Usually the legislature buckles under when a governor exerts his muscle. A governor has a lot to offer by way earmarks and special appropriations for the pet projects of legislators. In exchange legislators support the governor and his position. But this year is different. There is no extra money to hand out. Revenue is down, expenses are up, and the state budget is tight. So without the power of the purse, a governor has little to offer legislators to keep them in line.
This session a bill repealing the state income tax is making its way through the legislative process. Although the repeal may have started as political showmanship or an effort to create a political dilemma for Governor Jindal, it has gained a life of its own in the halls of Baton Rouge.
While such repeal is a worthwhile goal, it is one that cannot be done without careful planning which includes budget cuts and, most likely, a new tax to replace the lost revenue. Some states use high state and local property taxes and transfer fees from the recordation of sales of real estate to make up for the revenue that would otherwise be collected from the income tax.
Higher property taxes create a whole new set of problems of their own, but remain part of the solution for other states to raise new revenue. In Louisiana the first step would be to substantially lower the Homestead Exemption or eliminate it as we know it and raise property taxes significantly on homeowners. Interestingly, some of these states are now seriously debating whether an income tax in addition to their already exorbitant property tax is now needed to raise additional revenue. Louisiana’s property tax is low by national standards, and the state itself does not levy any property tax at all.
The repeal of the income tax is opposed by just about every good government group, and most pundits do not believe that the repeal will make it through the legislative process. If it does get through, Governor Jindal will have a big decision to make. Should he veto the bill or let it become law. Whatever that decision is it is sure to have major ramifications, politically and fiscally.
The legislature has also passed by a veto proof margin a continuation of the four cent per pack cigarette tax. Governor Jindal opposed the continuation of the tax keeping in line with his opposition to additional taxes. The bill now sits on his desk awaiting his action. Should the Governor veto the bill the question will be whether he can muster the forces to sustain the veto. Just because the bill passed with a veto proof majority in both houses doesn’t mean the votes will still be there to override the veto. Politically, Governor Jindal cannot afford to have the legislature override his veto.
The repeal of the income tax and the continuation of the cigarette tax are at best highly controversial. Repealing the state income tax may be a popular thing to do back home and may help many legislators with re-election; but without proper planning the state would plunge more deeply into fiscal chaos. Continuation of the cigarette tax probably doesn’t excite most voters unless you are a smoker. Cigarettes are expensive enough as it is, and a reduction in the tax will make it a little cheaper for smokers to continue their habit.
In any event the legislature is showing its independence from Governor Jindal and a mind of its own. This may be good, but maybe not. So long as the Legislature and the Governor don’t end up like Congress, fighting just for the sake of fighting, Louisiana will certainly weather a little independence by the legislature from the governor’s office, and the state will be a little better off.
by Lawrence Chehardy
About Lawrence Chehardy
For thirty-four years Lawrence Chehardy served as Assessor of Jefferson Parish and throughout his career has been a champion the maintenance of the Homestead Exemption. During his years as Assessor Lawrence Chehardy served as President, Vice-president, and Treasure of the Louisiana Assessors’ Association. He also served on numerous boards and committees of the association.
Chehardy has extensive knowledge of politics, political campaigning, and the political process. When it comes to political strategy and creating the campaign’s message, Lawrence is one of the best. Lawrence Chehardy has been instrumental in the election of numerous candidates through endorsements as well as campaign strategy. In many cases his endorsement turned the election in favor of those candidates.
In addition to his political commentary and public speaking engagements, Lawrence Chehardy is a founding member of the Chehardy, Sherman, Ellis, Murray, Recile, Griffith, Stakelum & Hayes Law Firm and serves as its managing partner.