Asleep at the wheel on tax credit wreck

By John Maginnis
Despite that he often engages in an adversarial relationship with reporters and bloggers, Gov. Bobby Jindal owes a debt of gratitude to Greg Hilburn of the Monroe News Star and his severest cyber critic, C.B. Forgotston.

hile Jindal was serenely signing and vetoing the last of the bills passed by the Legislature, Hilburn broke a story revealing a little-noticed Department of Revenue declaration of a tax credit up to $3,000 for the purchase of any of 112 makes of vehicles, going back to 2009. The story quoted House Appropriations Chairman Jim Fannin, who estimated a budget hit of $100 million, saying, "It could wreck us."

Forgotston followed up by e-mailing the story to his subscriber list, including media and politicians, under the screeching headline, "Idiots run our state!"

That might have helped to get the governor’s attention, who, by sundown, had sent Revenue Secretary Cynthia Bridges a letter rejecting her emergency declaration of April 30. The next day he accepted her resignation. In her place, Jindal appointed Deputy Secretary Jane Smith as interim, who--the ironies pile up--as a state representative in 2009, sponsored the legislation on which Bridges based her declaration.

Smith, who was "shocked" that her former boss had not informed the governor of the action, said the alternative fuel tax credit in Act 469 was meant for consumers who would convert their cars to run on compressed natural gas. "Flex fuel vehicles were never even discussed, testified about, mentioned," Smith said. True, the words "flex fuel" were not in her bill, but "ethanol" was, along with "methanol," "biofuel" and "electricity" as qualifying alternative fuels.

Three years later, in the administrative rule-making process, Bridges applied the tax credit to cars and trucks capable of burning ethanol, even if drivers fill up on gasoline instead. She also included all qualified purchases going back to when the law was signed in 2009. (I am no economist but it seems to defeat the purpose of a tax incentive to apply it retroactively.)

Because he was not told, the governor was unaware of the declaration’s impact, according to his press office. Others around him were not so in the dark. "This could have a devastating impact on the budget," said Senate President John Alario, a tax preparer by trade, who was already amending clients’ returns to get their money. When Fannin learned about it during the session, he alerted not the governor but his accountant, who filed for credits on two vehicles Fannin bought in 2010. Sen. Francis Thompson also sniffed out the deal and called Commissioner of Administration Paul Rainwater to discuss it. "It’s absurd," said the Delhi Democrat, after filing to get his own $3,000 back.

If he hasn’t already, Governor Jindal should learn what his inner circle knew and when they knew it. The farce of an administration not knowing what the administration is doing with $100 million brings to mind the governor’s favorite slam on his opponents’ proposals: This is the Washington, D.C., way of doing things.

Once clued in, the governor’s quick rejection of the six-week-old declaration might control the damage to a fender bender. How much worse would it have been, without the clarion calls of Hilburn and Forgotston, for Jindal to awake next Saturday to banner-and-balloons car ads screaming: "Giant State Tax Giveaway Sale"?

But he is not clear of his wreck yet, given the potential political pile-up. His interim revenue secretary has said the state will honor all credits granted so far. Does that cover all those sent in prior to Thursday? Also, the governor’s rejection letter did not address former Secretary Bridges’ policy statement. Rather, he wrote that the declaration failed to give the facts that constitute an emergency. Interim Secretary Smith now has to write a new rule that undoes the reasoning of her predecessor and rescinds a credit that car-buying taxpayers were starting to line up for.

The moral of this story--Team Jindal can see this coming--is that perhaps our governor, instead of jetting about the country to raise money for Republican candidates and to promote himself, might spend more time around the Capitol, where he could pick up on what’s going on, the way Francis Thompson does. At any rate, he should get something nice for Hilburn and Forgotston, like a gift card, perhaps, for gasoline.