What’s More Important To Lawmakers – Tax Reform Or The La. Budget?
Now that La. Gov. Bobby Jindal (R) has scrapped his tax swap plan, instead leaving it up to legislators to figure out how to handle getting rid of the personal income tax, what’s next?
Gov. Jindal, and the Louisiana Republican Party, wants to see a phase out of the state income tax. “If only the people of Louisiana tell their representatives and their senators that that’s what they want (a phase out of the state income tax), then they’ll get it done,” says Jason Dore, executive director of the La. Republican Party. He says a large percentage of residents would like no state income taxes.
But, on the opposite side of the aisle, House Democratic Caucus Chair John Bel Edwards with the La. Democratic Party, says the legislature should not address tax reform legislation this year. He says a bigger priority is to pass a budget that will not result in another year of midyear cuts. “We should not even begin to discuss dismantling our tax system, the income tax. We shouldn’t have that conversation. It shouldn’t be our priority, not in the fifth year of cuts.” Edwards also says there has not been an outcry from the public to repeal income taxes, obviously contradicting Dore’s statement.
Budget cuts are definitely on the mind of Council for A Better Louisiana President Barry Erwin. “How big is that lost revenue going to be, in whatever phase out plan that you think of? And where does that put higher ed. and healthcare?” He believes these two areas would be put at risk if there is a shortage in revenue.
La. Department of Revenue Secretary Tim Barfield, the man who was tasked as Gov. Jindal’s point man on his now scrapped tax reform plan, said in a meeting of the Senate Revenue and Fiscal Affairs Committee on Tuesday that a phase out income tax proposal doesn’t have to be revenue neutral, with the loss of revenue not having to be entirely offset. “I think that would be the ultimate desire,” says Barfield. “But I think if you look at a long-term phase out of that, I think you have a lot more leeway to do that and some of those issues are going to be addressed differently…I think the ultimate question about what the governor’s willing to sign or not sign…depends on what comes out of this process.” He insists the governor wants to do what’s right for Louisiana citizens.
But New Orleans Senator J.P. Morrell (D) is not happy to hear the administration is willing to support a phase out of the state income taxes, without raising revenue elsewhere, to match the tax dollars that are lost. “As a state, we can’t cut our way to excellence,” says Morrell. “And when you take revenue neutrality off the table, you’re not talking about fiscal responsibility, you’re talking about fiscal fantasy at that point.”
Morrell says while the public may like to pay less income taxes, it could result in further cuts to higher education and health care, if revenues are not generated elsewhere to make up for the loss of income tax revenue. “I think people need to continually be educated on the fact that, though you may not want to have to pay that income tax, there is a reality, a mathematically certainty that you cannot avoid, which is if we have less revenue, government does less things,” says Morrell.
But Dore says there is a way the legislature can protect critical services, while also phasing out the income tax. “The Louisiana Legislature needs to, whether it be through constitutional amendment or otherwise, we need to figure out a way to reduce wasteful spending without only bringing the axe to higher education and health care,” says Dore.
House Speaker Pro Tem, Democrat Walt Leger of New Orleans, says now that Jindal has “parked” his tax reform proposal, it should allow lawmakers to focus more time on passing a responsible budget. “The most important bill in this session is the budget bill,” says Leger. “It generally is and it most certainly is this year as we have another $1.2 billion or so hole to fill.”
But the importance of the La. budget is not just a Democratic concern, as Republican Senator Jonathan Perry of Kaplan shared his thoughts on “Mornings with Ken and Bernie.” “Whether or not the state’s income tax gets repealed or tweaked, however we do it, that is a completely different issue from the more than a billion dollar deficit that must be addressed,” says Perry, who believes the budget will have to be balanced.
So, moving forward, is tax reform something that will get done during the 2013 La. Legislative Session? Erwin says some lawmakers really like the idea of no state income taxes and that will be enough for an attempt to pass some sort of tax reform by the time the session ends on June 6th. “What kind of coalition, or what kind of group, is going to come together to be able to lead an effort to do this?” says Erwin.
While he says it will be difficult for a legislator or a group of lawmakers to come up with a tax reform plan that will get the support of a majority of the legislature, he doesn’t believe it’s impossible for them to come up with some plan. “The question of ‘Who is the legislative leader?’…is a valid one. And, I think, most of us who have been around here some time know (we) don’t really get a whole lot accomplished in the legislature, of a big nature, without strong leadership from the Governor. And it doesn’t look like that’s going to happen, as of now…But even though, I think, it would be difficult, I don’t think you can totally take the cards off the table.”