Tax, budget cut jockeying may allow Jindal comeback

The drama continues concerning the earthquake-like effects of SB 87 by state Sen. Buddy Shaw which has turned into a needless political chess game causing anxiety both for elected officials and taxpayers. However, particularly for the state and Gov. Bobby Jindal a successful resolution presents itself.

The bill as originally envisioned would have changed income tax brackets back to those of five years ago which would create a middle-class tax break of $500 or $1,000 per taxpaying household. Instead, it was amended in a Senate committee to eliminate all individual income taxes over ten years, with rates decreasing by a tenth every year. Many “supporters” of the amended bill in reality wanted to make it such a poison pill that either the Legislature would defeat it or Jindal would veto it – and by all indications Jindal seemed willing to cooperate in this.

Jindal’s story kept changing on it. First, his Administration said it was against it. Then it said it would sign it if cuts elsewhere in the budget to compensate for it would be made. Then the bill got amended, and not long afterwards the Revenue Estimating Conference declared an $824 million surplus a portion of which easily could “pay” for the cut, yet Jindal announced all of that surplus should go to substitute for “one-time” money – meaning he didn’t think it should be used for offsetting the cut, whether in the bill’s original form.

Yesterday, the House committee responsible for suggesting cuts to the governor’s budget did some of that -- $120 million which almost exclusively targeted education and health care which it said was using these “one-time” dollars. But more egregiously, it shifted other money around to fund about 140 local projects to the tune of around $15 million, even though Jindal had said that he was going to line-item veto projects of which many appeared to be of the kind that were added.

Today, debate in another House committee on SB 87 should have commenced. Yet today it got postponed for more research – which presumably had been going on since Friday’s surplus announcement – into options and feasibility.

An expensive game of chicken may be going on here. House members may be bargaining with Jindal, saying they will put the bill into a form he seems willing to sign – the latest rumor being phasing in the cut over four years – keeping the new surplus in essence unspent to allay Jindal’s stated fears of using “one-time” bucks on recurring expenses which was the rationale for cutting the $120 million and maybe even restoring that, so long as Jindal doesn’t touch most of the newly-added spending (no doubt the leadership would allow for a few symbolic strikes of the veto pen). If Jindal doesn’t deal, then they send the bill through as is and dare him to veto it and the negative political repercussions that could result from a governor who said his goal was to get rid for the individual income tax doing exactly the opposite.

But if this is what is going on and Jindal is smart and sincere in his tax-cutting desires, he can use this to turn the tables. He can tell the Legislature (the House would be carrying the Senate’s water on this deal, making the deal on its behalf as well for its senatorial projects) that unless they give him the original SB 87 that he will sign to make everybody look good and trim most of the added spending, he’ll sign the amended version and then kill off all those earmarks, plus a lot more of what they may value in other places, in the name of savings to “afford” the cut. That would dare the Legislature to try to overturn the line item vetoes (it never has) or to kill the tax cut on its own and bring the negative attention onto itself.

Ever since Jindal let the tax cut issue get out of his control by refusing to endorse it, his rhetoric about tax cuts and “one-time” money has been used against him. This bold stroke would put him back in control and it would take equal boldness for the Legislature to try to oppose, such as keeping those $120 million in cuts and calling what they may think is a bluff. But after the House’s words of caution about “one-time” money it can’t suddenly go out on a spending spree to compensate, and Jindal will then be sitting nearly a billion bucks that can be used (through debt reduction thus lower service payments and other means) to compensate for the tax cut in either form (both would cost about the same for the first year, but then obviously the amended version would escalate much more afterwards).

The scenario may offer Jindal a way out of the mess he created for himself and with successful enforcement of budget discipline through his veto pen and a tax cut presented way ahead of schedule, he’ll come out looking really good – besides, of course, doing prodigious service to the people of the state. We’ll just have to see if this is the opportunity presented, and what transpires.