Government & Politics
 

With income tax repeal dead, lawmakers to focus on ending years of spending cuts

With plans to repeal the state income tax now dead, according to lawmakers, they will focus now on trying to end five years of spending cuts inflicted by the Jindal administration and the Legislature to health care and colleges and universities – cuts that the public no longer can stomach.

Lawmakers also said they plan to spend the coming weeks trying to close tax exemptions and raise cigarette taxes in order to restore some of the budget cuts in past years.

Monday’s action by the House Ways and Means to indefinitely shelve proposals to phase out the state income tax kills Gov. Bobby Jindal’s legislative priority and reflects the governor’s weakened standing with the state Legislature.

Looming now are budget fights between the governor and fellow conservative Republicans known as the Fiscal Hawks, who are gathering strength to alter Jindal’s continuing reliance on one-time and contingency spending to balance his budget.

“Why say fight?” state Rep. Brett Geymann, R-Lake Charles, the Fiscal Hawks’ leader, asked with a smile. “There’s going to be a discussion. There’s going to be a lot of discussion.”

There wasn’t a lot of discussion in Committee Room 6 in the state Capitol on Monday morning, where the House Ways and Means Committee met to hear public testimony on a series of tax bills, including several that would phase out the personal income tax over five or 10 years.

Jindal supported these measures after he withdrew his plan last week to eliminate the income tax in a complicated plan that would have raised the state sales tax rate and eliminated some exemptions. Ways and Means Chairman Joel Robideaux, R-Lafayette, said last week that the hearing could go well into the afternoon.

But support for phasing out the income tax never picked up steam.

The Lens reported Friday night that committee sentiment ran against the phase-out because supporters couldn’t explain how they would offset the lost revenue — $23.7 billion over 10 years, according to the Legislative Fiscal Office.

The coup de grâce came Monday when Robideaux opened the packed hearing by reading a bland statement that ended with: “As a result, my preference is that we should indefinitely defer consideration of these bills. This is a difficult, but I believe, necessary action.”

None of the other 18 committee members challenged his statement. Less than an hour after it began, Robideaux banged the gavel to end the hearing.

Afterward, Robideaux told reporters why he tabled the bills. “The will wasn’t there to prolong the agony,” he said, adding, “People are not hearing from their constituency base that this is something they want done.”

Speaker Chuck Kleckley, R-Lake Charles, chimed in with a written statement: “It would not be fiscally responsible if we moved a bill removing the state income tax without replacing the revenue.”

The opposition reflects the finding of a Southern Media & Opinion Research poll of Louisiana voters, which reported that 63 percent opposed Jindal’s plan to eliminate state income taxes and raise sales taxes and cigarette taxes to offset the lost revenue. Lawmakers have said that a television ad promoting the governor’s tax plan, sponsored by a group allied with Jindal, generated more calls opposing the plan than supporting it.

“I don’t think what happened today has any impact on him,” said Bernie Pinsonat, an analyst with Southern Media, whose poll two weeks ago showed that only 38 percent of likely voters held a positive view of the governor. “The public thought it was over last Monday when he wouldn’t go forward” on his tax swap plan.

Jindal was left to issue this statement Monday: “Eliminating income taxes is the single best thing we can do to create jobs in Louisiana. If the Legislature decides not to act, I think it will be a missed opportunity.”

Jindal can take heart that two senators are pushing measures to repeal income taxes, but other senators said they see no groundswell of support. One measure, Senate Bill 138, is sponsored by state Sen. Dan “Blade” Morrish, R-Jennings. The other, Senate Bill 194, is by state Sen. Michael Walsworth, R-Monroe.

“The dominant feeling in the Senate about passing an income tax repeal bill without the money to pay for it – I don’t think that’s going anywhere,” said state Sen. Robert Adley, R-Benton.

State Rep. Sam Jones, D-Franklin, noted that a measure to eliminate the income tax over time could be revived in theory. “But at best it’s on morphine drip,” said Jones. “If it’s on morphine drip, almost always the patient never gets up.”

If measures to eliminate the state income tax are indeed dead for this year, the Legislature cannot try again until the 2015 session, unless the governor calls a special session before then. Under the state Constitution, the Legislature cannot raise taxes or eliminate tax exemptions in even-numbered years.

“We could create a study commission that could study how in the next two years to eliminate the income tax,” said state Rep. John Bel Edwards, D-Amite, the House Democratic Caucus leader. “There’s a lot of support here for eliminating the income tax. But how do you pay for it?”

Measures to change the tax system in less dramatic ways remain alive. Rep. John Schroder, R-Covington, a leading conservative, said he wants to close some tax exemptions but hasn’t figured out yet how to do that, a view echoed by several Democrats.

State Rep. Katrina Jackson, D-Monroe, continues to push a tax measure supported by the Legislative Black Caucus that Ways and Means will consider on April 23. House Bill 623 would raise the cigarette tax by 33 cents per pack to match the 69-cent rate in Mississippi.

Rep. Harold Ritchie, D-Franklinton, is pushing a measure, House Bill 417, that would increase the cigarette tax by $1.05 per pack to $1.41.

Both measures would face a Jindal veto because he has said he would not support any measure that raises taxes. Jackson’s bill would raise $64 million per year for health care and higher education from the cigarette tax increase; Ritchie’s would raise about three times more.

Both Democrats and Republicans said the Legislature needs to find ways to avoid the steady cuts during Jindal’s five years to higher education and health care programs serving the poor, especially the cuts during the middle of the fiscal year.

The Southern Media poll showed that nearly 80 percent of voters opposed further cuts to higher education and health care.

Rep. Geymann said that Jindal’s proposed $24.7 billion budget for the upcoming fiscal year is at least $1.2 billion short of what the state would spend if it provided the same level of services as this year. The Jindal budget provides no additional money for K-12 public education or merit raises for state employees, Geymann added.

He and the other Fiscal Hawks – who number 30 to 35 in the 105-member House – believe that Jindal is balancing the budget by illegally using funds available only this year and money that is contingent upon something happening, such as the sale of state property. Geymann said the one-time and contingent money totals at least $449 million in the Jindal budget now before the Legislature.

“We have a budget that is unbalanced,” Geymann said.

The Fiscal Hawks are pushing a series of measures that would force the House to approve its budget earlier in the legislative session rather than in the final, chaotic hours, and would make it more difficult to balance the budget with one-time money.

 

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