It’s All Stephen Waguespack’s Fault

At least that’s the narrative coming out of John Bel Edwards, the Democrats in the legislature and their pals in the media today.

Waguespack, the president of the Louisiana Association of Business and Industry, is the villain du jour because of two things – one, he’s forcefully argued against Edwards’ plans to raise every kind of business taxes imaginable during the current special legislative session, and in most cases LABI has been successful beating them back. The House killed a proposal by Rep. Ted James (D-Baton Rouge) that would have cut the amount of the rebate businesses get for paying the local government inventory tax, for example, and it killed a bill that would have reduced the amount of state tax deductions against federal income tax payments. Not to mention the House doesn’t seem interested in passing increased business utilities taxes that have cleared the Senate.

The second reason Waguespack is Louisiana’s villain du jour is his having given air cover to an idea being floated in the House which would increase the sales tax hike the House and Senate have already passed from one cent to 1.25 or 1.35 cents for a very short period of time – 15 months – in order to resolve the state’s budget issues in the immediate term while forcing the upcoming regular legislative session to be a forum for large-scale restructuring of Louisiana’s public fisc and tax code. Because Waguespack was willing to give acceptance to that idea as a prospective short-term solution, he’s the devil.

As an aside, it needs to be understood that the regular session which starts in a week after this special session ends Wednesday night is not a fiscal session; because it’s not a fiscal session legislators are barred from bringing tax increase bills in it. So whatever taxes are going to be raised this year will need to be raised right now. And Waguespack and LABI have been able to stop the majority of those tax increases; ergo, he is the devil.

And the devil was given his due, at least in Democrat parlance, at the atrociously-staffed Senate Committee on Revenue and Fiscal Affairs (Sen. J. P. Morrell is the chairman, and there are seven Democrats – Morrell, Karen Carter Peterson, Troy “Side Friend” Brown, Troy Carter, Yvonne Colomb, Jay Luneau and Gary Smith – and only four Republicans) when he testified against the idea of scrubbing all exemptions from sales taxes in Louisiana outside of constitutionally-mandated ones for prescription drugs and groceries…

“It’s hard for me to trust you, you helped create the problem we have,” said Sen. Karen Carter Peterson, D-New Orleans, to Waguespack amid his testimony opposing eliminating the exemptions. “You have no credibility. The things you have said ended us up in mid-year cuts every year.”

At least three other Democrats piled on, characterizing LABI as an obstructionist organization that is unwilling to take its share of cuts along with the rest of the state.

Freshman State Sen. Jay Luneau, D-Alexandria, said LABI has opposed their measures forcefully but has done little in terms of supporting other measures to help shore up the budget.

“LABI needs to come to the table with some solutions, you’re just telling us we can’t pay anymore,” Luneau said. “But somebody has to pay because we cannot cut these essential services. What can you do to help us in that area?”

Waguespack’s response to Luneau was to say that LABI will back the increase in the sales tax for the short duration. That only got him a lecture from Morrell…

State Sen. J.P. Morrell, chairman of the Revenue and Fiscal affairs committee, said LABI was behind the controversial proposal to further increase the sales tax.

Morrell said LABI now was trying to distance itself from being the originators of the proposal.

“The Legislature came in with the intention of raising one penny,” Morrell said. “This idea of raising more than one penny did not originate in the Louisiana Legislature.”

Which is actually not true, and Morrell either knows it’s not true or is clueless seeing as though he is neither a member of the House nor a Republican and is therefore not privy to much in the way of strategy being discussed by the House Republican leadership. Waguespack, who told the Hayride Friday that the potential sales tax increase was something the House leadership is kicking around and that he was willing to give cover for as a specific measure aimed at forcing tax increases to be temporary and off the table in out years so as to create an imperative for substantive reform, is not the author of the idea but he does talk to the leadership.

The real reason Waguespack is the devil is that Americans For Prosperity’s Louisiana chapter, which is really the only other anti-tax statewide lobby group carrying a lot of public clout (there are other business lobby groups, like the Louisiana Oil and Gas Association, the Louisiana Homebuilders’ Association and the Association of Building Contractors, for example, which are reliable opponents of tax increases at the Legislature but don’t do a lot of messaging to move public opinion), came out against the idea of a higher sales tax increase on Monday. That means LABI is isolated to some degree, and it’s why even a relatively reasonable pundit like J.R. Ball at the Times-Picayune would take a poke at Waguespack today

It was LABI — after beating back proposals to shed a few business tax exemptions — that countered with the idea of increasing sales taxes beyond the one-penny requested by Edwards. Blessing duly noted, House Republicans went to work “coming up” with the idea to further jack what already is on pace to become America’s highest sales tax rate.

“You’re underestimating the influence LABI has exerted during this session,” said a lobbyist inclined to be aligned with the wishes of Edwards. “Nothing happens, especially in the House, without their blessing.”

A political insider, with zero ties to the governor’s agenda, said, “If the special session is a train, then LABI is the engineer. They’re running the show, no question.”

Legislators — and, again, particularly those in the House — have morphed from lapdogs of the governor to LABI’s lackeys.

Edwards, it’s worth noting, is pushing for big business to feel some pain, but Republicans, after checking with LABI, reject the appeal like Shaquille O’Neal.

It’s really kind of funny when you think about it. LABI has thousands of members and they’re from every nook and cranny of the state. They’re all business owners and most of them are small business owners. And they, like the majority of the electorate, supported legislators who ran on an agenda of low taxes and smaller government. In other words, in this case LABI is merely attempting to hold those leges to what they ran on.

And LABI is even supporting a tax increase. And yet they’re the bad guys.

Why? Because we’re finally seeing Democrats find a tax increase they don’t like. You increase sales taxes and they believe that disproportionately hits poor people – there is some conflicting evidence on this, given all the exemptions for the things poor people spend most of their money on, but that’s what they believe. They’re coming to terms with the perception that they’re running around voting to make their constituents taxpayers, and they look stupid in the process. At some point, somebody might well decide to run robocalls in Karen Carter Peterson’s district, for example, trashing her for voting to rob her constituents with higher sales taxes, and if that’s done it would be irony and entertainment on an epic scale.

And if Waguespack is backing an even higher sales tax increase than the one which is making these Democrat lawmakers look like idiots, that’s doubly unacceptable to them. They didn’t go to the legislature to steal money from poor people to fund the government; they went to steal money from middle class people and above and use it to buy votes from the poor with. The current developments don’t quite satisfy that agenda.

So between now and the end of the session we’re going to see a deal cut between the House and Senate leadership on sales taxes as the way to resolve the budget – on one side will be the Senate, which will be attempting to “clean” the current four pennies the state levies of exemptions, and on the other side will be the House, attempting to increase the already-passed hike to a number that would satisfy the midyear deficit and buy time to switch to budget restructuring and reform so that state government is of a size Louisiana’s tax base can afford.

And the tiger in the room will be the question of duration, because it’s questionable what the House would vote for that lasts much beyond 18 months. In this, as Jeff Sadow has noted, the House has an enormous amount of leverage since it’s the House which has to originate all revenue-raising measures.

Add to that a fresh demand from Gov. Edwards that the House double the earned income tax credit, which would make the budget deficit a good bit larger and is likely to blow up any consensus there might be on some sort of budget deal, and this situation could well collapse – which if it does will surely lead to fresh threats of death sentences for developmentally disabled kids and college football, as is Edwards’ standard modus operandi.

So there isn’t a great deal of reason for optimism that a good solution will be found for Louisiana’s budget problems in either the short term or the long.

And it’s all Stephen Waguespack’s fault, dontcha know.

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