Gov. Mike Foster spent the early days of last week in a political flanking maneuver.

With a number of state lawmakers expressing doubt about an administration-backed tax plan to extend temporary taxes for 10 years and eliminate portions of those taxes based on growth in the state's general fund, Foster chose to circumvent the Legislature and take his case to the public.

The governor paid for radio ads touting the tax plan he prefers. Questioned about the costs of the ads --each clearly states that the ads were not paid for with state tax money -- Foster wouldn't say how much he has spent so far, or how much he plans to spend. Those numbers will come out later, after he files a required report with the State Ethics Board.

He also called editorial boards of a number of newspapers and invited columnists to discuss the tax plan.

To some extent, this may be Foster's final campaign. Constitutionally prohibited from being re- elected as governor, Foster is politicking to get the tax plan passed, but he insists the effort is about more than just the money -- it's about changing the system.



The Times: Were you surprised by the reaction to the plan to renew the temporary taxes for 10 years and roll back the taxes based on general fund projections?

Foster: The truth is, there wasn't a plan out there. We were drifting into total chaos. Nobody had a plan, well, there were a few. Bless his heart, (State Rep. Vic) Stelly had a plan, but it was D.O.A. because the president of the Senate said he was never going to let anything like that go through the Senate.

I fought for that thing last time. At least it did away with this temporary (taxes) argument we have every year. That was the main reason. And, secondly, enough people had said that income tax swaps were good.

I don't have any hard-and-fast ideas on tax reform simply because you can get a hundred different theories on what is the best. One of the things people have talked about for years is wrestling with the tax on food and utilities. Our plan fixes that. It tackles the one area that PAR and CABL and all those people said we need to tackle which is the sales taxes on manufacturing equipment. A lot of other states do that.

The only reason we threw the third item in (restoration of the excess itemized deductions) is because that's the one that so many people from wealthy districts have a stroke over. Quite frankly, about a third of the Legislature represents that. What we were going into was a deal where that was going to trigger the (removal of part of the sales tax on food and utilities), and then we were really going to have a situation that was ugly. It would really do the state a lot of harm to have that kind of hole in the budget.

I guess what I'm saying is, it's been such a bad system that a lot of us have really had it with it and are willing to sit down and try to do it better. That's the idea that those of us who are tired with the system have come up with -- a system whereby we took the temporary stuff and kept it on the books just long enough to get rid of it. It wasn't a fake plan, because it would have worked over the last 10 years, and our predictions show that it should happen in the future. The economist predict that. And, it doesn't stick us with a huge tax bust in the middle of a bad year, like a 9-11 year.

The Times: If you're confident in the financial projections, why shouldn't the state roll back the taxes on an annual schedule?

Foster: Because then you do exactly what you don't want to do. Then you set yourself up for instability. If we do (roll back the taxes) in the years that are decent, then the system will work. But if you have that to deal with in a bad year, then the Legislature, what are they going to do. They're going to say, "Well, we shouldn't do that," and then they will suspend again, and we'll be right back in the basket. It is a safety valve to make the system work and to make it stable.

The Times: Why shouldn't the Legislature just renew decreasing portions of the temporary taxes over the next few years? Couldn't you achieve the same thing with policy?

Foster: Not very easily without coming back in with the instability that's built in and coming over here with the whole big $600 million on the table. Everybody knows we can't do that, and you can't play Russian Roulette with it. You see how little planning goes into this.

The Times: What happens if the Legislature rejects the tax plan and instead renews 3 of the 4 cents on food and utilities and doesn't renew the suspension of half of the excess itemized deduction?

Foster: That's a good question. I don't know what I'll do. If I want to do something that's right for the state, I should probably veto the budget and call us back into session and do something that's responsible.

Why in the world, in a state that's finally beginning to make some progress, finally one of the seven states in the union that doesn't have major fiscal problems, why should we, why, why in God's name should a governor ratify doing something that's fiscally irresponsible? Really, it is fiscally irresponsible for me to ratify something like that.

The Times: Obviously this tax plan … some have even called it tax reform … is a high priority of this administration. Why now instead of two years ago, or four years ago?

Foster: That's a very good question. It's because I never had the solid backing of the leadership. Now, I've got the backing of the speaker (House Speaker Charlie DeWitt), the two money chairman (House Appropriations Committee Chairman Jerry Luke LeBlanc, House Ways and Means Committee Chairman Bryant Hammett) I've got the backing of the Senate president (John Hainkel). I think even Sen. (Jay) Dardenne has agreed we need to do something with the temporary taxes.

Because I've gotten solid leadership behind (me), this leads me to believe we can do it, that's why. It really will make me sad if we fail. I am dead serious when I tell you, if we took some people who understood government and economics and said, "Design a system that will cause chaos for our state," you couldn't design a worse system. I'm serious. Why in the world do we allow ourselves to be put through this. Nobody I know thinks this is a system worthy of continuing.

The Times: Does this tax plan address that problem on a long- term basis? How does this prevent the House Ways and Means Committee from waiting to pass tax bills until the House Appropriations Committee passes a budget, and with the appropriations committee waiting on the ways and means committee at the same time? It's a gamesmanship thing with each waiting on the other.

Foster: I'll tell you why. Because, think about this: This year, in order to cause chaos, any one-third in any combination, simply by inaction, can cause chaos. They don't have to do anything affirmative. They just sit there and do nothing, and you have chaos.

In the system we're proposing, you'd have to come in and take a tax off, which a governor could veto and it would take a two-thirds vote to override. That's not likely to happen. The problem is with the system we have, you can cause chaos with inaction instead of doing something affirmative.

The Times: Two years ago, after the original "Stelly Plan" failed, you made a comment about seeing a financial "Armageddon" on the horizon. Have we reached that point now?

Foster: It's close every year we have like this. Every year we have is close to a fiscal Armageddon.

We have a very interesting situation. We have people from very wealthy districts who are worried about very wealthy people. They say, "Well, my constituents want to do away with the income tax," they want to reinstate the deductions. That automatically triggers the other end of the spectrum, which says, "If we're going to do that for the rich folks, we're sure as heck going to give a penny to our people. In my book, that's Armageddon.

I'll try, but I frankly don't have any concept of where we'll find that money, plus we're $40 million, $50 million or $100 million short anyway. The only reason I've been able to prevent it is that I have a good relationship with the leadership, good relationship with the Legislature. They've done the responsible thing.

A good example is, not only do we not have Armageddon, but we're one of seven states with stabil ity. Can I tell you how disruptive it is to put yourself in a box where at mid-term, you have to go to college faculty, cut their salaries, go to the universities and say you have to cut half your programs. That is horrible, and we did that for years and didn't bat an eye.

We're always on the edge of that Armageddon. We wouldn't be. In a stable situation, whereby we had to do something affirmative -- and we would have a chance to do affirmative things, because we wouldn't have the Sword of Damocles hanging over us, with people saying, "I'm going to do this, and I don't care (what happens)."

The people that are threatening these things are really irresponsible from the standpoint that they really don't care what happens to the state. They haven't indicated to me that they care. It only takes a few of them.

The Times: By trying the Stelly plan, as it was set last time to raise an additional $206 million, did we basically poison the water for something like that to work this time, but with it being a revenue-neutral tax swap?

Foster: I don't think so. I've been around too long, and I'm going to tell you people do not like income taxes. You run a poll and you say you're going to be required to pay one of two taxes, income taxes or sales taxes, it will be 3-to-1 for the sales tax every time. Don't ask me why.

The Times: So the water was poisoned already?

Foster: It's not poisoned. It's just the way people think. I used to, and I still do, ask people about what they think, and I would ask that question over and over, and it's always been that way. People are just offended by having to dig in their pocketbooks and pay part of what they make. They're not offended by someone taking a little part of what they spend. It's a psychological thing.

The reason I fought so hard for the Stelly plan -- quite frankly I didn't feel that strongly; I'm not one who believes that's the cure-all for our tax system -- it's safe because it grows. Stelly points out that if we were more dependent on income taxes, it would be growing and helping us keep a stable budget, but do you really want government to grow?

That's another thing. Our plan will keep government under real tight restrictions. We've proposed a plan that will control the growth of government. I fought so hard for the Stelly plan because I wanted to get away from this craziness, this foolishness of coming over here and fighting this temporary thing.

The Times: You took a couple of swipes at your "friends in business" during your opening address. Is this administration's relationship with the Louisiana Association of Business and Industry irreparable?

Foster: I doubt it. I'm sort of like the man married to a woman. I'm a business person. I'm always going to be a business person. Let me tell you the problem I have. Think about their proposal. They propose a huge cut in the budget under the auspices that it's going to do something good and bring people in. Guess what I found out? I though it was going to help 3 percent of the businesses. You know how many businesses it's going to help? 0.3 percent.

It'll give a tax break to some of the big multi-nationals and a few small businesses that happen to be trapped in C-corporations. We just couldn't afford it. They did it under the guise that it's going to do some economic development, but it won't. It'll help Wal-Mart, Exxon and maybe a few of the big ones.

The franchise tax will gradually end up sliding away, because people are not going to stay in C-corporations. They're going to find ways out of them, and they're already doing that. It just made no sense to help 0.3 percent of the big businesses and put a huge hole in the budget.

The second part of the plan, which is even more irresponsible, is they came up with an idea -- and I can't blame them for trying, except that it's irresponsible and they shouldn't be doing things that are irresponsible -- is they said let's give a tax break to any purchase any business makes. They ran the numbers on that, and that was worth close to $600 million. Every small business, bless their soul, charges off everything from their automobiles, their computers, some of them their hunting camps. No state in the union does that, fortunately, so we're proposing something that's competitive. Let's give aIntermediate string overflow Cannot justify line break to the manufacturers.

Their plan was so selfish and so poorly thought out, that it just really upset me.

The Times: In the wake of a special session in which the state committed millions of dollars in tax money and tax breaks to keep the Saints and lure the Hornets, wouldn't any $500 million tax renewal plan have a public perception problem?

Foster: That concept was as hard for people to understand as the one I'm dealing with on the suspension of these exemptions.

I've had this discussion with legislators. They've said, "My people don't want to do that." And I said, "Don't want to do what?" And they said, "They don't want to give money to these sports teams to help keep them here." I said, "Suppose we ask your people, for every $1 we put out, we get $10 back, how would they think about that?" Well, they'd like that, and that's the way it is.

The only money we gave the Hornets was $1.5 million to help them move, and the hotel-motel tax is going to pay it off. Other than that, we're building out the arena, which we've always intended to do once we got an NBA team, and it's going to be a real economic engine.

The Saints, really and truly, they bring the Superbowl and huge amounts of money. But the majority of what we were doing is OKing hotel-motel money.

Actually, I've got to give the New Orleans legislators credit … they gave up their slush fund (from the hotel-motel taxes), which they should have never have had.