Shreveport Times: Keep Stelly Plan?

Tax topic #1 for Louisiana lawmakers so far this year has been whether or not to repeal the "Stelly tax plan," which cut sales taxes and hiked income taxes back in 2002. Today the editorial board at the Shreveport Times says it exactly right:

A massive overhaul of that favorite whipping boy, the Stelly Plan, is a step backward. It properly shifted the state away from a dependence on regressive sales taxes on food and utilities, "temporary" taxes that made Wall Street bond analysts nervous, and shifted the burden to a less regressive income tax.

But the Times also understands why lawmakers are nervous about defending the Stelly plan:

But couple that with a tax bracket shift and the loss in the ability to make deductions in home mortgage payments and medical expenses and many- middle and-upper income taxpayers soon began crying foul.

Paying for the Stelly sales tax cuts with a hike in another tax was the responsible thing to do-- and hiking the income tax in a way that eliminated special tax breaks made the tax system fairer in a number of ways. The burden should be on advocates of Stelly-plan repeal to explain why bringing back these long-dead tax breaks is actually good policy.

In parting, the Times suggests if Stelly repeal is in the cards, lawmakers should follow their M.O. from years past, when they've made tax hikes temporary, by making any income tax cuts temporary and contingent on economic growth:

Just as lawmakers were content for years to rely on a system of temporary sales taxes to prop up the state budget, perhaps those dead set on tax breaks would consider putting sunset provisions on tax changes as a hedge against the bottom falling out of state revenues.

This also seems right on: nothing is certain in Louisiana revenue forecasting. The state's dependence on oil revenues means that the difference between revenue boom and revenue boost can be a small one. Lawmakers should be mindful of this as they decide the fate of the Stelly reforms.