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An Edwards run for governor hurts income/sales tax swap

4th March 2013   ·   0 Comments

By Christopher Tidmore
Contributing Writer

Piyush “Bobby) Jindal appeared on “Meet the Press” boasting of his plan to increase Louisiana’s sales tax in exchange for abolishing the state income tax. The Pelican State Governor may have entered NBC’s Washington studio as a spokesperson for the Republican Governors Association, but host David Gregory quipped the real motive for the visit; “He sounds like a candidate… for President.”

The Sunday, February 24, interview revealed another reality, though. Jindal’s own words confirmed what many of his critics have come to believe. The Governor’s White House ambitions are contingent on the success of his Louisiana tax reform initiative. He cannot afford to lose the vote in this April’s legislative session. With most of his educational reforms (of which the Jindal also boasted on “Meet the Press”) frozen by judicial dictate for violating the state constitution’s mandate for funding “public” education, Jindal needs an alternative policy success to proclaim in the snows of Iowa and New Hampshire.

In a legislative hearing just before the NBC taping, one of Jindal’s key Republican allies openly questions whether the swap could be done revenue neutrally. Sen. Jack Donahue of St. Tam?many Parish, Chairman of the Joint Legislative Budget Committee, all but said that abolishing the state’s corporate income tax may prove impossible.

Donahue, who also chairs the powerful Senate Finance Committee, emerged from the hearing to tell Stephanie Riegel of “Daily Report” that he remains unconvinced it makes sense to do away with hundreds of millions in revenue the corporate income tax generates at a time when the state is facing a $1.3 billion shortfall, including $800 million worth of cuts to health care. “We got $250 million from corporate income taxes this year, which helped us finish off the year,” Donahue explained.

“We keep cutting and cutting and cutting and looking at all the money we give away. … I don’t want to raise taxes, but I do want to look at all the options and sources of revenue.” The State Senator from Mandeville admitted that the recent boom in industrial construction and expansion put Louisiana in better economic shape than many states, yet there still remains a $1.2 billion hole in the operating budget.

Despite reassurances from the Jindal Administration that the tax reform plan will be revenue neutral, Donahue predicted that the Legislature might be unwilling to take that risk. “I like the idea of making Louisiana more competitive,” he maintained, “but there needs to be a little balance; because if we get rid of the income taxes and things don’t work out, we’ll never get them back.”

Such damning words from Donahue, one of the administration’s main allies, endanger not just the corporate cuts, but the entire tax swap package. Predictably, his comments sent the 4th floor into immediate damage control mode. Desperate aides fumbled for explanations why the Senator hailing from the silk stocking precincts of arguably the most GOP seat in the Upper House voiced such dissent. The chairman’s budgetary honesty effectively eviscerated Jindal’s recent charm campaign to woo wavering Democratic legislators into the pro-swap camp.

And, the musings without a doubt could not have come at a worse time for Jindal. As the governor counts votes to build a two-thirds majority for increasing sales taxes (after moving an income cut), the Democratic Party discovered that it might have a will to fight the next election. And, emphasizing the tax swap’s impact on poorer and lower middle class voters suddenly seemed a viable strategy.

Over a week ago, House Democratic Caucus leader Rep. John Bel Edwards of Amite did what no senior Democrat managed in 2011. The state representative announced his his intention to run for governor on Baton Rouge’s WRKF radio. The frequent Jindal critic was vocal on the tax issue, sending a warning to his—primarily white, rural—Democratic colleagues to stray not too far into the Republican camp.

Edwards, no relation to the former Governor, has sent the subtle message that Democrats must organize themselves now if they have a hope of holding on to Mary Landrieu’s U.S. Senate seat in 2014, and making a play for the Executive Mansion in 2015.

In 2011, for the first time since the Civil War, the party of Jefferson not only failed to run a credible candidate for governor, but could not seem to field candidates for lieutenant governor, Attorney General, Secretary of State, or treasurer. Only six years before the Democrats held not just a majority but every at-large elected state office.

Special-education teacher Tara Hollis’ 48-point loss to Jindal, as the “leading” if not official Democratic candidate, was blamed as the fluke of a first-time contender. Yet the depth of that margin of defeat—matched with the paucity of other contenders from her party—engendered real fear that the only other statewide Democratic officeholder might not survive.

Mary Landrieu has signaled that she plans to stand for a fourth term for U.S. Senate in 2014, just as the GOP eyes her seat as essential to win a majority in Capitol Hill’s Upper Chamber. Swing Republican voters who chose the New Orleans Democrat over John Kennedy in 2008, when control of the U.S. Senate was not at stake, will have to come to the polls once more in her favor–in an environment far less kind to the Party of Barack Obama in this increasingly GOP bastion.

National SuperPAC money will pour into the Pelican State this time around. Endless commercials will remind Louisiana’s conservative voters that Republicans only need six seats to take control of the upper chamber. If the GOP picks up–as expected—West Virginia (where Jay Rockefeller is retiring) and South Dakota (where there is a possible Tim Johnson retirement), even the loss of a competitive seat in Iowa would still mean Republicans need only win four out of five seats where Dems are probably running for re-election: Alaska (Begich), Arkansas (Pryor), Montana (Baucus), North Carolina (Hagan), and, of course, Louisiana (Landrieu).

Terrifying to Democrats, in each state Barack Obama lost in 2012. As such, an appeal that a GOP Senate is within grasp may trump incumbency loyalty to Mary Landrieu’s moderate politics. Particularly, that’s true in pro-Landrieu Jefferson Parish who’s swing voters put aside their normally Republican-leanings and provided much of the Senior Senator’s 100,000+ margin of victory in 2008. Running against Barack Obama and for a GOP Senate may cause those conservative suburbanites to vote differently this time around.

Therefore, a new swing constituency must be sought. In order to keep Landrieu in office, Democrats must woo working-class voters they have lost in the last couple of cycles. This predominantly rural and Caucasian Northern Louisiana/Acadiana electorate has been casting ballots for Republicans in recent years, but could under the right ideological circumstances switch back.

A possible drastic boost in sales taxes matched with a state hospital system slated to receive not one dollar in funds this year could provide an impetus. Or at least an argument to rural voters that will see their local hospital close if a private privatization partner cannot be found.

This is a real fear in Monroe right now where the LSU hospital will close at year’s end if Jindal Administration cannot find a private company to take up the financial slack when the state pulls that hospital’s remaining funding to plug the $1.2 billion deficit. The funds to finish the construction of the new UMC Hospital in New Orleans are absent, and other parts of the former statewide Charity System will close should private operators not materialize in the next six months.

If they do not, Jindal’s income/sales tax swap will take much of the blame for the hospitals shuttering, whether deserved or not. Or at least the potential of the loss of funding might be enough to force some House and Senate Democrats from joining the two-thirds majority.

Hospital closures provide the political cover, and could bring about the platform for a statewide Democratic movement. Mary Landrieu, turning a liability into an asset, could cite how other Republican governors have accepted expanded Medicaid dollars under the Affordable Care Act. That such a move would have saved many of these hospitals, but “Jindal and his fellow Republicans” were too obsessed with sales and income taxes.

Obama’s key signature bill might not be a lead weight around the U.S. Senator’s neck anymore. With John Bel Edwards leading the assault on the tax swap by emphasizing healthcare cuts, the State Rep. provides Mary Landrieu cover. He also provides the most viable Democrat a chance at the governor’s office as well.

A recent survey conducted by Public Policy Polling of North Carolina showed that her brother, New Orleans Mayor Mitch Landrieu, would be a strong candidate for governor, tying Republican U.S. Senator David Vitter with 44 percent and actually leading Republican Lieutenant Governor Jay Dardenne 44 percent to 42 percent. None of the aforementioned have publicly declared an intention to seek the office of governor, though all three have been considered possible candidates.

As political consultant Mike Bayham put it to The Louisiana Weekly, “The strongest candidate for the Democrats would be the New Orleans mayor, who handily won two statewide bids for lieutenant governor, though his sister’s political fortunes might serve as an omen of his chances in 2015. Even if Mitch is entertaining thoughts of running for governor, he or anyone in his inner circle is not going to breathe a word about it until he is past his mayoral re-election in early 2014.”

“Mitch is certain to not only win a second term as mayor,” Bayham continued, “but will likely win big as his field of opponents won’t be any stronger than what confronted Jindal in 2011. I could easily see a scenario play out where John Bel Edwards, acting as a placeholder, assumes the role of a hatchet man for the next few years and then conveniently jump out if Mitch later decides to leap into the race for governor.”

“Come 2015 if the Democrats believe they have a real shot at winning the governor’s mansion, they’re going to want to line their bets/contributions behind a proven political winner, Mitch Landrieu.”

“But if 2014 breaks badly for the Democrats, Mitch ultimately opts to stay put in City Hall and John Bel Edwards stays in the race for governor, at least the Democrats will have made an attempt to oppose the GOP by fielding a candidate from the floor of the state House of Representatives instead of the depths of obscurity.”

A candidate who is taking the lead in denying Jindal a two-thirds majority for the sales/income tax swap. All of this does not mean that the governor will not move to phase out the corporate, franchise, and personal income taxes. The $3 billion in revenues requires only a simple majority of each house to end. There are enough Republican members for that. Replacing those funds, however, requires a supermajority, and for that Jindal needs Democrats—a party with less reason to compromise now that John Bel Edwards has chosen to run.

This article originally published in the March 4, 2013 print edition of The Louisiana Weekly newspaper.

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