Louisiana’s taxpayers sprang for a major accounting firm, a website designer, public relations experts, podcast creators and consultants to develop and market the governor’s failed tax plan.
By the Jindal administration’s calculations, the state ultimately will spend roughly $800,000 on the governor’s unsuccessful bid to eliminate the state’s corporate and personal income taxes.
An exact figure is unknown because the state Department of Revenue still is negotiating final payments four months after Gov. Bobby Jindal abandoned the proposal on the opening day of the legislative session.
“It’s been a slow process,” said the department’s secretary, Tim Barfield.
The governor wanted to make dramatic changes to the state’s tax code. The goal was to simplify the tax code by sweeping away exemptions and eliminating income taxes in exchange for a higher state sales tax.
Legislators differ on whether the dollars spent on Jindal’s tax swap idea were a waste of taxpayer money.
House Democratic leader John Bel Edwards, of Amite, said the Republican governor’s plan was unworkable from the outset.
“This guy has talked like a fiscal conservative since day 1, and he’s governed like anything but,” Edwards said.
Senate President John Alario, R-Westwego, said Jindal put an idea on the table for discussion. It might take two to three years for legislators to fully embrace it, he said.
“It takes a while to plant the seed,” Alario said.
Throughout the session, the governor refused to admit defeat and urged legislators to send him their spin on changing the state’s complicated tax code. He ended up using contractors and temporary employees hired for the tax plan on a different front. When legislators tried to rewrite the governor’s state operating budget by reducing existing tax breaks, Jindal successfully fought back with the team of experts assembled for the tax package.
The state Department of Revenue hired an accounting firm, a website designer, a tax adviser, public relations consultants, a multi-media campaign creator, an outreach expert and eight temporary employees to work on the proposed tax swap.
Some of the contracts remained active and temporary employees remained on the payroll after the governor abandoned his proposal on the first day of the 2013 legislative session. At least one contract remains active, although the revenue department said no work is being performed.
During a recent news conference on charter schools, Jindal vowed to continue to look for ways to improve the state’s tax code, without addressing whether his plan will resurface in the future.
To pitch the plan again next year, the governor would have to call a special session because of constraints on what can be debated during the regular session.
“Look, we’ve got the fourth lowest taxes in the entire country here. We’ve got the 32nd-worst tax code in the entire country. And so the bottom line is that it makes sense for us to continuously evaluate that tax code and model changes to that tax code to improve that tax code for the taxpayers, the families and businesses of Louisiana,” Jindal said.
Barfield, the state’s revenue secretary, said he is working to close out contracts for the tax package.
Payment amounts still are uncertain for Alvarez & Marsal, a New York-based global management firm that assessed the state’s tax structure, and Ernst & Young, a London-based accounting firm that provided economic modeling. Combined, those contracts were supposed to cost at least $365,000.
And there were other costs.
Payroll and benefits for eight temporary employees hired strictly for the tax plan totaled $144,702.23. Hiring a New Orleans firm, St. Julien Public Relations, with access to stock footage, music and recording cost $15,000. Website design, letterheads and logo cost nearly $20,000.
The governor’s tax plan became public knowledge in January after the Jindal administration started discussing it with legislative leaders. However, the administration was working on the plan before the winter holidays.
The revenue department signed a contract with Ruston-based Spring Media USA in November for the management of a website and creation of messaging, podcast capacity, logos, signage and a multi-media campaign. Within months, the department hired an Oklahoma public relations company, a Baton Rouge-based consulting group that counts one of the governor’s former advisers, Camille Conaway, among its employees and a New Orleans public relations firm with expertise in reaching out to minorities and low income residents.
State Rep. Sam Jones, D-Franklin, said the Jindal administration could have saved the taxpayers money by more fully vetting the tax proposal with legislators before signing contracts and hiring employees. He said legislators did not know enough about the plan early in the process to warn the governor that it lacked legs.
“We’re paying a lot of consultants out of state a lot of money to give us advice that at the end of the day when we work through it doesn’t make sense,” Jones said.
Barfield said he scaled back once the governor shelved his plan.
Ernst & Young, he said, had little involvement past the first day of the session while Alvarez & Marsal helped build a model to analyze any alternative tax plan that legislators might have developed.
The tools that were developed, Barfield said, helped the Jindal administration respond quickly when legislators contemplated making a 15 percent reduction in certain tax breaks. The governor denounced the idea and called press conferences to spell out the likely impact to specific industry groups.
“There were pockets where we had a positive influence,” Barfield said.
The revenue department also now has stockpiles of tax research.
“It was absolutely the right thing to attempt,” Barfield said. “We learned a lot. We learned a lot about the appetite for this type of reform.”
Richard Thompson with The Advocate New Orleans contributed to this report.