Good tax plan economically faces tough battle politically

While there are more hits with Gov. Bobby Jindal’s proposal to swap sales for income taxes, there are enough misses that could derail the change that needs a supermajority in the Louisiana Legislature.

The plan would eliminate all personal and corporate income taxes, plus the corporate franchise tax (in essence a licensing fee based upon corporate capital that is perhaps the most unfavorable of all the states that have one), in exchange for raising the state tax rate 1.88 percent and coverage of that to a host of previously-exempt services. However, several large exemptions will continue to exist against the entire state sales tax portion, principally concerning the acquisition of unprepared food, medicines, and utilities. Plus, any person whose income falls below $20,000 annually will be able to apply for a rebate of up to $300, and anyone drawing retirement payments such as Social Security can get a rebate tied to the first $60,000 of income (currently, recipients and state and local government retirees do not pay income taxes). Finally, it raises the tax on tobacco products, by $1.05 per pack of cigarettes.

Evaluated on economic terms, the plan has much going for it. Over the decades, research results continue to demonstrate that the most reliable path to increased societal wealth comes through systems relatively light on income taxes compared to sales taxes (nine states currently have no income taxes). Empirically, states with the lowest income taxes for decades have seen the most economic growth, while those with the lowest sales taxes have seen the least growth.

Budgeting choices now may affect governor's race later

Some presumed candidates for Louisiana governor in 2015 got called onto the carpet by state legislators for their alleged overspending on employee pay raises. The legislative querying produced some campaign propaganda points favoring certain of them at the expense of others.

The House Appropriations Committee, in its initial budget review for the next fiscal year, suddenly seems to have discovered that elected executive branch officials can give these pay raises, even as “merit” pay raises for other executive branch civil service classified employees have not happened for four years and for some unclassified employees even longer. Why this sudden realization that legally these officials could do this materialized now, from among individuals who wanted to vote themselves pay increases less than five years ago, remains a mystery, but became a topic of interrogation for some elected executives.

As they pointed out to varying degrees extenuating circumstances, such as the need to keep what they believed were key employees, that they budgeted to be able to do this, and that attainment of merit standards by employees meant these people deserved this. In addition, Insurance Commissioner Jim Donelon claimed Department of State Civil Service rules forced him to grant four percent pay raises when money was available, and Agriculture Commissioner Mike Strain said the law made him grant raises. These were in reference to mandated civil service rules that said certain personnel actions required raises to be given if money was available. But agency heads have discretion in making these dollars available: they could have gone to filling more positions or to finance other activities, so to claim they were “forced” to give raises is an overstatement.

PAR expansion framework falls short for proper analysis

More information always is better, and in that sense the Public Affairs Research Council has done a service by producing a guideline for analysis of whether Louisiana ought to accept federal money with considerable strings attached to expand Medicaid eligibility. But unfortunately it falls short conceptually, which makes vulnerable whatever recommendations would stem from its suggested course of study to the criticisms it levies.

The report reviews mainly two others from dispassionate, nonpartisan sources that provided the starting point from which Louisiana officials to date have determined not to pursue this option. However, some of its critiques also focus on problems that cropped up in more partisan, less objective analyses (many already addressed prior to this effort here).

Had the effort stopped just at pointing out the shortcomings of analyses based upon these several reports, little value would have come of it. But by then highlighting avenues of data acquisition and analyses that policy-makers ought to pursue provides for a good start. If state policy-makers already are not cognizant of these items in need of periodic review, then this serves as a basic primer on them.

Landrieu wish to punish oil further toughens reelection

Did Sen. Mary Landrieu commit political suicide with remarks recently published about her willingness to end tax breaks for oil companies?

The Democrat has walked, successfully to date, a fine line in staying on office in a state whose people increasingly are willing to vote on this basis of ideology, the majority of whose views poorly fit her own expressed views. To date, she has sustained a myth that she is a moderate Democrat when in fact she votes very much to the left: her lifetime American Conservative Union voting record (where a score of 100 equates to a perfect conservative voting record) is barely above 20.

Yet she has won three elections and his gunning for a fourth, partly because she has become expert at peeling off just enough support from those whose interests she typically votes against, but on the most salient issues to them she sometimes backs them. One is the oil industry, where historically she has fought attempts to increase the tax burden on the industry, one understandably important to Louisiana.

Dardenne Senate run may make sense for him, conservatives

Suddenly, if you consider media reaction being anything close to a genuine reading of public opinion, in Louisiana Lt. Gov. Jay Dardenne is the hottest politician in terms of political future. And perhaps it is conservative Republicans, who have had a rocky relationship with him, who join the mainstream media here in a kind of wishful thinking that may become reality.

Last month, a poll came to attention perhaps more because of Dardenne’s place in it than anything else. In part, it asked public opinion on hypothetical 2014 Senate matchups featuring Sen. Mary Landrieu. The Democrat widely is considered, if not the most vulnerable, one of the most vulnerable senators to lose her seat in the upcoming election.

Although Dardenne’s name never had been mentioned as a Senate candidate – the most cited names have been Reps. Bill Cassidy and John Fleming, former Rep. Jeff Landry, and recently inserting himself into the discussion, Board of Elementary and Secondary Education Chairman Chas Roemer – it was included against Landrieu, and he polled the best. State media outlets made inquiries, and then a national opinion magazine did a whole story on the possibility of Dardenne running. The perspicacious The Hayride also weighed in.

Unfunded mandate change misunderstands govt roles

While on the surface a constitutional amendment to prohibit foisting unfunded mandates onto all local governments in Louisiana may sound appealing, it’s better public policy not to hamstring state policy-making in this fashion.

Currently, the Louisiana Constitution prohibits the state from saddling local governments from certain kinds of these unless the local government approves and it is willing to pay for them. However, a number of exceptions exist, separated by school districts and all others; for examples of the latter, increased pension contributions to pay off the state’s unfunded accrued liabilities may be passed along because the Constitution applies this part only to legislation passed essentially after 1991, and the amendment to pay down the UAL became part of the Constitution in 1989. Other civil service legal changes that affect local governments also are exempted regardless of date enacted, and there are several others.

School districts get a different set of exemptions; for example, if an unfunded mandate comes down, as often happens, the Minimum Foundation Program does not have to pay for it. Also included is anything having to do with implementing accountability, if there is a cost increase, and there are several others. This part of the Constitution applies for matters passed essentially only after 2006.