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APNewsBreak: Jindal adviser told about credit rule

Associated Press Modified: July 6, 2012 at 5:30 pm •  Published: July 6, 2012
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BATON ROUGE, La. (AP) — A top official in the Jindal administration was notified shortly after the Louisiana revenue department issued a controversial ruling that expanded an alternative fuel vehicle tax credit, a ruling that was later rescinded by the governor as complaints raged that it could devastate the state budget.

A spokesman for Gov. Bobby Jindal has said the governor didn't know of the tax credit expansion until mid-June. But a review of internal Department of Revenue e-mails by The Associated Press shows Jindal adviser Scott Angelle was told by one of his employees about the rule governing the alternative fuel tax credit — which greatly expanded the list of eligible vehicles — on May 1, the day after it was issued by the agency.

The e-mails, provided in response to a public records request, show that the true cost of the credit expansion is not yet known and imply that then-Revenue Secretary Cynthia Bridges may have been pushed out of her job because of the contentious issue.

Jindal scrapped the rule June 14. Bridges abruptly resigned the next day with no explanation.

An e-mail by interim Revenue Secretary Jane Smith suggests Bridges' leaving was tied to the vehicle tax credit and claims Bridges didn't notify the governor and his staff about the rule.

"I am so sad for Cynthia. I left her a message. I had no idea that the governor and staff had not been informed. I can't figure that out," Smith wrote to Carl Reilly, a division director in the revenue department, in a series of back-and-forth e-mails June 15 and 16 about the alternative fuel tax credit.

Angelle, the governor's natural resources secretary and chief legislative lobbyist, was on a May 1 e-mail list with three others, including an official with General Motors and a lobbyist at the Louisiana Capitol, giving them the link to the regulations governing the Alternative Fuel Tax Credit.

"I am passing this information along since I'm aware of your keen interest in the matter," Isaac Jackson, Angelle's general counsel at the natural resources department, wrote in the e-mail, which was then forwarded to a revenue department employee.

In a statement issued through a spokesman, Angelle said he doesn't remember receiving or reading the e-mail.

"I wasn't aware of any previous correspondence. I first became aware of the emergency rule on June 14 when notified by a legislator," he said.

The revenue department declaration expanded the list of qualifying vehicles for the tax credit. Lawmakers who learned of the credit expansion worried it could become a budget-buster, costing the cash-strapped state millions of dollars more than projected for the tax break passed in 2009.

Jindal's office said the rule was rescinded because the law governing issuance of an emergency rule was not followed.

A June 14 e-mail from Angelle also talks of the legislative worries about the financial impacts of the expanded list of vehicles and asks for further details, referring to a conversation he had with House Appropriations Chairman Jim Fannin.

"I just heard from chairman fannin and he expressed concern about tax credits being allowed for 'alternative fuel' vehicles other than natural gas and electric ... He is concerned of the impact this will have on fisc and believes it is not consistent with the legislature's intent. Can you provide any info?" he wrote to Bridges.

That same day, Jindal rescinded the emergency rule.

The tax break, approved by lawmakers in 2009, was designed as an incentive for buying "clean-burning" vehicles or converting cars and trucks to lessen the reliance on gasoline and diesel and encourage alternative fuels, like compressed natural gas and ethanol. Smith, the interim revenue secretary, sponsored the tax break three years ago when she was in the Legislature.

The tax credit can be 10 percent of the cost of vehicle or $3,000, whichever is less.

The regulations approved by Bridges swept in new "flex fuel" cars and trucks with the ability to burn ethanol.

Before the emergency regulations were issued, hundreds of pages of e-mails detail continued confusion and questions by accountants about what vehicles were eligible for the tax break and different interpretations among revenue department staff about whether flex fuel cars and trucks were included in that list.

The revenue department had said $1.1 million in claims had been filed between April 30 and June 14, when the expanded list was in effect. It wasn't clear how many credits involved car and truck models from the expanded list.

E-mails between tax research analyst Michelle Galland and tax director Dawn Bankston suggest the real cost of the credits tied to the now-rescinded rule could be much larger.

Bankston wrote that the number of credits claimed during the emergency rule period "looked too low to me." Galland replied that Bankston was correct, that the numbers given to the media were returns "posted" by June 18, while others filed during the emergency rule period were still pending.

Bankston did a preliminary review of alternative fuel credits pending on June 21 and said nearly $6 million were likely tied to the "flex fuel" vehicles included in the expanded credit list from the emergency rule.

Even without the expansion, the tax break has been far more lucrative for car and truck buyers than projected. A financial analysis of the bill estimated a cost of less than $1 million for the first five years, through the 2013-14 budget year. More than $18 million in credits have been claimed, however.

Rules governing the tax break program are being rewritten, according to the revenue department. Some lawmakers have said they'll push to tweak the law, to limit its scope.