Gov. Bobby Jindal’s point man on the tax overhaul declined Tuesday to say that the governor would insist on revenue neutrality on any tax changes passed by the Legislature.
The lack of a definitive answer from Tim Barfield, the state Department of Revenue’s executive counsel, came as he testified before the Senate Revenue and Fiscal Affairs Committee.
Amid heavy opposition, Jindal on Monday dropped his tax overhaul plan that would eliminate income taxes while increasing the state sales tax and expanding its base. The governor told legislators to come up with their own plan to eliminate the income tax.
Jindal didn’t offer ideas for what should be included, how long the tax repeal should take, or most significantly, whether the removal of $3 billion in income tax revenue would need to be offset with some other tax hike to gain his support.
He urged legislators to come up with a tax plan and send it to him.
Several lawmakers have offered proposals to gradually phase out the income tax over a decade, and various proposals have been filed to remove tax breaks, raise tobacco taxes and generate other kinds of tax revenue.
Lawmakers said the tight timeline — the session has to end by June 6 — makes it tough for deals to be struck for a full income tax repeal.
State Sen. Robert Adley, R-Benton, pressed Barfield on whether the administration would sign an “out and out” income tax repeal without revenues being identified to replace the lost dollars.
“I would think you would not be in favor of something like that. You realize you have to replace the dollars,” Adley said.
Barfield said his agency is ready “to work with the bills out there and see what we can do with those.” He said revenue neutrality would be “my desire.”
But he added that there is legislation that would, for instance, repeal the income tax over 10 years, giving time to come up with replacement revenues.
Adley said in future years it becomes more expensive to offset income tax repeal because revenues from that source are expected to climb according to the latest five-year state fiscal projections.
State Sen. J.P. Morrell, D-New Orleans, said he was unhappy to hear Barfield indicate that “there is no longer a mandate for revenue neutrality.”
Morrell called it “fiscal fantasy” to take that approach.
While tax cuts are popular, they also trigger state revenue loss and more budget cuts to higher education and health care for which legislators get complaints, Morrell said.
Morrell reminded colleagues of what happened with the elimination of the income tax feature of the so-called Stelly plan and the budget problems for state services it created.
“We cannot cut our way to excellence,” he said.
Melinda Deslatte of The Associated Press contributed to this report.
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