The good news is that Gov. Bobby Jindal wants to make tax reform a key issue in the 2013 Legislature. He named Tim Barfield, a respected Baton Rouge businessman and his new secretary of the Revenue Department, as his lead official in the effort.
The bad news is that Jindal and Barfield, who was a top aide during stints in Jindal’s first administration, have such a poor record on tax policy.
When Louisiana was flush with revenues in 2008, the state cut back the income tax increases that were part of the landmark 2002 Stelly tax reform plan, which also sharply cut state sales taxes. The income tax changes were needed to balance the ledger.
By gutting the income tax provisions of the Stelly Plan, Jindal and the Legislature put politics ahead of fiscal prudence, and in the words of former state Rep. Vic Stelly of Lake Charles, “gave away the store.”
A very short time later, the state was missing that money: Jindal balanced the budget only with federal stimulus funds in a couple of years, and has reverted to the unfortunate practice of using one-time money, such as Medicaid matches to prop up the state’s health-care budget.
Fees have gone up, and college tuition rose as Jindal severely cut aid to state colleges and universities. At the same time, corporate tax receipts tumbled as more and more breaks diverted money from the budget: “tax expenditures,” as the wonks call them.
Good politics, lousy policy.
So we are skeptical of the steward of the state’s miserable balance sheet who wants to encourage “economic development.” More breaks for multinational corporations doing business in Louisiana? More cuts for the colleges that are the promise for economic success in the future?
Whatever the governor proposes in the way of tax reform, we hope that it is focused on stability and long-term payment of Louisiana’s liabilities. We’ve seen, so far, a short-term and political policy.
Jindal and Barfield will have a very hard sell if their vision of tax reform further cuts the taxes of those who are doing well as state institutions deteriorate.
Jindal had tax reform and threw it away.