Mill rejection lacked political courage, but got job done

Not entirely for the right reasons, and in a convincing display of a lack of political courage, a request to throw away likely $67.5 million of Louisiana’s money was scuttled by the State Bond Commission.

The Commission turned down a deal that would have had the state back half of the $135 million cost to build a sugar mill in Bunkie. Most economic studies showed it had little chance of making any kind of profit, meaning the state would be liable for the bonds’ cost, and the one study that did so that was riddled with a number of problems. The facility well may not be built as a result of the vote.

The key figure in the vote was Gov. Kathleen Blanco, who by formal powers as governor such as line time vetoes, and informal powers such as arranging for the heads of Legislative committees, could pressure legislators, who comprise a majority of the Commission, to vote the way she liked. Representatives from her office comprise another two votes, while the other four come from other state elected executives.

The dynamics of the vote broke into three camps. First, apparently from previous comments, only one of the negative voters – the only Republican on the panel new Secretary of State Jay Dardenne – had the courage to vote against it because of what the deal truly was, bad for the state. (At the meeting, Treasurer John Kennedy began to imply this as well when he wondered whether other alternatives could assist farmers.) The supporting votes came from state senators led by its President, Don Hines – whose district is where the proposed mill and whose son-in-law would stand to profit directly from being able to use the mill. Hines, usually a Blanco loyalist, has as much input into the Senate careers of these senators as does Blanco.

All the other opposing votes seemed to be based upon the theme of there not being enough “information” about the mill, that a number of sugar farmers were against the deal, and/or that there were other ways such a tax credit (suggested by Blanco’s representatives) to help farmers. These were politically safe things to say – for example, allowing Blanco make herself appear as a fiscal reformer yet seeming concerned about sugar farmers – but disguise that those like Blanco who fell back on these explanations, if they believe them, do not understand the larger issue.

And that is, the state must reject inefficient spending designed to aid only a few and commit it to much more serious, higher priority projects such as (in the case of capital projects like this one) working down the transportation backlog (that $135 million could knock out over 1 percent of the estimated $12 billion needed for this). Public aid to sugar farmers ultimately is a wasteful exercise because there is too much sugar already being produced – hence the quota system imposed by federal law. Rather, the market should be allowed to work freely and permitted the shed the least efficient producers in the state, before any kind of aid would make sense; nobody has the right to impose a cost on others just because they want to pursue a certain occupation.

Interestingly, the supporters of the mill inadvertently latched onto this logical shortcoming most of the opponents expressed in their reasons for their negative votes – that it is not a question of the manner of aid, but rather whether aid should be given at all given other priorities. They argued the tax credit regime might end up being more costly and less effective to solve the presumed problem, transportation costs of cane and unrefined sugar. They implied that if Blanco really did care about the costs in committing the state’s money, her crew would not have suggested this. (Bad publicity – maybe even from bloggers – they blamed as the true reason for the negative votes; if only, they must lament, there was no freedom of speech and press things like this wouldn’t happen!)

The Commission made the right call, but mostly for the wrong reasons. And while the decision gives Blanco more room to try to get off the hook concerning accusations that she does not really diverge from the good-old-boy populist model of Louisiana politics where decisions are made more to satisfy certain constituencies than the public as a whole, no doubt she will try to present this action in her reelection campaign as evidence to demonstrate she is a reformer.