Letter in Shreveport Times
A recent article in the Shreveport Times criticized Governor Jindal and the legislature for cutting taxes in 2008. You can read the article by clicking here. The argument is a familiar one: Don't cut taxes when there is a surplus because the surplus will not last forever. And don't cut taxes when there is a deficit, because the state needs revenue. In other words, tax rates only move in one direction - up.
How Louisiana is supposed to compete with low tax states like Texas is something the AP reporter does not address. My response to the article was published in the Times yesterday and can be read below this message or by clicking here.
Of course the question of how to deal with the budget and make Louisiana more competitive cannot be answered in a letter to the editor. But it is important to point out that Gov. Jindal and the legislature have been presented with a unique opportunity to innovate. Fixing the tax code, reforming civil service and creating public partnerships with private industry will do more for the state in the long run than simply milking taxpayers.
Out of crisis comes opportunity. Post-Katrina New Orleans is home to one of the most significant public education reforms ever attempted. Our charter system may end up serving as a model for public school systems around the nation. Further, our charters may succeed in developing the educated, middle-class taxpayers this city desperately needs.
The failure of New Orleans public education should have been addressed years ago, but sometimes it requires disaster to make change politically viable. With that in mind, our policy makers in Baton Rouge should take advantage of the budget crisis and implement innovative, market-oriented solutions that make the state a more attractive place to live and work. We look forward to offering such solutions in 2009 (and beyond) and welcome your input and opinion along the way. Best wishes for the New Year!
Regards,
Kevin P. Kane
President
Pelican Institute for Public Policy
400 Poydras Street, 30th Floor
New Orleans, LA 70130
Office: 504-595-5183
Cell: 504-920-4727
Melinda Deslatte's analysis of the fiscal challenges facing Louisiana ("Budget Shortfalls Worsened by Tax Breaks") implies that Governor Jindal and the legislature were irresponsible in electing to cut taxes this year. While speculating on the impact of any given tax cut is fair game, Deslatte fails to appreciate the larger objective of tax reform: To create an environment that attracts the workers and businesses that are key to the future of this state.
We are all familiar with the exodus of businesses and taxpayers to states like Texas. If Louisiana is to stem and reverse this tide, we need policies that make this a more attractive place to live and do business. Eliminating a tax like Stelly gives middle class and upper middle class taxpayers one more reason to stay in Louisiana. One tax cut does not solve a complex problem decades in the making, but it does indicate that our political leadership understands the bigger picture.
Deslatte also fails to consider the impact of tax cuts on economic activity. If the government takes a smaller cut of your income, you have more to spend as you see fit. This spending generates increased revenue for the state. While we do not yet know how much revenue will be generated, Deslatte completely overlooks this crucial aspect of tax policy.
Finally, it is worth noting that allowing people to keep more of what they earn hardly constitutes a "giveaway". The challenges facing Gov. Jindal and the legislature are significant, but the taxpayers of Louisiana face challenges as well. Allowing people to keep more of what they earn is both just and sensible policy. Budget shortfalls come and go, but an intelligent, long-term approach to tax reform is necessary if Louisiana is to develop a more vibrant and diversified economy.
Kevin P. Kane
President
Pelican Institute for Public Policy
The Simplicity of Government Transparency
Governor Bobby Jindal’s short tenure in office has received extensive coverage from local and national media. And while several pieces of new legislation have garnered much attention, two important developments have gone largely unnoticed: Executive Order No. BJ 2008-2 and Senate Bill 37.
These new laws mandate the creation of a website where state spending will be posted and require increased transparency in state finances. Together, they signify that Louisiana is moving towards making all government spending information accessible via the internet.
By making its finances more transparent Louisiana will be joining a movement that is spreading across the nation. The federal government already has a website where its finances are posted. States including Texas, Missouri and Florida have all acted quickly to put their financial records online and many other states are in the process of doing the same.
Why is this so important? For one, our form of government requires an informed populace. But we are not fully informed if we don’t know where our tax dollars are being spent. Although some of this information is technically accessible, it is rarely presented in an understandable and user-friendly format. Now that we have the ability to create searchable, comprehensive websites we should insist on full disclosure.
In addition, making the financial operations of our government fully transparent will help to reduce the fraud and corruption that has so tarnished our state. Companies do not want to do business in Louisiana because of our reputation and as a result, many of Louisiana’s most talented people seek opportunity elsewhere.
Posting budgets and contracts on the web and creating virtual check registers would give anyone with internet access the ability to serve as a government watchdog. This would reduce fraud and waste while also demonstrating that Louisiana is committed to open and honest government.
We applaud Governor Jindal for moving in the right direction. But we can do more. For example, we should require every municipality, parish and school board to put its budget online. Those who pay the local government bills should also be able to see how their tax dollars are being spent. And the costs involved in creating these websites are surprisingly modest.
The Pelican Institute for Public Policy is committed to leading the effort for more transparency in government throughout Louisiana. In the coming months we will be educating legislators and officials, the media and the public on the merits of using the internet to achieve greater transparency. We will also help officials make use of innovative and efficient programs so they can create websites where spending information is disclosed in a useful and informative manner.
The old maxim that “sunlight is the best disinfectant” is particularly apt when it comes to government spending. Decades of fraud and waste have made Louisiana one of the worst places in the country to do business. If our state is going to prosper our government must allow its dealings to be seen by one and all. Governor Jindal appears to understand this – now it is time to find out who else shares this commitment to open and accountable government.
Kevin Kane is the president of the Pelican Institute for Public Policy, a think tank based in New Orleans. He can be reached at kkane@pelicaninstitute.org.
