Last Modified: Friday, April 12, 2013 5:49 PM
The Louisiana Legislature could be on the verge of eliminating the state’s personal income tax without any plan to replace the lost revenues. What a monumental mistake that would be. That is exactly what lawmakers did five years ago when they repealed the Stelly income tax increases that were designed to replace missing sales tax dollars.
You couldn’t get the governor and legislators to publicly admit they made a mistake in 2008, but many lawmakers have privately talked about what a costly error that was and how it has come home to roost.
The repeal cost the state $359 million in revenues in 2009 and over a billion dollars more since that time. So, no one should be surprised that state agencies have had to deal with mid-year budget cuts during the five years Gov. Bobby Jindal has been in office.
Once the anti-Stelly sentiment cranked up in the halls of the Legislature, it spread like wildfire. The governor jumped on the bandwagon late. And when he did, lawmakers tripped over themselves to get on board. Everyone forgot the Stelly plan also wiped out nearly $300 million in sales taxes on food, residential utilities and prescription drugs.
The votes during the 2008 session to repeal the Stelly plan were unanimous. If you put the repeal of a tax on the legislative calendar, only the most daring legislators are brave enough to oppose it. And as most of us know, there aren’t too many of them around when the governor becomes the chief engineer on the repeal train.
Over a dozen bills designed to repeal or reduce the state’s income tax are on the Monday agenda of the House Ways and Means Committee. That is where all tax matters begin their trek through the Legislature.
Both Gov. Jindal and Speaker of the House Chuck Kleckley, R-Lake Charles, talked about income tax repeal after legislators adjourned for the weekend. Kleckley was first, and said he supports a 10-year phaseout of the personal income tax, and the lost revenues could be replaced at a future session. Minutes later, the governor agreed, saying he wouldn’t put up any barriers, even if lawmakers don’t come up immediately with a way to replace the missing dollars.
It is believed both men favor a repeal bill sponsored by Rep. Hunter Greene, R-Baton Rouge. Greene offered a similar 10-year income tax phaseout measure during the 2011 legislative session that didn’t go anywhere.
Greene is on the same page with Jindal and Kleckley. The trio is saying let’s get this income tax off the books, and we can worry about how to pay for it later. It sounds exactly like that Fram auto oil filter commercial years ago that ended by saying, “You can pay me now, or pay me later.” Buy an inexpensive oil filter now or you’re going to end up paying hundreds of dollars later to replace the car’s engine.
Greene talked to The Lens, which describes itself as the New Orleans area’s first nonprofit, nonpartisan public-interest newsroom.
“Instead of looking at a projection of how much (money) we’ll need, we can use actual collections to see the gap,” he said. “We can then look at cuts in spending or look at finding other sources of revenue.”
Rep. Alan Seabaugh, R-Shreveport, is author of another income tax phaseout bill that wouldn’t become effective until 2016. He told The Lens pretty much what Greene said.
“We have 12 years to figure it out,” Seabaugh said. “Let everybody know it’s coming, and we’ll work it out.”
Talk about wishful and reckless thinking. The lost income tax revenues need to be shored up now.
Listening to these promises about taking care of revenue losses in years to come reminds us of those early American salesmen who peddled fake cures from their medicine wagons.
The Oregon Center for Public Policy on a different issue put it this way: “Watch out Oregon, the snake oil salesmen are rolling into town, with old medicine in a new bottle.”
Louisiana’s House Ways and Means Committee should give the dozen or more income tax repeal bills extremely close scrutiny. It would be akin to committing fiscal suicide to let legislation get out of committee that doesn’t have some mechanism to replace lost revenues. Anything less would be totally irresponsible.
Economics professors at LSU (Jim Richardson), Tulane (Steven Sheffrin) and the University of New Orleans (Tim Ryan) make even more sense. They said in an op-ed piece in The Times-Picayune they believe the state has a workable and competitive income tax structure and it would be a mistake to repeal it.
Rep. Joel Robideaux, chairman of Ways and Means, has questioned the wisdom of eliminating one source of revenue without coming up with a replacement. He told The Lens it wouldn’t be a prudent thing to do to a state budget that is already unstable. The question is whether he and his committee members will be able to stand up to the pressure they will get from Jindal, Kleckley and others to repeal the tax and worry about lost revenues later.
The citizens of Louisiana can only hope lawmakers don’t repeat the mistake the previous Legislature made five years ago when it repealed the Stelly plan. The state has been in a financial bind ever since.
• • •Jim Beam, the retired editor of the American Press, has covered people and politics for more than five decades. Contact him at 494-4025 or email@example.com