A History Lesson For The Usual Stelly Nostalgia Suspects

The $1.6 billion budget deficit the state legislature is going to have to resolve in the session starting today has set off a storm of howling and whining from the Louisiana Democrat Party and their pals in the state’s media.

And the subject, naturally enough, is the Stelly Plan and its “tragic” demise at the hands of the horrid Bobby Jindal and his Republican stooges in the Legislature.

Or something.

First, there was the state Democrat Party, which put out a propaganda piece on Friday outlining all the “myths” about Jindal’s governance that included this…

MYTH: Oil prices are to blame for the $1.6 billion budget hole.

REALITY: Jindal and his Republican allies in the state legislature authorized the largest tax cut in Louisiana history, resulting in a budget shortfall of more than $1 billion before oil prices dropped.

That, of course, refers to the repeal of the Stelly tax. We know because when the Times-Picayune offered up its demand for a “permanent” fix to the budget that largely echoed the state party’s press release it was made even clearer…

There are myriad reasons Louisiana is facing a $1.6 billion budget deficit and painful cuts to health care and higher education, but they all come down to the same thing: shortsightedness. Shortsightedness by Gov. Bobby Jindal and legislators for believing that a short-term boom in revenue post-Katrina was going to last. Shortsightedness on their part for believing oil prices would never tank. Shortsightedness for rolling back former Rep. Vic Stelly’s income tax reforms, which would have provided a dependable source of revenue. And shortsightedness for balancing the budget repeatedly from trust funds and other limited pools of money that are now running dry.

Our pal Nick Bouterie took to Twitter to drop the plunger on this nonsense this morning…

As entertaining as it might be, it’s true – John Bel Edwards did co-sponsor what ultimately became Act 396 of the 2008 Regular Session that repealed Stelly.

See for yourself…

edwards cosponsored stelly repeal

It’s also true that Jindal was not a fan of the Stelly repeal at the time. Perhaps the Picayune’s reporters should read their own paper

Facing growing momentum for some sort of tax cut, Gov. Bobby Jindal and legislative leaders agreed Wednesday to roll back the 2002 Stelly plan income tax increases starting in 2009.
The deal emerged after several days of backroom negotiations and appears to defuse a politically tenuous situation for Jindal, who did not initially embrace a tax cut even though the state treasury is brimming with record revenue.

Since voters approved the swap in 2002, repealing the income-tax increase has become a cause celebre on conservative talk radio and a staple of many political campaigns. But Jindal had pointedly avoided calling for a repeal, instead focusing his tax-cutting energy on business taxes that are unique to Louisiana.

Long-shot legislation

As it started out in the Senate, Shaw’s legislation would have rolled back the Stelly plan increases retroactive to Jan. 1 of this year, which would have meant a $302 million hit to the 2008-09 budget.

Without support from the governor, the bill was given little chance of passing its first test in a Senate committee. But the Revenue and Fiscal Affairs Committee surprised observers by moving it forward to the full Senate, where it was amended to phase out the state income tax entirely by 2017, at an eventual hit to the treasury of $4 billion a year.

Jindal initially said he would support a tax cut only if it were matched by corresponding cuts in state spending. But that argument began to evaporate after a forecasting panel last week recognized $824 million in new state revenue over the next 14 months, leaving room for both new spending and tax cuts.

Still, Jindal said he wanted to delay the implementation by a year to avoid having to balance next year’s budget using “one-time” money that otherwise will become surplus cash July 1.

You could make the argument, so we will, that John Bel Edwards was a bigger supporter of the Stelly repeal than Jindal was.

For that, we join Nick in thanking him.

After all, there was wide support for killing Stelly. It was a punitive tax on the productive class which dispatched capital and citizenry to Texas at an alarming rate, and since Stelly’s repeal Louisiana has seen net in-migration for the first time in decades.

Edwards shouldn’t run from that. He should take credit for it. Why is he allowing his party to attack one of his greatest accomplishments in the state legislature?



Interested in more news from Louisiana? We've got you covered! See More Louisiana News
Previous Article
Next Article
Join the Conversation - Download the Speakeasy App.

Trending on The Hayride