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13.12.06

Principled GOP, instransigent Democrats equal "partisan" session

It appears now that the 2006 Second Extraordinary Session of the Louisiana Legislature, which in the hopes of the big government crowd had much potential, will go out with a whimper. A couple of good things like tax credits to reimburse special insurance assessments came out of it (and one bad tax credit where essentially the state will pay people who don’t pay income taxes to have children) but its high level of success (ignoring the fact we had little need for it except for insurance assessment relief) is defined by the fact it did so little to injure the people.

But the legacy of it that big government lovers are trying to extract and popularize is along the theme that Louisiana is becoming like Washington, too “partisan.” For example, words of wisdom from Commissioner of Administration Jerry Luke LeBlanc: “I've been in some pretty heated standoffs but nothing based strictly on party politics like this. It does a disservice to the people of this state to have the Washington model of partisan politics so strong.”

Of course, uttering a statement like this shows exactly that LeBlanc has been in government too long, and it needs translation because all the way from the multi-degreed like me to those who may not have much formal education but a lot of common sense are not going to understand what he means if we look only at the surface of his remark – at least for those of us who don’t see government as the salvation for the great unwashed or as something that better knows what should be done for the people than the people themselves, as believe LeBlanc and his boss Democrat Gov. Kathleen Blanco.

Anti-business Blanco blames GOP for stalling giveaway

As House Republicans almost unanimously continue to prevent the state from busting its spending cap to accommodate massive new spending by Gov. Kathleen Blanco, this has gotten her dander up in reference to one of the requests, $300 million to prepare a site for a new manufacturer, if the firm chooses Louisiana over two others. “If we lose this business deal,” she said, “the blame will lie squarely in their laps.”

The sheer irony and hypocrisy of her statement is staggering, because for three years not only has Blanco not done as many as two things to help business in Louisiana – and that primarily would be existing business, not only going all out for a Pollyanna crapshoot that may never pan out – but she has championed measure after measure that would stifle economic development. Blanco has implemented only one measure designed to entice business into the state, the reduction of sales taxes on machinery and equipment purchased for manufacturing and corporate franchise taxes on borrowed capital – over eight years.

(Even as Blanco blames the Republican legislators, they have asked her to lobby her Democrat majority in the House to phase these taxes out immediately. She refuses to do so. Today, the House did vote to create a fund to contain up to $300 million for purposes of attracting that firm.)

Just some of the more recent and high-profile anti-business, and thereby anti-working man, actions of Blanco:

  • Backing a sick tax that would have raised the cost of health care in the state
  • Approving of a raise of the minimum wage (both legislatively and administratively) paid to state employees which would have a ripple effect on all employers
  • Making preliminary plans for the placing tolls on interstate highways, thereby raising transportation costs
  • Delaying flood control policy reform which discouraged commerce
  • Supporting a bill that would increase gas prices because of an ethanol-blend mandate

    All would have or did increase costs on businesses and their employees, and note that, in every instance, her approach was one that championed bigger, less efficient government. Blanco also has been barely seen on a variety of bills to tighten ethics requirements, another set of things that would give business greater confidence to stay in or to locate to Louisiana.

    Blanco has not been the most anti-business governor the state ever has seen, but it is ludicrous for her to claim that the failure to support legislation that favors one business not even in the state is a detriment to economic development when she has a past littered with instances of her refusal to reduce the size of government that would have helped the climate for all businesses in Louisiana.
  • 12.12.06

    GOP needs to take offensive against self-destructing Blanco

    As a result of yesterday’s legislative action, things were bad enough for Democrat Gov. Kathleen Blanco. Having pared down her agenda to just spending $400 million on the transportation backlog, $300 million for site preparation for a manufacturer who may or may not come to the state, and just $100 million for pay raises for select state and local employees, she could not get enough votes to override the state’s spending cap limitation currently allowing for $194 million because of intense, almost exclusively, Republican opposition. This made her look ineffective, another such episode gubernatorial opponents could use against her next year in her reelection bid.

    But then she had to open her mouth and make herself look worse, handing them an even better issue. “No tax breaks are going out until we finish our business,” she announced, meaning, appropriate to her entire reign, that her vision of spending, whether it really makes any sense, gets priority over returning the peoples’ money to them.

    Republicans U.S. Rep. Bobby Jindal, state Sen. Walter Boasso, and even other potential 2007 candidates of all partisan stripes must have pinched themselves to make sure they weren’t dreaming when they heard of these remarks. It’s easy already to envision them hammering home the message to voters that Blanco opposed tax reduction of all kinds, with the state supposedly sitting on a huge surplus, when it was within her grasp as a childish retort to the sensible view that more time was needed to formulate plans and to monitor the state’s fiscal situation.

    From the least to most, the pay raises involve recurring funds, and the false economy created by billions of dollars of federal rebuilding money may support that for couple of years, even more. But unless structural changes occur in the state’s fiscal policy, when that money goes away, the additional expenditures may not be sustainable.

    And what changes are those? Precisely the tax cuts Blanco refuses to give. This is a golden opportunity to jumpstart the economy with the recovery money supporting the temporary loss of tax revenue that comes from tax cuts before the economic growth they spur kicks in.

    The same applies to the site money. More than throwing hundreds of millions of dollars at some firm, more attractive would be tax cuts that would attract better quality new employees from out of state, help new employees in state, and would reduce the tax liability of the company.

    Finally, the transportation backlog is the most worthy of the three requests, but Republicans are absolutely correct in slowing this down because there is no guarantee if approved the money would spent in a rational fashion. Instead, given the state’s history, it is likely to be spent for primarily political reasons, rather than according to genuine need in helping Louisiana’s overall transportation goals. Once they sign over a $400 million check, the minority Republicans cannot control the process to ensure more rationality in passing out roads monies.

    Note that Blanco’s declaration also gives legislative Republicans an issue by which to hold legislative Democrats’ feet to the fire. Already, House committees have passed along tax cut legislation. House Republicans need to agitate to bring them to a vote. If the House leadership, controlled by Democrats aligned with Blanco, refuses to bring them to votes or defeats them in votes, this becomes a campaign issue for Republican candidates for seats across the state in 2007. That looming reality may get enough Democrats on board to get the tax cuts through, and put pressure on the Senate to do likewise – leaving Blanco in the position to swallow popular bills she opposed, or to veto the greatest tax relief in the state’s history.

    Going on the offensive one more way would help the GOP, and state as a whole. Republicans should sponsor legislation to remove $50 million from the state’s recently-created disaster fund (as was promised by Blanco after the end of hurricane season if nothing happened for insurance extra premium charge rebate checks, because it’s been previously appropriated and not subject to the cap), add it to the $194 million, and then appropriate it all out to roads projects in the current priority order they are listed in the unfunded portion of the current capital budget. This way they can show they mean to tackle a pressing problem, but in a responsible fashion. Then they should press for passage of legislation also already approved by committee to pay back the extra charge through tax credits.

    The session continues to backfire on Blanco, to the benefit of the state. Republicans need to keep the pressure on to make both the practical and (to them) political dividends even greater.

    11.12.06

    Fiscal conservatives hold line, deal Blanco reelection blow

    Fiscal conservatives in the Louisiana rebelled against Gov. Kathleen Blanco, politics as usual, and the prevailing liberal/populist ethos historically in the state by defeating a resolution to increase state spending over its Constitutional cap. Only two Republicans – Hollis Downs and Tom McVea – and independent Joel Robideaux voted for it, while Democrats Jeff Arnold and Alex Heaton votes against it making the final tally 59-40 in favor, but two-thirds of seats were required to pass (I think; with three seats unfilled, the House has been unclear whether it is total seats or the seated membership).

    The hypocrisy of many of the supporters of the resolution was staggering. As an example of the use of non-recurring funds, they argued it was important to reduce the backlog of transportation projects, talking about how the cost of roads presently was rising 1.5 percent a month – when they frittered away hundreds of millions of dollars in past years on building unneeded reservoirs that could have gone to roads. As an example of the use of recurring funds, supporters argued the cap needed to be relaxed to fund raises for teachers. Yet in 2005, Republicans offered such a pay raise as an amendment to the operating budget – and it was voted down by many of the same House members then who claimed they were all for it this day.

    The difference is one of priorities. Tax cuts to those who actually pay them, pay raises, money for roads, and (as required by law) reduction of the unfunded accrued liability are considered by the House majority to be less important than to keep money flowing to fund a bloated state bureaucracy, or to favored constituencies, or to pet projects that should not be a matter of state funding. More often they will do things like pass sick taxes onto the people rather than look for efficiencies in program operation because they put special interests ahead of minimal government that empowers people. The only time they rise in support of the things they articulated approval for today is when they think there’s enough money to take care of these things they usually think less important.

    This leaves the state spending limit at (now estimated to be) $194 million, and there’s been talk of diverting $50 million from the newly-created disaster fund to add on to that. Some spending then can get done and, if the supporters of today are genuine, they’ll funnel that money to roads or the unfunded accrued liabilities. But unless the Blanco Administration and its legislative allies can figure out a way to switch about a dozen House members’ opinions in the next six days, that’s all. And if not, this will represent, at the philosophical level, a defeat of the old convoluted prioritization and, at a political level, a blow to Blanco’s reelection efforts.

    House GOP sensibility wins on politics and principle

    In Congress, Republicans lost their majorities last month because they strayed from the conservative principles that resonate with the majority of Americans. In Louisiana, House Republicans appear determined to attempt to gain a majority by not making the same mistake.

    Yesterday, a whole raft of free-spending proposals, five in all, by Gov. Kathleen Blanco rubber-stamped by the House Ways and Means Committee (composed of all but two Democrats, one of whom recently switched parties in a bid to try to win a Senate seat later this year) were supposed to hit the floor after debate of HCR 6, the resolution that would have busted the state’s spending cap over $2.4 billion. It would take a two-thirds vote to enable this.

    Instead, when the House met, rules were suspended to introduce a new bill which would allow for a tax credit rather than rebate of excess premiums paid by home insurance policyholders in order to prop up the state-run property insurer. The body adjourned, allowed that new piece of legislation to be heard in Ways and Means which rubber-stamped it, then reconvened to close itself for the day after introducing five other resolutions identical to HCR6.

    The tactic is to produce vessels in which to allow the spending ceiling to increase for any of the five items already approved and waiting – if the Blanco Administration has the muscle to get any of them through. At this point it does not, hence the quick creation and disposition of HB 120 engineering the insurance tax credit which does not have to adhere to the spending cap as it is a credit and not a return of taxpayers’ monies.

    The only other Blanco proposal that appears to have enough support is creating a fund to reward a company potentially building a large steel plant in St. James Parish. But Republicans indicated they believed the incentives provided would be no higher than the current cap, now estimated to be $155 million. With 41 of 105 votes and described to be nearly unanimous in opposing raising the cap, if they stay firm, these are the only two measures with any chance of passing.

    If so, this turn of events would produce a stinging defeat for Blanco and cause a backfire of her agenda behind the agenda of the session she called, distributing goodies to buy votes for her reelection attempt next year. Instead, Blanco will appear as ineffective and cannot use the turn of events to raise political capital: how can she campaign against fiscal conservatism in a state well-known for lacking that precise quality?

    At the same time, House Republicans will have shown they have the will to impose fiscal discipline in government, and that with any surplus they are interested in solving long-term problems repeatedly ignored by Blanco and Democrats, such as the unfunded accrued liability in retirement accounts the amount of which has grown to nearly half the size of a year’s budget. Such a preference will resonate with voters tired of short-term political considerations taking primacy in budgetary decisions.

    Better, the GOP announced they were all for much of the Blanco agenda that promised in part selective tax cuts – but only in the fiscally-prudent manner of cutting spending elsewhere. If they are smart, they will come back in the spring’s regular session with some proposals to do this. Tax cuts alone would be a good idea, and in the ensuing few months the state will be on more solid footing with a better idea of what’s ahead to afford these in the short run (as there will be a lag effect to the increased revenues that will result from tax cuts).

    Staying committed to this course of action by the GOP legislators not only is good for the state in the long run, but for their party’s political fortunes as well, as voters will respond positively to this kind of agenda next fall.