Most Americans learned in their grade school government and civics classes about the three branches of federal and state government. Perhaps kids in Louisiana should also learn about a fourth branch, Grover Norquist of Americans for Tax Reform (ATR), who apparently has veto power over crucial legislation.
Louisiana’s leaders have grappled with how to close a $1.6 billion budget gap all session. The wound is self-inflicted; lawmakers and Gov. Bobby Jindal passed the biggest tax cut in Louisiana’s history back in 2008, when oil prices were high and the state had a $1 billion surplus, instead of investing money in priority areas like education, health care and infrastructure. After the economic slowdown, Jindal and state leaders turned to a variety of tax incentives and one-off revenue sources to increase job growth and balance the budget to no avail. Today, oil prices are at record lows and Louisiana lags the nation in growth. But instead of reversing tax cuts that haven’t lead to prosperity, lawmakers are cowering in fear of anti-tax advocate Grover Norquist, who doesn’t even live in the state.
Gov. Jindal, widely rumored to be preparing a presidential run, has insisted that any solution to the budget problem must be revenue-neutral and in accordance with the dictates of Norquist’s famous anti-tax pledge. The governor and legislators, caught between their need to balance the budget and kowtow to Grover, are tying themselves in knots to raise taxes without appearing to do so.
Take the bill recently under consideration in the state Senate that would make Rube Goldberg proud. Senators first considered a package of bills from the House that would raise $664 million to stave off devastating cuts to higher education, but did not include the offsets demanded by ATR. In order to pass muster with the national group, senators invented a new “fee” for college students that would raise the same amount as the House tax increases, then promptly offset this fee with a tax credit. At the end of the day, students won’t actually pay more, since the credit will apply at the same time that the fee is levied. And since fees don’t count under the ATR pledge, Gov. Jindal can claim that the tax increases were offset by the new student credit.
Again, the Louisiana Senate was forced to adopt a convoluted plan with a fake fee and fake tax credit as a smokescreen for raising revenue so that the governor could keep his promise to an anti-tax advocate in Washington, DC. That’s the world we live in.
The gambit appears to have fooled no one. The Hayride, a conservative blog proclaimed by ATR as “Louisiana’s premier political website,” has called the measure an outright tax increase. A number of senators refused to support the bill, saying legislators were “playing games.”
The entire bait-and-switch wouldn’t even work if it weren’t for the ATR’s strange distinction between raising taxes (terrible!) and raising fees (meh). The conventional wisdom in some quarters is that charging fees for state services is better that raising taxes broadly because fees fall directly on beneficiaries. But while this seems fairer, it is the opposite in practice. Fees rarely rise with inflation, the way that conventional tax revenue does. They place a bigger burden on low-income residents, who have less ability to pay. And many of the services that states have turned to fees to fund, like higher education, have many indirect benefits for society that should be supported through broad taxation. Sadly, as more and more lawmakers defer to the opinions of Grover Norquist and his ilk rather than adopting commonsense fiscal policies, more states have come to rely more heavily on fees.
The solution to this mess isn’t gimmicky legislation. The solution is for legislators and governors to grow a backbone and stand against Grover’s anti-tax zealotry. Lawmakers should consider their obligations to their constituents rather then bending to the caprice of a beltway insider.