Sparring over borrowing mirrors shifting political fortunes

Perhaps notable out of the conflict over the fate of HB 157 was the political maneuvering for future power in the state.

This idea behind the bill originally in part would have allowed the state to borrow in the short-term to fund continuing operations of both state and local governments. By the time it reached bill form, it was only to provide loans to local governments for debt, capital improvements, and business. By the time the House Appropriations Committee finished with it, this looked to be its final resting place.

While opponents had various concerns about it, it seemed that they coalesced behind the arguments made by Treasurer John Kennedy, who after the meeting disputed the Gov. Kathleen Blanco-backed measure at several turns. For example, when Commissioner of Administration Jerry Luke LeBlanc contended the state lending this money out would not really affect its credit rating negatively, Kennedy insisted that it would.

Kennedy also raised the very salient point that other lending mechanisms that would not put the state on the hook may soon become available. Indeed, Rep. Richard Baker’s Louisiana Recovery Corporation Act, H.R. 4100, is set to be debated in committee tomorrow which, if capitalized, could do anything that’s in HB 157 and much more. As others of the committee noted, the January special session might be a better time to consider this measure after the financial landscape has become clearer.

Since the disasters happened, Kennedy has been a consistent voice for fiscal prudence, often against the will of Blanco, who has wanted to borrow and dip much farther into the Budget Stabilization Fund than the law presently allows. Kennedy has argued that if any borrowing is to occur it should be against the assets in the Fund.

As Blanco’s popularity continues to decrease (even leftist Time magazine, while lauding other big-spending liberal governors, has piled on Blanco), Kennedy by the expression of these sentiments looks increasingly attractive as a post-disaster governor. At the same time, Blanco’s inability to get passed her own legislation using her own leaders again brings into question whether she has the power and leadership to address the aftermath of the disasters.