Last week, the House passed HB 62 that would raise the sales tax a cent for the next 18 months. This limit displeased Edwards, who, despite saying the increase should serve as a “bridge” until the state reaches more secure revenue-raising footing, behind the scenes wants to keep as much tax revenue rolling in as possible to support larger government and buying time to empower constituencies to pressure policy-makers into keeping the higher spending levels. His Administration therefore said it should last five years – conveniently removing the necessity of a vote to retain higher taxation levels prior to an anticipated reelection bid by him.
The Senate’s Revenue and Fiscal Affairs Committee, with supporting testimony from the Administration, went along with that, and produced a fig leaf for cover: R.S. 39:2(27), which deserves full rendering: “’Nonrecurring revenue’ means revenue received by the state from a source identified by the Revenue Estimating Conference as being of a nonrecurring nature. ‘Nonrecurring revenue’ does not include revenues received by the state from any source which has been available for the preceding two fiscal years or which will be available for the succeeding two fiscal years.”
Because of the ambiguity here – the passage doesn’t indicate whether a “fiscal year” counts as parts of or whole years – three different interpretations of it exist. First, the most literal interpretation would mean two whole fiscal years, or 24 months at minimum. Second and more relaxed, it could mean part of a year and the whole of another, or a minimum of 12 months and one day. Third, and most brazenly against the spirit of the law, it might mean a minimum of two days: the last day of a fiscal year and the first day of the next, although that would raise precious little money.
So while the first seems the most plausible, keep in mind that if so then the Legislature and Revenue Estimating Conference violated the law last year when it used money from HCR 8, raised from a suspension partially of the business utility exemption, for a intended period of a little over 13 months for recurring expenses. This seems consistent with the second interpretation, and Democrats including then-legislator Edwards certainly raised no complaints then, that would form the basis of the House’s 18 month span.
Yet even using the third would mean a source would not have to exist more than 24 months, if apportioned out exactly on a fiscal year. That would mean the HB 62 tax, as it would begin Apr. 30, would have to last 26 months to capture at least two full fiscal years.
However, note also that the third interpretation, if taken literally, would extend that time period further if two full years of the proceeds would remain eligible for use. Because the clause uses the word “and,” not “and/or,” if you have a 24-month period, even if slotted exactly into two fiscal years, only during the first year would the proceeds count as recurring because, at that point, the tax does not exist for the two succeeding fiscal years, but for one preceding fiscal year and one succeeding fiscal year. Thus, for HB 62 under this interpretation, the tax would have to last 38 months to have the next 26 months’ worth of proceeds to use for operating expenses . Regardless, if wanting to capture 26 months of the proceeds as recurring revenue, it will not take five years.
This hypocrisy, if not outright lying, by Democrats arguing for a five-year limit for the one cent sales tax increase exposes their real agenda: acting as pushers trying to make addicts of the state to a higher spending level in government, so in five years raising income taxes (through higher marginal rates and/or fewer deductions) to supplant the sales tax increase. They’ll hope their favored constituencies enjoying the higher spending can put enough pressure on others so as to effect this transfer of wealth on a permanent basis, continuing the bloat present in Louisiana government (at present 18th in forecast per capita spending, by far the highest in the region).
Senate Republicans need to see through the transparency of this ploy and phony rationalization. If Democrats seem insistent on the most stringent interpretation, they can go for a 26-month span (ending Jun. 30, 2018) and say to follow the law under that interpretation only the first 14 months of proceeds from that can go to operating expenses. That will serve as a genuine “bridge” and create an imperative to engage in substantive fiscal reform now, rather than to get the state hooked on higher spending.
With House Republicans (the GOP comprising the majority of both chambers) they can send this bill to Edwards and dare him to veto it on the basis that the tax lasts too little in time length. He’ll never do it, faced with the enormous cuts that would result and would fall entirely on him for the electorate to blame. That’s the way to defeat his tax-and-spend mentality in these emergency times that at worst justify increased taxation for only short periods.