[StBernard] Governor wants tax cuts limited to $180 million

Westley Annis westley at da-parish.com
Wed Jun 27 20:18:50 EDT 2007

Governor wants tax cuts limited to $180 million
Posted by Capital bureau June 26, 2007 9:52PM
By Robert Travis Scott
Capital bureau

BATON ROUGE -- With two days left in the legislative session and more than
$32 billion in spending measures packed away, Gov. Kathleen Blanco is
holding fast to her conviction that lawmakers should not pass tax cuts
totaling more than about $180 million for next year.

It is the last major money battle of a session that has dealt with record
sums of state revenue.

Various tax cuts strewn among several bills are awaiting final action. If
all passed, their combined impact would near a billion dollars. But the
spending bills have already passed, and by law the state budget for next
year must be balanced.

Following the governor's lead, the Legislature has left room in next year's
budget for about $150 million for tax breaks, plus about $30 million more
that administration officials said could be trimmed without resorting to
line-item vetoes in the state budget bill. The governor also could veto tax
cut bills that come to her desk.

Blanco issued a strong warning to the Legislature Tuesday to send her a
package of tax breaks that will keep the budget in balance or else she will
cut programs championed by lawmakers who have insisted on the tax cuts.

"The people of Louisiana definitely deserve tax cuts. But at the same time,
you can't bankrupt the state of Louisiana," Blanco said. "And so tax cut
proponents are in that mode. I think they're like a bunch of spoiled
children, and we're on vacation, kind of, and they think mom and daddy can
buy them every single toy and balloon in the whole place. And, you know,
parents have to say no after a time."

When asked how the mom should deal with tax cuts that exceed her threshold,
Blanco said, "Momma says you better be careful or you're gonna lose your

"She's not my momma, and she's not my constituent," said Rep. Jim Tucker,
R-Algiers, who heads the Republican House Delegation. "The people of this
state deserve some of those dollars back. I believe if she doesn't come off
this $180 million limit, she will be facing a veto over-ride."

He said Blanco and her allies in the Legislature have been spending like
"drunk sailors" while accepting tax cuts that would amount to less than
one-half of 1 percent of the total state spending amount.

So far the governor has largely succeeded with her session strategy of
emphasizing increased spending on education, roads, public employee pay
raises and government programs rather than tax cuts as a way to address the
record revenue pouring into state coffers. The new money is the result of
tax revenue from hurricane recovery spending, higher energy prices and
federal assistance for storm damages.

The governor can still cut the state budget with her line-item veto
authority, and she can also issue executive orders to curtail spending at

Jimmy Clarke, Blanco's chief of staff, said the governor is aiming at a tax
cut level of about $175 million. House Ways and Means Chairman Taylor
Townsend, D-Natchitoches, who has been allied with Blanco on most tax cut
issues this session, said the target was $175 million to $180 million.

If the Legislature at large backs off and tries to live within the
governor's means, then lawmakers face a helter-skelter rumble to figure out
which tax cut measures will fit into a $180 million package.

Addressing the House Tuesday afternoon, Townsend outlined what he saw as the
priorities for tax cuts.

The biggest ticket item is likely to be "significant relief" from a bill to
roll back part of the Stelly Plan tax program. Townsend has a bill that in
its current form would let taxpayers include a portion of their federal
itemized tax deductions on their state income tax forms, a deduction that
the 2002 Stelly plan took away.

That bill would bring an estimated $157 million in tax cuts counted in the
fiscal year beginning on July 1 and more in subsequent years as the itemized
deductions are allowed in full.

"Some parts of the Stelly tax cuts are valuable," Blanco said Tuesday.

Another priority is "significant relief for the working poor," Townsend

The Legislature on Tuesday passed a bill by Sen. Lydia Jackson,
D-Shreveport, that would do just that. It provides a refundable earned
income tax credit for individuals in an amount equal to 5 percent of the
federal earned income tax credit for which they are eligible.

That total tax break amounts to $40.5 million annually, but the law would
not take effect until 2008, which would not impact the budget for the next
fiscal year. That means Blanco might not count the Jackson bill toward her
limit on cuts.

Blanco has already signed into law a $1 million tax break to the General
Motors car plant in Shreveport. That amount, like all other cuts, will be
counted toward her $180 million limit, she said.

The competition under that ceiling is tough. For example, there are bills
still in the process asking for repeal of the gift tax and for income tax
deductions for private school tuition.

Other tax cut bills are still in play, and some are duplicated in multiple

Sen. Walter Boasso, D-Arabi, has amended three bills with the same tax cut
proposal. He would offer a tax credit to compensate homeowners and
businesses whose property insurance premiums have increased since the
hurricanes. The cost of the measure in its current form is $93 million.

One of the bills carrying that initiative is House Bill 892, which has been
heavily amended with various tax breaks. In its current form, it provides
more than $400 million in tax cuts, including Boasso's breaks for insurance
customers, plus other breaks for wind and solar energy installations and for
credits applied to capital companies that invest in Louisiana businesses.

When the bill came to the House floor Tuesday, Townsend asked members to
reject the Senate version and all its amendments. Rep. Ronnie Johns,
R-Sulphur, asked the House to approve it, and Townsend then withdrew the

Senate Bill 3 by Sen. Rob Marionneaux, D-Livonia, has been a popular
initiative in the Legislature this session that calls for a sales tax
holiday in August. But it was amended in the House to also phase out a sales
tax on natural gas and electricity for businesses in the state.

Dan Borne, president of the Louisiana Chemical Association, said he was told
by administration officials that the governor would veto the bill if the
utility tax break was left on.

Even tax bills that have passed could be in trouble. The Senate on Tuesday
adopted the so-called Broadway South bill by Sen. Edwin Murray, D-New
Orleans, to provide tax credits supporting theater renovations and stage
performances in Louisiana.

Blanco said that bill appeared to be expensive, and it was like all other
tax cut measures falling under her scrutiny.

"I think the Legislature needs to look at the total value of the entire tax
cut package that they're dealing with," Blanco said. "Make sure that
everything is balanced, that everything comes out right."

Asked what her role would be in deciding which tax cuts to choose, she said,
"Well, they can work it out, or I can work it out. They can make that

"I always thought families who were struggling deserve the tax cut more than
families that have a whole lot of money," Blanco said. "A nice balance there
works for me."

"I really haven't gotten involved in directing the traffic as to how the tax
cuts should be apportioned. I'm just saying, remember the total value. Let's
not bankrupt the state of Louisiana."

Robert Travis Scott can be reached at rscott at timespicayune.com or (225)

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