Louisiana Chemical Association Files Suit Over Illegally-Passed Tax Hike, And They’ll Win

Just out today is a release from the Louisiana Chemical Association, which has gone to court and filed suit to invalidated one of the key tax increases passed in an effort to cut Louisiana’s budget deficit without cutting government…

The Louisiana Chemical Association (LCA) filed legal papers in Baton Rouge early this morning asking a state district court to declare a tax hike unconstitutional. The petition is attached.

“The Louisiana Constitution says tax measures must originate in the House and pass both houses by a two-thirds vote. House Concurrent Resolution 8 did not, and we believe it’s unconstitutional,” said LCA President Dan Borné.

“The magic number is 70 affirmative votes in the House. HCR 8 fell short of a two-thirds majority twice. It got only 63 votes on initial House passage and 60 votes on the House vote to accept the conference committee report. If those votes stand — taxes by a majority vote instead of a two-thirds vote — it will be virtually impossible to kill resolutions that impose taxes in the future,” he added.

HCR 8 imposes a one percent sales and use tax on business utilities and natural gas. It is effective July 1, 2015, and it’s estimated the tax will raise more than $100 million through August 5, 2016, when the tax will no longer be in effect unless it is renewed by the Legislature next year.

“This is a business-only tax. It falls 100 percent on the Louisiana business community and places a particularly heavy burden on the petrochemical industry. Our plants depend heavily on purchased power and natural gas to generate steam, heat and electricity. If our competitors in other states are not paying a tax like this, it can make a huge difference when chemical companies decide where to invest new capital,” Borné added.

A one percent sales tax on business utilities and natural gas was enacted in 1986 and swelled to four percent by 2001. Over the next several years, business was able to convince lawmakers of the tax’s uncompetitive nature, and it was reduced to 3.3 percent by 2007. The chemical industry made the repeal of the tax a major campaign issue that fall, and the Legislature unanimously removed the tax in 2008. Competing states don’t charge a sales tax on manufacturers for use of natural gas or utilities.

The tax is effective today, meaning businesses will be billed for the tax in August for their July usage.

“The filing this morning is the first of what could be several legal maneuvers to attack the constitutionality of HCR 8, a process that could take several months to complete. We’re therefore preparing information on how to pay the tax under protest until the matter is finally resolved,” Borné said.

“Paying under protest does not mean the state cannot spend the money, but if HCR 8 is finally declared unconstitutional, the state will have to return the money to those who paid under protest,” he added.

In a message to LCA members, Borné said they were likely to hear from some legislators that the legal action is a direct attack on those who were in the budgetary bulls-eye during the session and who had to cast tough votes for hundreds of millions of dollars in new taxes.

“This is flatly untrue, he said. “We totally understand the budgetary challenges facing the state and that lawmakers were in a difficult position. Our legal action today is not directly or indirectly intended to attack state revenue generation, nor should it suggest any cooling of relationships with any of our valued constituencies around the state. Our action is about defending the Constitution of the State of Louisiana,” Borné concluded.

What to say to this? Basically, we told you so.

Here at the Hayride, we hammered the RINO’s in the House of Representatives who joined with the Louisiana Democrat Party to pass this stupid tax increase and particularly the House’s atrocious leadership – Speaker Chuck Kleckley, House Delegation Chair Lance Harris and Ways and Means Chairman Joel Robideaux – for completely ignoring the state constitution in their rush to bring about a tax orgy to balance the budget.

It is illegal to raise taxes at the Louisiana legislature with a simple majority. You need a two-thirds vote to raise taxes in this state.

But Joel Robideaux, the House Ways and Means chairman who currently calls himself a REPUBLICAN (this is a fiction, of course; he only joined the party so as to achieve his current leadership position), says otherwise.

Why does Robideaux say this? C.B. Forgotston

Robideaux is basing that on legal fiction contained in a 1993 Attorney General’s Opinion.

An Attorney General’s opinion serves only one purpose; to cover the asses of public officials so they can do things that are of questionable legality without being found guilty of malfeasance. Otherwise, it’s no better than my legal opinion in a court.

Without getting bogged-down in legalese, Robideaux believes the general provision in the Louisiana Constitution about suspensions of laws (La. Const. Art. III, Section 20) requiring the same vote to pass a law to suspend it.   The tax credits, exemptions, etc. only required a majority of the leges.

However, La. Const. Art. VII, Section 2 says it takes a 2/3’s vote to increase taxes.  That provision is glossed over by the AG Opinion while saying the general overrules the specific law.

Louisiana jurisprudence says the opposite. When there is a conflict a specific law supersedes a general law. Perschall v. State, 697 So.2d 240 (La., 1997)

The AG opinion was written prior to the above cited case. The AG cites no case law to support his opinion.

The leges don’t give a damn about the constitution because they know most citizens don’t have the resources to litigate.  Even if someone does litigate, the matter won’t be decided before the suspension expires two months after the 2016 Regular Session.

At that point, the only recourse is for a taxpayer to sue the state to get the illegal taxes returned.   Assuming the taxpayer wins the lawsuit; they cannot force the lege to appropriate the funds to pay the judgment.

So beginning at 10 a.m. today, we’re going to see an orgy on the House floor, in which Robideaux and House Speaker Chuck Kleckley will pressure Republican state representatives to join Democrats in raising most of a billion dollars from Louisiana taxpayers in order to paper over their fiscal incontinence. They’re going to deem these tax bills passed based on legal interpretations as flimsy as their budgetary competence, and send this dog’s breakfast to the Senate.

And we weren’t alone. State treasurer John Kennedy agreed that without a two-thirds vote to pass a tax increase you can’t enforce it…

“I’ve taught constitutional law at LSU for 10 years, and it’s clear to me the constitution requires a two-thirds vote to increase taxes,” said Kennedy, who was speaking to a Monroe Chamber of Commerce group Tuesday. “If somebody files suit challenging it, he or she would win in court.”

And for good measure, Kennedy said it again

Kennedy, speaking to the Press Club of Baton Rouge, said the bills that now are before Senate committees have an “excellent chance” of being declared unconstitutional if challenged in court. His argument is built upon Article 7, Section 2 of the state’s constitution, which says any “new tax, an increase in an existing tax, or a repeal of an existing tax exemption” needs a two-thirds majority from both the House and Senate to become law.

Five of the 11 bills were passed without the two-thirds vote. However, Kennedy said, the Legislature is basing its approval on a 1993 attorney general’s opinion that says only a majority vote is necessary to suspend an existing tax exemption.

The bills passed via majority were all related to scaling back tax exemptions and credits. The treasurer, though, said transcripts from the state’s 1973 constitutional convention indicate lawmakers back then weren’t making an exception for partial exemptions.

“This house of cards can come tumbling down,” said Kennedy, who teaches state constitutional law as an adjunct professor at LSU’s Paul M. Hebert Law Center. “If somebody files suit and challenges this and wins, then we’re going to have to do it all over again.”

But when we brought this up to Harris during his presentation to the Republican Party of East Baton Rouge Parish luncheon at the beginning of June, his response was beyond pathetic…

Asked about the fact most of the tax increase bills the House passed didn’t have a two-thirds vote, and are therefore unconstitutional, and rather than pay those tax increases their victims will likely sue on that basis and win, what the budget impact would be, Harris had a peculiar answer. He said he relies on House Speaker Chuck Kleckley’s judgement as to what majority is required to pass which bill, and Kleckley said they didn’t need a two-thirds vote.

Kleckley, of course, isn’t on the state Supreme Court, which has already ruled on the two-thirds question and not in a way favorable to what the House did this session. Nor is Kleckley an attorney. To say this inspired confidence wouldn’t be an accurate reading of the crowd.

Kennedy is correct, and the LCA is going to win that lawsuit and invalidate the tax hike the House passed. In all likelihood HCR 8 is by no means the only one going down before this is over, and what was alleged to be a balanced budget will end up a deficit of hundreds of millions of dollars.

Those of us who are just ordinary voters can’t do anything to punish Kleckley for his awful record as House Speaker; he’s termed out and so far isn’t running for anything else. Supposedly Kleckley’s next career move will be to finagle himself a high-paying job as an influence-peddler, probably for the hospitals as a payoff for his role in passing that hospital tax scam a couple of sessions ago.

But Robideaux is running for parish president in Lafayette, so he can be made to pay the price for his incompetence and illegality. And Harris is up for re-election, though so far we don’t know who his opponent will be.

These clowns need to be run out of Louisiana politics. They’re not alone. We need a bloodbath among Republican incumbents in legislative races this fall to get rid of the RINO’s in the House.

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