Jindal tax cut resistance threatens self-inflicted wound

The Gov. Bobby Jindal Express actually found a train traveling faster than itself last week. Whether it’s going to get out of the way, latch onto it, and take it over is another matter, the decision about which can have tremendous political reverberations.

Jindal’s gubernatorial campaign rhetoric spoke of creating smaller government and hoped (but did not promise in his first term) to achieve reductions if not the elimination of income taxes. Yet Jindal also made clear the state faced major fiscal problems, principally the previous commission of non-recurring dollars for recurring expenses, that also needed to be worked out, and so thus his first budget contained no income tax reduction.

But in light of large surpluses from the recovery-stimulated budget, and to fulfill a campaign promise by state Sen. Buddy Shaw, his SB 87 was introduced to cut income tax rates back to the levels prior to enactment of the “Stelly Plan” five years ago which saw some hefty income tax increases. Perhaps unexpectedly, it received a very enthusiastic response in committee as even senators who in the past had thrown cold water on income tax cuts now endorsed it.

The Jindal Administration at first joined in the frigid bath in its testimony, saying its $302 million would whack too much money out of the proposed budget. But three things were working in favor of the bill: that only hours previously in a House committee the Legislative Fiscal Office had testified that another large surplus likely was to be declared about May 15, that continuing escalating oil and gas prices alone could pay for the entire cut, and that the Administration had left a wide-open source to offset the initial effects of the cut budgeted to go to a fund to dangle incentives in front of large potential employers to the tune of $307.1 million. Simply, so many alternative sources of offsetting funds – as much as $1.8 billion estimated – increasingly made it inexplicable that Jindal would not support the measure.

Later last week, the Administration surreptitiously began to wave the white flag when it declared it would go along with the bill if there were spending cuts with it, and SB 87 after minor amendment was taken off the calendar to be given a near-guaranteed hearing Apr. 29. This gives Jindal three options, predicated on the conditions under which the bill got to the floor and the Senate itself. Keep in mind that the bill advanced on a 6-3 party-line vote where all present Republicans voted in favor of it, but that the Senate itself has a healthy Democrat majority.

First, Jindal still may be against the bill and hope the Senate Democrats do the dirty work for him, either by stopping the bill or giving him cover by being able to prevent themselves from making any cuts. This will not reduce pressure on him much because of the revenue-enhancing factors stated above which the cut proponents will unceasingly remind the public about, but it can buy him time to save some face in that it would keep the legislation from heading to the House too soon. With 50 Republicans of 105 in the House and enough others willing to defect on this issue, the House is far less likely to go against this bill.

Further, the House would be much more willing to excise the “megafund” from the budget to do so, although it will not act on that until nearly June. So Jindal would need these delays to pursue the second option if he does sympathize with it, which is to wait on a surplus to be declared in about two weeks at the next meeting of the Revenue Estimating Conference which would appear to “pay” for the cuts, and then he can declare victory and back it wholeheartedly.

But it would be so much easier and politically astute to take the third option: declare the megafund addition contingent on newly-recognized revenues and shift that money to compensate for the tax cut. (To help him take the step, the Senate might make the cuts contingent themselves; i.e. for the next few years, they partially go away if a deficit is recognized.) This way, showing enthusiastic rather than grudging support, Jindal appears to be driving the train and not aligning himself with the very advocates of big government he chided in his campaign and inaugural address.

Why he hasn’t done so already by sacrificing the megafund addition remains the single greatest puzzle of his young administration. Why should he risk a tremendous withdrawal of political capital with such an obvious deviation from his stated governing philosophy? And to be able legitimately to take credit for a campaign pledge years ahead of schedule would create a strong lockbox to protect that capital seems far more valuable – and helpful to the state’s current employers and employees – than a stubborn insistence on holding onto funds that may never get used.

To date, concerning Jindal’s governance about the only real criticisms have been more manufactured than substantive. But he needs to defuse, and only he can do it, a policy tussle than genuinely will define who he is and what he believes that is heading in a direction running against the wishes of those who put him in office and of the entire state. Regardless of his intent behind it, the longer he resists, the more political damage he inflicts upon himself.