"Fiscal cliff" and "reform" are hot political buzzwords these days, in Washington as well as Louisiana. Our state faced a so-called fiscal cliff in 2010, but it turned out to be little more than a speed bump. Nowadays, Gov. Bobby Jindal is touting "tax reform" as one of his primary goals in 2013. Reforming Louisiana's arcane tax code is always a laudable idea, especially if it alleviates Jindal's annual gutting of higher education and health care budgets. Unfortunately, the governor hasn't offered any specifics of what he means by "tax reform." Instead, he speaks in platitudes and talking points — much like he did last year on the topic of "education reform." One thing he has made clear: He wants his tax plan to be "revenue neutral."
That's another buzzword. Supposedly, it means the plan will not raise more revenue next fiscal year than the current tax code raises this year. Somehow, he promises, it will be fairer and more business friendly — whatever that means. Politically, it means a great deal to Jindal, who continues to pump up his resume (and maintain his "tax virginity") as he prepares to run for president in 2016.
The concept of revenue neutrality also appeals to hard-line fiscal conservatives, who would prefer less taxes and less spending — but it does nothing to fix Louisiana's long-standing problems. Our state has neglected its infrastructure for decades while slashing higher education and health care budgets every time there's a revenue shortfall. No governor in history has cut higher education and health care more than Jindal. That's ironic, because his first two jobs in state government were in those arenas. The cuts — more than half a billion dollars to higher ed alone — go way past "trimming the fat." After five consecutive years of draconian cuts, our public universities are hemorrhaging talent. Given that stark reality, the concept of "revenue neutrality" strikes us as irresponsible. We are not alone.
Last week, the Louisiana-Mississippi Hospice and Palliative Care Organization issued a strongly worded letter condemning Jindal's elimination of the Medicaid Hospice Benefit. The benefit has allowed the state to spend Medicaid funds on in-home, end-of-life hospice care rather than channeling terminally ill patients into the state hospital system. Moving dying patients into intensive care units, the group contends, will cost four times more than allowing them to remain at home. The Jindal administration contends that eliminating the benefit will save the state more than $10 million in 2014 — but that says nothing about the cost in human terms.
Meanwhile, the Institute on Taxation and Economic Policy, which identified Louisiana as one of the states with "potential for major tax reform in 2013," warned, "The focus on revenue neutrality means that tax reform is unlikely to help Louisiana better meet the needs of its taxpayers in future years."
The Louisiana Budget Project (LBP), an independent nonprofit, has monitored state spending through several administrations, both Republican and Democratic. "We fundamentally disagree with the governor's position that this has to be revenue-neutral," LBP director Jan Moller told Gambit. "If you're going to go through this exercise of who should pay more and who should pay less, we should do it with an eye toward raising revenue."
What could be cleaned up? Moller suggests that Louisiana stop allowing taxpayers to deduct all of their federal income taxes on state returns — a deduction that Louisiana shares with only two other states, Iowa and Alabama. We suggest phasing out the deduction over several years so the impact is softened.
Elsewhere, reform groups such as the Council for a Better Louisiana and the Public Affairs Research Council are preparing to release their suggestions. We look forward to hearing from them, and we hope the governor will take their recommendations to heart.
Jindal and his advisers have said "everything is on the table" when it comes to tax reform — another vague promise. The governor has indicated he will unveil his tax reform plans later this month or in early February. We hope he keeps that promise. So far, his tax reform plan sounds a lot like the "education reform" plan he touted last year at this time. Details of that plan were not released until the legislation was filed at the eleventh hour — then it was rammed through the Legislature at a breakneck pace.
Time has shown that to be a flawed way to make major policy changes. The more time lawmakers and the public have to digest the specifics of the governor's plan, the better.