On the Nov. 18 edition of Fox News Sunday, Gov. Bobby Jindal told host Chris Wallace, "When it comes to this fiscal cliff, I was in Congress, I guarantee, if they just put a Band-Aid on this, we'll be in another fiscal cliff in a few months. We need structural changes." Jindal was referring to the federal fiscal cliff — the combination of tax hikes and spending cuts that are set to take effect automatically on Jan. 1, unless Congress and President Barack Obama enact an alternative plan before then.
The governor is right about the need to address the federal deficit in a comprehensive manner, but Louisiana has its own fiscal cliff, one that places similar demands on Jindal and state lawmakers. For starters, the governor should stop hitting the talk show circuit to promote his nascent presidential campaign and start giving Louisiana his full attention. Only days before Jindal's appearance on Fox, his administration announced a $963 million anticipated funding shortfall for Louisiana's 2013-2014 budget. In human terms, that's more than $200 for every man, woman and child in the state.
Some will attempt to gloss over the shortfall by pointing out that the state's total budget is more than $25 billion. That argument also glosses over the fact that almost half of the total state budget — $11.3 billion — is federal matching funds. The state general fund (i.e., the "undedicated" portion that actually comes from Louisiana taxpayers) is only $8.4 billion, which makes the $963 million shortfall a lot more daunting. Another $5.7 billion comes from state taxpayers but is "dedicated."
As recently as 2008, the state was flush with cash — almost $2 billion in the black. Since Bobby Jindal took office as governor, what "structural changes" brought Louisiana to the edge of this fiscal cliff?
One stands out: In 2008, state lawmakers, with Jindal's belated but enthusiastic support, rolled back the 2002 Stelly Plan. Named for then-state Rep. Vic Stelly, R-Lake Charles, the Stelly Plan brought some long-overdue sanity to Louisiana's tax code. It raised income tax rates on middle- and upper-income brackets while lowering regressive sales taxes on food, utilities and other basics. The original Stelly Plan was designed to be revenue-neutral in its first year while increasing revenues in subsequent years as the economy grew. That's exactly what it did — until lawmakers and Jindal wiped it out in 2008. Ironically, the clarion call to roll back Stelly was the fact that it did precisely what it was designed to do — raise revenues over time.
In 2008, Louisiana's flush coffers were the result of billions in post-Katrina federal aid. Critics of former Gov. Kathleen Blanco decried the skyrocketing state budget after the storm, but anyone who could see past his nose recognized that those federal dollars were temporary. Nonetheless, state lawmakers and Jindal, all in a fever to cut taxes, supported rolling back Stelly, and voters agreed. The result was a quick drain of the state's surplus — and a return to the structural deficits that once again give Louisiana clockwork budget crises. Thus have Louisiana's health care and higher education systems been decimated to produce balanced budgets in the face of fiscal cliffs.
The governor steadfastly refuses to consider revenue increases — he believes he must maintain his "tax virginity" to run for president in 2016. Instead, Jindal now proposes an overhaul of the state tax code, a modern incarnation of the 1980s fiscal reform movement — of which Stelly was a linchpin. As he did with his "education reform" plan, the governor speaks in vague generalities about reform — but he offers no specifics. We supported fiscal reform in the 1980s and '90s, and we applaud any effort to restore sanity to Louisiana's convoluted tax code. As was the case with Stelly, Jindal promises his proposals will be revenue neutral. That's a good place to start, but where are the specifics?
We are fully prepared to support an overhaul of the state tax code, but not until we see a specific plan. We hope the governor does not do with this plan what he did with his education reform plan last year — keep the specifics under wraps until the last possible moment to drop bills in the legislative hopper, then schedule committee hearings before anyone has a chance to analyze his proposals. As we saw with his so-called reforms for education, the result of that approach can be badly flawed and skewed to favor small constituencies. That is hardly reform — nor is it a sound platform from which to launch a presidential campaign.