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27.11.06

Change law to prevent fund hijacking for boondoggles

The madness must stop: since Louisiana Agriculture and Forestry Commissioner Bob Odom continues to use taxpayer dollars on dubious deals, it’s time to cut off the mother’s milk around which Odom bases his political career, money.

In addition to the questionable prospects for the existing sugar cane mill at Lacassine, threatening that the state will have to pay loans backed by it in the event of its failure, it turns out that the deal meant to prevent state exposure, a promissory note to own it from a Colombian former cement maker, is financially poor as well. Consider that the note is for $60 million, payable out over 44 years at 3 percent interest, but with payments of only $100,000 for the first four years. Yet expenses so far to the state seem to be over $58 million so they may well exceed the note’s value. In addition, the 44-year length and 3 percent interest rate are (well) beyond and below, respectively, marketplace-based loans, meaning the state is locked into an inferior rate of return for a longer period. (For example, a more realistic 5 percent rate would get the state a whopping $276 million additional, over double the future value of the actual deal). Finally, the initial four year grace period costs the state a total of $12 million in forgone interest payments.

Why is the state allowing Odom to structure deals that cost taxpayers much more than any benefits brought? Because it’s the law: Odom gets use of $12 million a year coming from next taxable slot machine proceeds which may be used by the Louisiana Agricultural Finance Authority for “economic development” programs. Politically, Odom, who sits on the Authority, controls enough votes on it.


Given its composition, Odom may be able to control enough of the future memberships to continue this symbiotic relationship – providing he continues in office. But his use of these funds shows no official should be trusted with this revenue stream. Thus, changing the law to prevent his open spigot of funds (while also providing for the already-promised contractual payments) must occur.

The place where this would start, Legislative committees, currently remain blocked by pro-Odom, big government-loving, good-old-boys state Rep. Francis Thompson and state Sen. Mike Smith, so as long as they are around it would be tough to accomplish. However, courtesy of term limitations, they exit their respective bodies at the end of next year.

Meaning revision of the law by the new Legislature should be one of its first tasks. Even if Odom makes it back into office (and stays out of jail), restoring these funds to legislative control will make it harder for out-of-control spending such as this to afflict Louisianans.

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