be a tax increase.”

Not everyone who’s signed the pledge sees it that way.

Twenty-five members of the Louisiana House and Senate, mostly Republicans but also a few Democrats, have signed the legislative version of the pledge, which substitutes the words “vote against” for veto but is otherwise identical to the one Jindal signed.

State Sen. Jack Donahue, a lifelong Republican and the Senate’s finance chairman, insists he’s as tax-averse as anyone. But Donahue, who said he doesn’t remember signing the pledge but agrees with the text as he understands it, is leading the charge to take a hard look at the value of these programs. In his view, curtailing exemptions, even if it means more revenue, would amount to a “reallocation” of state spending, not a tax hike.

“I’ve been in business for 45 years,” he said. “I know that when I have a problem, if I don’t take a look at it, the problem is generally going to get worse and not better.”

To that end, Donahue introduced a bill in this year’s legislative session requiring the Revenue Estimating Conference to report on how much certain incentives are costing. It passed easily, but Jindal vetoed it. In his accompanying message, he argued that such a report could discourage business relocation and expansion. He also noted that Americans for Tax Reform had asked him to kill the bill.

Jindal’s clearly benefiting from his fealty as he works to build a national image as a conservative leader and anti-tax absolutist.

When Jindal proposed a sweeping measure to eliminate state income tax, raise sales tax and close some loopholes in 2013, ATR President Grover Norquist and Director of State Affairs Patrick Gleason wrote a column enthusiastically endorsing the idea, even though it had little support in Louisiana and died a quick death. A year earlier, the two had publicly suggested Mitt Romney choose Jindal as his running mate.

Some lawmakers bristle at the thought of being beholden to an outside group and say that’s Jindal’s politics, not theirs (Gleason, in an interview, insists the pledge is to taxpayers, not ATR). Still, Gleason said he’s been fielding calls from, and reaching out to, nervous Louisiana legislators.

His message, he said, is that, “Look, we’re not defending any credit and deduction. All we say is, use it to lower rates on everyone. You can totally get rid of credits and deductions and be consistent with the pledge, but it has to be tied to rate reduction elsewhere.”

Gleason’s involvement itself carries another, more implicitly threatening message. The group sees its mission as educating voters and uses all the usual tools — direct mail, phone banking, social media — to publicize politicians’ voting records. And of course, it’s not lost on anyone that we’re coming up on an election year.

“I look at it as a public service,” Gleason said.

Stephanie Grace can be contacted at Read her blog at Follow her on Twitter, @stephgracenola.