Bad Times on the Bayou : State’s Gov. Roemer Tilts at Tax Limits of Huey Long’s Day

The 34-story Louisiana Capitol casts a long shadow over the white marble statue of Huey Long, but these days, it seems that Long is casting the shadow.

“An unconquered friend of the poor,” reads the inscription on Long’s tomb next to the statue, “who dreamed of the day when the wealth of the land would be spread among the people.”

The populist ideas of “the Kingfish,” who governed from 1928 until 1932, remain embedded in the state’s fiscal structure: Spread the wealth; protect the poor.

Homeowners have a $75,000 property tax exemption, so the average residential property is tax free. Automobile license plates are $3 a year. Cities can’t raise taxes without voter approval, so businesses, through taxes and fees, bear much of the cost of public services.

This system that Huey Long helped to build is crippling the state now, economists say. Without the oil profits windfall, state and local budgets can’t be balanced. Schools and hospitals are suffering. The unemployment rate has soared and new business is discouraged by the tax structure.

Reversal of Benefits

“It’s ironic. What is supposed to be good for the people now acts to their detriment,” University of New Orleans economist Tim Ryan said.

Eugene Schreiber, director of New Orleans’ World Trade Center, added: “We’ve got to change. We cannot do business in the old ways. . . . Painful as it is, it’s forced us to wake up.”

But it’s a rude awakening for the land of “The Big Easy,” as New Orleans is called.

After a string of legislative victories and a fierce round of budget cutting and borrowing, Gov. Buddy Roemer’s initial attempt at overhauling the tax structure failed in the state House.

The Harvard-educated conservative Democrat has, in his own words, “poked every bear in the forest” to incite a fiscal revolution in Louisiana.

He won education reform, campaign finance reform, tort reform, workers’ compensation reform, even unemployment insurance reform--but when it came to fiscal reform, when it came to dismantling the last vestiges of the populist past, Roemer lost.

Can’t a family’s home be the one thing that’s not taxed, Roemer’s opponents asked.

‘Break From Tradition’

“I believe in paying our own way. That is a break from Louisiana tradition,” Roemer said. “It doesn’t come easy.”

Along the way, Roemer is making plenty of political enemies, from populists to labor unions to teachers. Polls have shown that public opinion of him is divided.

The question remains: What happens if the maverick governor can’t pull off his revolution?

“It would be more of the same. We’d be a slave to Saudi Arabia . . . a wasteland, a welfare state,” Roemer said. He said that people with the means to move away would do so.

Politicians, he said, “are beginning to realize that.”

Louisiana is struggling to climb out of a depression that began when the price of oil fell by more than half in 1984 and 1985. Tens of thousands of jobs were lost and many businesses and workers left the state.

Taxes on oil--which used to account for 40% of the Louisiana state budget--plummeted and the state, long known for its big-spending ways, hadn’t put anything aside. It hadn’t spent much on developing a strong economic base. In fact, it hadn’t had a balanced budget in the 1980s until Roemer took office a year ago this month --even though it has a balanced-budget law.

The state’s debt reached $2 billion.

State Missed Payroll

“We could not make the payroll the week after I took office,” Roemer said.

Now, state promoters, planners and business leaders all are talking about Louisiana’s recovery--with fiscal reform.

“When the price of oil was $40 a barrel, hardly anybody worried,” said Schreiber, the businessman who chaired a governor’s task force on labor.

“Having all these advantages made everyone in the state very lazy. Louisiana has not been competitive in business,” Schreiber said. “It’s only really now that the state is pulling its act together.”

The day after Roemer’s fiscal plan was defeated last October, two companies that had been considering Louisiana locations announced that they would build in Texas instead. Other businesses considering relocation or expansion in the Bayou State are holding off until they see if reform passes, said Louisiana’s chief of economic development, Connie Lewis.

Wall Street bond brokers set informal guidelines for what would be necessary to raise the state’s bond rating, currently just one notch above junk bonds. A low bond rating means the state must pay higher interest on its debt. Roemer has accomplished all but one change--that of fiscal reform--said his chief of staff, Steve Cochran.

“(Bond brokers) watch us very closely,” he said.

Battle Lines Forming

The battle probably will come this spring, when Roemer comes back to the Legislature with a plan. Last time, his package passed the state Senate but came up 10 votes short of the necessary two-thirds margin in the House.

The opposition focused on Roemer’s plan to cut the $75,000 homestead tax exemption. It was led by a county tax assessor, Lawrence Chehardy, who said Roemer was attempting to raise taxes and cripple the average homeowner.

“People in Louisiana read horror stories in other states where property taxes did go wild,” Chehardy said. “Government taxes everything. Can’t there be one thing in life a person can have without being taxed?”

Chehardy says lawmakers should cut the budget, and if there are any tax increases, taxpayers should get a chance to vote on them.

Roemer and his top aides insist that the budget has already been cut so much--by more than $500 million--that further reductions could cripple the state. Already, they worry about the declining quality of care at state-supported hospitals and whether cities can get by without the usual state funds.

Big Deficit Looms

The next fiscal year’s budget projects a deficit of $734 million. The total budget is $4.2 billion, but only $2.2 billion of it represents discretionary spending--money that isn’t tied to court orders or debt payments.

“Cutting that much ($734 million) would shut more and more hospitals, cut transportation money and higher education,” said Commissioner of Administration Dennis Stine. “That is, in my mind, shutting down government.”

Still, the early talk of next June’s budget is a revolutionary concept itself in Louisiana, a state that at times balanced its budget for only three-quarters of the year and hoped that oil prices would go up.