Guest commentary: College, industry team up to benefit workers _lowres

Stephen Waguespack

Louisiana’s $1.6 billion budget hole may be grabbing headlines, but the solution for closing it is not to end or curtail fast-growing tax-credit programs — rather, it’s to shrink government, the head of the state’s biggest business lobby said in a speech Friday to the New Orleans Chamber of Commerce.

Stephen Waguespack, president of the Louisiana Association of Business and Industry, laid out a three-part legislative agenda for the upcoming session focused on infrastructure spending, improvements to the educational system and tort reform.

Though the first two items could cost money, Waguespack said it’s important not to increase the size of the state’s budget, which he said grew by close to $9 billion in the last decade.

While he described the looming budget deficit as “the elephant in the room,” he said the problem isn’t that Louisiana doesn’t have enough money, but that the state spends too much. One prime target for cutbacks should be state pension systems, which cost about $2 billion a year, he said. Waguespack said public pension systems must be reined in much the way many private ones have been.

And while tax credit programs have grown at a runaway pace in recent years, Waguespack said paring them back isn’t the answer. Most of the tax credits were put there to make Louisiana more competitive with other states, he said, and most have worked.

“Tax credits are viewed by some people as free money lying around, and if we just scooped it up, we’d be fine,” Waguespack said. He described the state’s smorgasbord of tax credit programs as a “carpet” laid atop the “broken foundation” of a poorly designed tax code. Removing the carpet isn’t the answer, he said, but fixing the problems with the tax code is.

Waguespack has emerged as one of the most influential critics of Jindal’s budget plan, unveiled last week, in which Jindal for the first time proposed scaling back some tax credit programs to save the state more than $500 million.

The bulk of that savings would come from Jindal’s recommendation to sharply curtail a program in which the state refunds most inventory taxes, which are property taxes paid by businesses to local governments on items that can be sold.

The businesses that pay the most in inventory taxes tend to be large petrochemical plants, including oil refiners; such large businesses are key LABI members.

Waguespack, who used to be Jindal’s chief of staff, has denounced the governor’s plan as nothing more than a stiff new tax on business.

He repeated his criticism of the Jindal plan Friday, saying LABI would rather see the inventory tax killed altogether — a plan Jindal has also said he’d support.

Killing the tax would require amending the state constitution, whereas curtailing the refund program would not.

Were the tax gone, Waguespack said, the state would have an extra $440 million or so — the money now spent on refunds — to spend on health care, higher education and other needs.

“If we repeal that tax, we can have our cake and eat it too,” he said.

He did not say what local governments, some of which rely heavily on the inventory tax, would do to make up for the lost revenue.

The budget shortfall is expected to bring further cuts to higher education, which already has seen its state funding cut by more than half during Jindal’s administration. Jindal has proposed slashing the funding by more than $200 million in the coming year, or by about a third of what the state spends now.

Waguespack said there are too many four-year colleges and too many separate university systems in Louisiana, and a restructuring is needed.

“We’ve always tied their hands,” he said, and higher education leaders should be more empowered to “compete in the market” for students.

When it comes to shoring up Louisiana’s shoddy infrastructure, he said the Legislature needs to stop raiding dedicated pots of money like the transportation trust fund, which is meant to be spent on roads. Last year, $60 million was transferred from that fund to State Police, money Waguespack said should have come out of the general fund.

Regarding tort reform, he said Louisiana is one of the most litigious states in the South, and an “improved legal climate” would save billions. Among other things, he said, LABI would support new judicial accountability measures, such as requiring judges to fill out the financial disclosure forms now required of legislators and public executives.

Follow Gordon Russell on Twitter, @gordonrussell1.