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Story Archives: Peanuts, politics and taxes


Peanuts, politics and taxes
by Sam Hanna, Jr. - posted Tuesday, May 13th, 2008 @ 2:16 pmE-mail Story E-mail Story | Print Story Print Story 
Sitting in the peanut gallery one gets the impression Gov. Bobby Jindal didn't actually believe the Legislature would seriously consider cutting state income taxes in Louisiana.

That's exactly what's taking place as lawmakers hit the home stretch toward the conclusion of the 2008 regular legislative session.

The big question that's been contemplated by Jindal administration officials, legislative leaders and political pundits alike was how far should lawmakers go, or to what extent, should they cut income taxes in this day and age of robust tax collections stemming from sky-high oil prices, which the state hasn't seen since the late 1970s and early 1980s.

When Sen. Buddy Shaw of Shreveport offered his bill to cut income taxes to levels the state levied prior to the passage of the so-called Stelly Plan of 2002 odds were stacked against Shaw's bill ever seeing the light of day, or making it out of committee for the full Senate to consider. Not only did the Senate consider Shaw's bill, it passed it, accompanied by an amendment offered by Sen. Nick Gautreaux, which called for abolishing state income taxes altogether.

What was legislation carrying a cost of some $300 million per year to the state treasury ballooned into a bill, which, if fully implemented, would stick the state for $4 billion annually.

Lawmakers probably recognize the state can't cope—at this time at least—with a loss of some $4 billion, especially when there exist billions of dollars in road construction projects sitting on a to-do list with no money appropriated to pay for them. There isn't the first sign of a plan either to peel $4 billion out of the state budget, which has grown at a record clip since the onset of Kathleen Blanco's tenure as the state's chief executive.

The Jindal administration apparently recognized it, for Jindal has said he would consider signing off on the Shaw bill as long as the Legislature found $300 million or so in budget cuts to pay for it. From all appearances, though, Jindal never saw the Gautreaux amendment coming, meaning he most likely never envisioned having to deal with a $4-billion hit to his ambitious spending plan to invest in the state's infrastructure, including education, healthcare and workforce development.

Enter Rep. Hunter Greene into the picture.

As chairman of the tax-writing committee in the House, Ways and Means, Greene shut down the Shaw bill on Monday in lieu of further studying how the state can operate without the luxury of taxing income earned by the people.

Greene acted properly in putting the brakes on the Shaw bill as it stood as of Monday.

Yet, by mid week Jindal's attitude toward cutting income taxes in Louisiana took a turn.

Joined by Greene and Shaw, Senate President Joel Chaisson, Speaker of the House Jim Tucker and Sen. Rob Marionneaux, Jindal announced that he and the aforementioned lawmakers were in favor of rolling back the income tax increases the so-called Stelly Plan levied some six years ago.

At a news conference Wednesday, Jindal announced a move was underway to scale back state income tax rates to the pre-Stelly levels, beginning in 2009. There was no mention of cutting some $300 million from the budget.

Jindal stopped short of advocating an outright repeal of income taxes, but it's safe to say his new position on the Stelly front was welcome news to scores of taxpayers who embraced Jindal's positions as a candidate for governor to dramatically change the manner in which we operate government in Louisiana, including allowing the people to keep more of their money.

It's unclear what prompted Jindal to change his mind.

It could have something to do with the people's attitude toward taxes these days, especially among the people who actually pay income taxes in Louisiana.

It also could have something to do with the browbeating lawmakers have received in recent weeks following the first sign that Jindal and the Legislature weren't too hip on cutting income taxes.

There is little doubt, though, that the state can afford to roll back income tax rates to pre-Stelly, or to levels the state levied before 2002.

That much became more than evident late last week when the Revenue Estimating Conference decided the Legislature has an additional $800 million at its disposal for the current fiscal year and the fiscal year beginning July 1. The $800 million, give or take, is the product of activity in the oil patch and a spike in income tax collections courtesy of more people working in the oil patch itself. Also, state sales tax collections remain fairly strong, That's been the case since the construction boon ensued south of Interstate 10 following the 2005 hurricanes.

It's not practical at this time, though, to abolish income taxes altogether.

A $300-million tax cut, give or take, for the people is doable.

It's the right thing to do, too, in light of the pressure people are under thanks to increased food costs and record-high gasoline prices, which, are directly tied to sky-high oil prices.

But that's simply an observation from the peanut gallery.

Sam Hanna, Jr. is publisher of The Ouachita Citizen, and he serves in an editorial/management capacity with The Concordia Sentinel and The Franklin Sun, three newspapers owned and operated by the Hanna family. Hanna can be reached by calling (318) 805-8158 or by emailing him at samhannajr@samhannajr.com.
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