As a result of yesterday’s legislative action, things were bad enough for Democrat Gov. Kathleen Blanco. Having pared down her agenda to just spending $400 million on the transportation backlog, $300 million for site preparation for a manufacturer who may or may not come to the state, and just $100 million for pay raises for select state and local employees, she could not get enough votes to override the state’s spending cap limitation currently allowing for $194 million because of intense, almost exclusively, Republican opposition. This made her look ineffective, another such episode gubernatorial opponents could use against her next year in her reelection bid.
But then she had to open her mouth and make herself look worse, handing them an even better issue. “No tax breaks are going out until we finish our business,” she announced, meaning, appropriate to her entire reign, that her vision of spending, whether it really makes any sense, gets priority over returning the peoples’ money to them.
Republicans U.S. Rep. Bobby Jindal, state Sen. Walter Boasso, and even other potential 2007 candidates of all partisan stripes must have pinched themselves to make sure they weren’t dreaming when they heard of these remarks. It’s easy already to envision them hammering home the message to voters that Blanco opposed tax reduction of all kinds, with the state supposedly sitting on a huge surplus, when it was within her grasp as a childish retort to the sensible view that more time was needed to formulate plans and to monitor the state’s fiscal situation.
From the least to most, the pay raises involve recurring funds, and the false economy created by billions of dollars of federal rebuilding money may support that for couple of years, even more. But unless structural changes occur in the state’s fiscal policy, when that money goes away, the additional expenditures may not be sustainable.
And what changes are those? Precisely the tax cuts Blanco refuses to give. This is a golden opportunity to jumpstart the economy with the recovery money supporting the temporary loss of tax revenue that comes from tax cuts before the economic growth they spur kicks in.
The same applies to the site money. More than throwing hundreds of millions of dollars at some firm, more attractive would be tax cuts that would attract better quality new employees from out of state, help new employees in state, and would reduce the tax liability of the company.
Finally, the transportation backlog is the most worthy of the three requests, but Republicans are absolutely correct in slowing this down because there is no guarantee if approved the money would spent in a rational fashion. Instead, given the state’s history, it is likely to be spent for primarily political reasons, rather than according to genuine need in helping Louisiana’s overall transportation goals. Once they sign over a $400 million check, the minority Republicans cannot control the process to ensure more rationality in passing out roads monies.
Note that Blanco’s declaration also gives legislative Republicans an issue by which to hold legislative Democrats’ feet to the fire. Already, House committees have passed along tax cut legislation. House Republicans need to agitate to bring them to a vote. If the House leadership, controlled by Democrats aligned with Blanco, refuses to bring them to votes or defeats them in votes, this becomes a campaign issue for Republican candidates for seats across the state in 2007. That looming reality may get enough Democrats on board to get the tax cuts through, and put pressure on the Senate to do likewise – leaving Blanco in the position to swallow popular bills she opposed, or to veto the greatest tax relief in the state’s history.
Going on the offensive one more way would help the GOP, and state as a whole. Republicans should sponsor legislation to remove $50 million from the state’s recently-created disaster fund (as was promised by Blanco after the end of hurricane season if nothing happened for insurance extra premium charge rebate checks, because it’s been previously appropriated and not subject to the cap), add it to the $194 million, and then appropriate it all out to roads projects in the current priority order they are listed in the unfunded portion of the current capital budget. This way they can show they mean to tackle a pressing problem, but in a responsible fashion. Then they should press for passage of legislation also already approved by committee to pay back the extra charge through tax credits.
The session continues to backfire on Blanco, to the benefit of the state. Republicans need to keep the pressure on to make both the practical and (to them) political dividends even greater.
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