The Independent Weekly - The Populist
North Louisiana Democrat Foster Campbell is running for governor on a controversial oil tax plan touted as a panacea for some of the state's most serious issues. Will it sell?
By Nathan Stubbs | 8/29/2007
In 1977, then-Louisiana State Sen. Foster Campbell of Bossier Parish was the sole vote in the Senate against deregulating the rural electric co-operatives. After co-op electric rates skyrocketed following deregulation, Campbell successfully waged a three-year campaign to return to regulation.
Dressed in a rare suit and tie for a campaign stop, Foster Campbell, cell phone pressed to his ear, paces the floor. Pulling back on a tall white curtain, he peers into the nearby parking lot to survey the cars pulling in. Bright sunlight pours into the room, glaring off the gold-framed portraits of oil barons that stare out over the dining hall.
A North Louisiana Democrat running for governor on a controversial plan to institute a new oil processing tax, Campbell is far from his home turf here at the Lafayette Petroleum Club. Speaking before the Republican-heavy International Association of Drilling Contractors, he probably won't be picking up many votes either.
"This is the lion's den," he says with a grin. Nevertheless, Campbell the only gubernatorial candidate to accept the IADC's invitation to the luncheon relishes the opportunity to have the floor to himself.
"This is what I'd call a second primary audience," notes John Bernhardt, Campbell's regional campaign director and one of a few state oil producers openly supporting his candidacy. "This isn't our core support base. But for Foster to get elected, these people need to quietly be saying, Wait a minute, this does makes sense, and this might actually be good for me and my business.'"
While restless, Campbell isn't nervous. "This will be good," he says. "They need to hear this."
Campbell's headstrong approach comes from years of fighting unsuccessfully for an issue that has been a hot topic in the state Legislature for decades: taxing the vast amounts of oil and gas that passes through the state's pipelines and refineries from foreign and offshore production. Currently, the state only receives excise tax revenue from oil and gas drilled within the state and its coastal waters. Rather than only taxing that oil and gas as it is produced, Campbell advocates instituting a "processing fee," where all oil and gas foreign and domestic is taxed equally at the state's refineries.
According to Campbell, Louisiana stands to gain approximately $6 billion a year from the proposal enough to eliminate the state's income taxes and have nearly $2 billion per year left for discretionary spending money he would use to fund the state's highway backlog, repair the eroding coastline and fund education initiatives. Campbell is always quick to point out the huge lift the state's economy will get from doing away with income taxes.
"We've never had a tax cut like this in the history of Louisiana. Imagine everybody walking down the street gets a pay raise," Campbell says, snapping his fingers. "What are you going to do with yours? Spend it, probably; working people will spend it. This is going to be an economic boon like we've never seen. It is a huge infusion of cash, and it simply rearranges the way we tax. This is something that has to be done."
Restructuring the state's oil and gas tax has been attempted before; former Govs. Edwin Edwards and Dave Treen both tried unsuccessfully to push their own severance tax reform initiatives. The current tax system has been in place since 1921, when the majority of Louisiana's oil and gas was produced in-state.
Campbell became an advocate for a processing tax after Bob Pugh, a constitutional attorney from Shreveport who has worked for the state, approached him with the idea. "He told me he knew I wouldn't give up [fighting for it]," Campbell says.
In his years of pushing the issue as a state senator, Campbell says he realized it would never happen without the strong backing of the governor.
"This ain't no little deal here, you know what I'm saying? We buckin' some big folks. You gotta have a governor that's going to call these [legislators] in and say I'm for this, you understand.' That's what it's going to take to do it."
The processing tax has numerous skeptics, including all of Campbell's opponents in the gubernatorial election, as well as powerful state lobbies such as the Louisiana Association of Business and Industry and the Louisiana Oil and Gas Association.
"[Campbell]'s been running with this bill every year for the last 15 years," says Don Briggs, president of LOGA and a steadfast opponent of Campbell's tax plan. "It sounds good. I think he's using it as a political tool. It's a platform. It's definitely a very populist concept." Briggs recently brought together a group of oil refinery executives as well as Bob Bowman, former head of LSU's Center for Energy Studies, to discuss the effect of a state processing tax on oil and gas. Briggs says it will likely do two things: increase gas prices in the state and decrease the amount that Louisiana refineries will pay for crude oil. As a result, more and more oil and gas will go across the border to Texas refineries.
"A lot of people don't understand it because it is a huge, complex issue," Briggs says. "When that oil comes in and it's got this tax on it, the refiners, big oil, are going to pass it back to the consumer. It's going to be expensive."
Campbell wastes little time in dismissing LABI and LOGA as beholden to the chemical industry and major oil companies like Exxon and Chevron. "Don Briggs is sold out," says Campbell. He says his proposal will help local oil and gas producers and hopes they get behind him, despite opposition from major oil producers.
"Average people on the street, that's who I'm pitching to," he says. "Just the everyday guy, going to work. We're trying to sell him something different.
"As far as going down and talking to the Committee of 100," Campbell continues, "lined up with all the Dow Chemical guys, I could waste all the time I want to waste there and never change their mind. My time is going to be in the street seeing people."
Campbell has little doubt the message will sell. In February, he hired Florida pollster Jim Kitchens, who interviewed a random sampling of 600 Louisiana residents on the following question: "When oil comes out of the ground in Louisiana, the landowner pays a twelve and a half percent tax to the state. But, when oil is brought to Louisiana refineries from foreign countries or the Gulf of Mexico, no user fee is paid to Louisiana. Would you support or oppose Louisiana charging a processing user fee on foreign oil?"
The poll showed an overwhelming 76 percent supported the idea, with only 17 percent of state residents opposed. (Margin of error for the poll was 4 percent.) Next week Campbell will begin airing his first TV ads, hoping to make the oil tax debate a central issue in the governor's race.
"As time's gone on, this has gotten a lot less opposition, because people realize now, hey, it's the right thing to do," says Campbell. "I mean you can't argue against it, and if you do, well, what oil company are you representing?"
"It's the right time," he adds. "Everybody knows it. That's why the oil companies are as scared as they are. There's no question about it, had it not been for Katrina, this wouldn't be possible. People now are ready for some real action. In the past, they were sort of lulled to sleep. This has always been able to get killed in the Legislature, and nobody really knew about it. This is on the table now. This is a viable alternative today, and that's why I am running for governor. I want this discussion, this debate to happen in this state. It's too big to leave it back. Let's get it over with once and for all."
For a candidate who has recently polled in single digits and still trails far behind his rivals in fund raising, Campbell and his camp are contagiously optimistic about their odds.
A 27-year veteran of the state Legislature now in his fifth year on the Public Service Commission, Campbell has been actively campaigning for governor since last Thanksgiving, and made his official announcement in March. "We haven't spent much money," Campbell says. "But just to drive around you spend a lot of money. Burning a tank of gas a day, you spend a lot of money. Seriously, we've put 40,000 miles on the car."
The campaign has largely flown under the radar, doing the type of retail politics Campbell relishes. His two GMC Yukons, emblazoned with bright red decals with Foster Campbell printed in white block letters, trek out to some of the more remote corners of the state. Campbell is an insurance salesman and cattle rancher by trade, and shakes hands on the street and stumps at hunting clubs, cow auctions and any other venue where he can find an audience. "Foster loves politicking at the auctions," says campaign aide Bill Robertson. "Those are his people."
Campbell grew up poor, in the small rural town of Minden, near Shreveport. His dad ran a local gas station, and Campbell began working there while still in the fourth grade. He pumped gas, checked customers' oil, wiped their windshields and swept out their cars. "That was way before self-serve," says Campbell. "Gas was 26 cents a gallon."
Campbell was also a public school teacher and an agricultural supplies salesman; poverty and education have always been important issues for him. (He was recently endorsed by the Louisiana Association of Educators.) In the state Senate, he worked to raise grade point average requirements for high school athletes and helped establish the Bossier Educational Excellence Fund, a $1 million trust for schools in Bossier Parish, using Louisiana Downs racetrack revenue. BEEF later served as a model for Campbell in establishing the statewide trust for public schools with $1 billion from Louisiana's tobacco settlement.
More recently as public service commissioner, Campbell was influential in passing the "Do Not Call" program to protect residents from receiving unwanted sales calls at home and working to bring reliable telephone service to Mink and Shaw, the last rural communities in the state to receive phone lines.
Those accomplishments hold special resonance for Campbell, considering that his career was almost cut short. After losing his first bid for Congress at the age of 32 to Buddy Roemer, Campbell ran again for the seat in 1988. Leading in the polls going into the final month of the campaign, Campbell was seriously injured in a car crash weeks before the runoff election. The accident left him blind in his right eye, and he narrowly lost the seat to current 4th District Congressman Jim McCrery.
Since the crash, Campbell takes nothing for granted. Full of vigor, with neatly parted silver hair, thin framed glasses and a deep North Louisiana accent, Campbell is always animated on the campaign trail. Between stops, he takes short power naps in the car to stay fresh. At functions, he puts forth a conscious effort to speak in a calm, matter-of-fact manner that conveys a veterans' assurance.
While independently wealthy Campbell owns two insurance agencies and his own cattle ranch he frequently evokes the plight of poor rural towns, where he sees jobs and economic development at a standstill. "Y'all are doing good in Lafayette," Campbell says. "But there's some parts of the state that aren't doing so good. I want to do something for people in Haynesville and Bastrop and Breaux Bridge."
As a north Louisiana public service commissioner making his bid for governor on a populist pitch to tax big oil and alleviate poverty, comparisons to Huey Long have been unavoidable for Campbell. Campbell even sounds much like Long in some of his speeches. Seventy years after the Kingfish, the answer to why oil companies won't leave Louisiana after a new tax on big oil is still the same: "They can't move the Mississippi," Campbell says. "They can't leave with 40,000 miles of pipeline. They're here." Campbell says he isn't trying to emulate anyone but adds that Long did a lot of great things for Louisiana. "And they still talk about him every day," Campbell says. "You know what I mean? They talk about him more than any other governor."
Like Long and former President Harry Truman, whom Campbell cites as his biggest political hero, Campbell thrives on giving people the kind of straight talk that is a rarity in contemporary politics.
"I know this is tough talk to take," Campbell tells one office group he speaks to in Judice. "But when we're behind Mississippi and Arkansas we need some tough talk. Tell me what's in Arkansas besides Wal-Mart and Tyson's chicken?" Campbell asks his audience. "Nothing. We have squandered our natural resources. This great state cannot be behind Mississippi and Arkansas."
Campbell often tones down his stump speeches when he's in a more conservative city like Lafayette. Gone are lines that tout his Democratic Party loyalty ("I didn't vote for George W. Bush, or his daddy") and rural roots ("I doubt Mr. Jindal knows the difference between corn and cotton").
When asked to cite some of the differences between him and Jindal, Campbell says, "I understand rural people and agriculture. He has no idea what's going on in rural communities and agriculture. I work with black people very well. I don't think that he has a lot of communication with the black community."
Campbell's central oil-and-gas tax platform has many Democrats divided on backing him. One concern is whether Campbell's plans are practical. When Gov. Edwin Edwards passed the "First Use" tax, which taxed oil and gas imports while providing credits to local producers, the U.S. Supreme Court struck it down in 1981 for violating the U.S. Constitution's Commerce Clause, noting that the law favored "those who both own [offshore] gas and engage in Louisiana production." Campbell insists that his proposal is legal and constitutional because it taxes both foreign and domestic oil the same.
He says the tax may drive up national gas prices slightly, but it's fair because of the high cost Louisiana has endured in providing much of the nation's energy supply.
"It might raise gas prices some," he says. "But you know with all the hell we've had with Katrina and all of our coast being torn up, I don't know how many people would be against it. I really don't think it'd be that big a deal. If it goes up 4 or 5 cents a gallon, everybody across the country's going to have to pay a little bit more. So what, if it goes up 6 cents? We save our marsh, we save our wetlands. Those are not just Louisiana's wetlands, they're the country's wetlands."
Bill Backstrom, a tax attorney with the New Orleans firm Jones Walker who deals with many constitutional issues, says it's impossible to tell whether Campbell's processing tax would pass constitutional muster. "It would require a whole statutory scheme to literally set up the mechanism for imposing and levying and collecting the tax," he says. "And that's what one would have to analyze in depth to determine if it was legal according to the state constitution and the U.S. Constitution."
There's little doubt in Backstrom's mind that such a bill would wind up in the courts, and that it could take years before a final ruling. He says it's also important not to overlook the fact that this type of tax would require a constitutional amendment which would first have to be ratified by the state Legislature, then a statewide vote of the people. "You've got to add that to your timeline," Backstrom says, "and to the struggles that anybody that tries to do this will face."
Campbell typically dismisses any concerns that his campaign's central platform could fail. But if did, does he have a plan B?
"Plan B would be about like what Mr. Boasso and Mr. Jindal have nothing," Campbell says sarcastically. "I mean, they don't say anything that they're doing." As he expounds further, another Campbell trait surfaces: the journey into occasionally perplexing quotes reminiscent of Yogi Berra. "I'd fix the ports; we'll take the money we've got and manage the best we can. That's plan B. Shine your shoes and get a haircut. You know what I mean? Don't cut anything, you know. So, yeah there's Plan B. Plan B is what we've been doing for the last 20 years."
Campbell's campaign has also raised questions over whether a populist message will still work in the current political climate. "Foster's message is a good populist message," says one Democratic state senator who wished to remain anonymous due to multiple ties to gubernatorial candidates. "But I just don't think the state is populist anymore. I mean we still have the same economic woes that we've always had, but people don't want to be told they're poor anymore. And I think that populist message let's blame somebody else to fix our problems I think people in Louisiana, rightfully or wrongfully, don't listen to that as much anymore."
Among those firmly in Campbell's camp, there's no question his plan should resonate more with the common man than anything else being discussed in this year's governor's race.
"[Campbell]'s kind of rough around the edges," says Opelousas Mayor Don Cravins, a longtime friend of Campbell's from the state Senate. "But you can't underestimate him. His message is much different. I think he has the message that is much more in tune with the average Louisianian than a Bobby Jindal or a Walter Boasso. If that's populist, I think it's practical, and I think it makes good sense.
"Foster may have an uphill battle in that he is the least funded," Cravins adds. "He's got to get his message out. He has to make his push now to see if indeed his campaign can get the kind of traction it needs so that people can see that we do have an alternative in this race that's not the same old soup. That's going to be the real test and the real challenge."