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27.12.06

LA needs to follow federal lead on cable competition

Once again, Louisiana remains behind the curve as, at the federal level, the Federal Communications Commission partially did what Gov. Kathleen Blanco denied the state only months ago.

The FCC recently relaxed regulations to increase the amount of competition allowed in provision of cable television, the point of HB 699 in the 2006 regular session of the Louisiana Legislature. They will make it easier for non-cable companies to get franchising agreements with local governments, after a study showed areas with those kinds of providers produced lower rates to consumers, as opposed to having satellite providers as the only competition.

Local governments have opposed allowing other communications concerns such as telephone companies to compete for franchising agreements because the present agreements often serve as a stealth way for these governments to squeeze extra revenue out of the pockets of those paying for cable TV by arranging for fees to be passed along. One way to accomplish this was by buildout provisions – forcing new providers to create supply in unprofitable way, rather than let the market determine where supply occurred. The FCC ruling put a lid on differential treatment of existing and potential providers in bailout and in passing along fees by local governments.

The Louisiana law would have gone much further – except that after passage of the Legislature Blanco vetoed it. Unfortunately, author state Rep. Billy Montgomery, despite his nearly two decades in office, didn’t have enough clout to prevent this.

It’s a bill that needs reviving in the 2007 session, perhaps by somebody more capable than Montgomery, especially because Congress can pass laws overriding regulations and now that it is controlled by the party that seeks to empower government and to disempower people, Democrats, they could attempt to do so and hope Pres. George W. Bush doesn’t bother to veto it. Sending it to Blanco a second time, especially during an election year where she’ll need all of the help she can get at the polls, might get her to sign it this time.

Well-managed state debt can't stop ticking time bombs

It’s good to see that Louisiana handles it issued debt responsibly, according to a report earlier this month. But before a number of Louisiana politicians get too self-congratulatory about the nature of the state’s debt, it’s helpful to review the issue over which the last special session of the Legislature foundered that in part dealt with this and related matters.

Recall why the session went kaput – Gov. Kathleen Blanco and the Legislature’s fellow Democrats wanted to bust the state’s spending cap quickly without a lot of thought while legislative Republicans wanted to hold the line to pursue greater contemplation of what to do with the presumed budget surplus on the way. (Republicans offered to increase some state salaries and to spend in some areas provided cuts were made in other areas, or to give some pay raises of shorter duration with funds that would not go over the cap, but Blanco and Democrats prevented a solution to this standoff.) One area where some detailed discussion needed to occur was in using any surplus funds to reduce the area where the majority of the debt currently lies, and also in the area where even larger potential looms.

By way of explanation, the Louisiana Constitution caps the amount of money at a certain level that can be spent by the state as a whole in primary government functions, adjusted by the rate of private-sector economic annual growth. The reason why the cap now is coming into play is the growth of government in the state has proceeded at a far higher rate than private-sector economic growth has in the state over the past decade or so.

Louisiana law also limits the amount of new debt the state can issue, if the debt service required by such debt would exceed 6 percent in each fiscal year of taxes, licenses and fees as estimated by the Revenue Estimating Conference. Because transportation needs and delayed maintenance of roads has continued to escalate at a greater rate, a huge backlog of around $12 billion in such needs still is unmet.

As Treasurer John Kennedy notes in his annual report on this matter, even if debt per person in the state is 20 percent lower than it was 15 years ago (note this figure will increase as the state continues to lose population), the borrowing cap is going to limit, in a predicted scenario, debt issuance to highways projects (specifically, the TIMED program), to less than $2 billion for the next four years, and then none whatsoever for the next six.

In others words, not much of a dent can be made in the highway projects unless spending on other parts of the state government’s infrastructure is scaled back. And the $2 billion may not even keep up with other needs identified within that decade, or even four years. However, “surplus” money since it is not borrowed does not count against the limit, so it could eat into the backlog in a way borrowing could not.

Further, the four pension funds run by the state for retirees face a massive unfunded accrued liability that topped $11.45 billion according to the last report. State law requires that it be paid off by 2029 and, worse, has grow in spectacular fashion so that it about doubles the actual funds predicted to be available for payout through 2029. This would mean the average legislative appropriation going through then, assuming no growth in it during this span (in reality it doubled in size in the past five years) would be just about $500 million a year for those 23 years.

So while current debt may be managed well, the state has out itself in the position where future debt issuance is not going to cover transportation needs, and further demands may be placed upon the state with the woefully unfunded retirement accounts payments looming that will reduce the state’s capacity to keep up with transportation demands.

This also points out one other salient fact – spending to solve both these problems will force the state’s spending cap to be busted at current rates of economic growth. It’s unlikely to be amended out of existence and its takes a two-thirds vote to do so, so unless there is widespread political will to keep a lid on growth of other kinds of spending if surpluses are available, these problems will continue to fester now matter how well debt may be handled.

26.12.06

Hightower, looking to future, left Shreveport worse off

Shreveport ex-Mayor Keith Hightower left office last month after eight tumultuous years. And while it’s true that the long-term impact of some of his decisions will define how his reign is evaluated in the future, not to understand the motive behind those decisions misses a complete understanding of his tenure, and of his future in politics.

Odds are pretty good that, to some degree, the city’s convention center (actually envisioned by his predecessor Bo Williams) but especially its accompanying hotel will be albatrosses around Shreveport’s neck for decades to come, siphoning valuable tax revenues for their subsidization, retarding the city’s progress. In isolation, the poor decisions made by Hightower to implement these would seem to constitute merely an error in bad judgment.

But there’s another piece to the puzzle, and that is Hightower’s insistence on practicing an ideology formed by the political culture in Louisiana that sees governing as an exercise in putting government first and people second in order to reward friends and to punish enemies. The liberal populism that has infected the state argues that government is to be used against any individual liberty that does not maximize rewards to certain interests. Thus, he entertains an exclusive, divisive ideology that, rather than aiming to create an environment that maximizes all people’s chances of achieving individual ends, instead deliberately rewards certain interests at the expense of the people.

Hightower, through his penchant of making public policy decisions that appeared to favor certain elites (his so-called “circle of friends” and supporters whose political muscle was needed to keep him in office) at the expense of good judgment (such as with the hotel deal), epitomized this good-old-boy trait in the state. It started almost from the beginning of his first term and lasted until the very final days of his second term.

So, the failure of Hightower’s leadership that will increasingly become manifest as the years roll by, stemming not from only poor decision-making, but from a wanton disregard of the entire public weal that caused those decisions to be suboptimal. That characteristic of Hightower’s mayoral run itself will become more obvious as time advances.

Which is why if he is to have any future career in electoral politics, he needs to act sooner rather than later. A number of people at present, those either who have profited from Hightower’s time in city government, or who share his liberal populism, or whom prefer symbolism over substance, or whom simply aren’t adequately informed, would continue to support Hightower’s future ambitions. It’s the latter group whose support will erode over time, and the rest cannot provide enough political punch to keep him elected.

Their support will fall off when they know the real Hightower record. Hightower spent tremendous sums of money on projects that promise to weigh down the city rather than to preserve its infrastructure (the costs of which were then passed on to ratepayers), giving it a crushing debt with a declining capacity to pay for it, allowed spending to spiral out of control, and had crime increase from 18,510 offenses reported in 1998 to 30,440 in 2005. Given all of that, the best his supporters can come up with in pointing to any substantial contributions of his was that he made for a more “positive” attitude. This, of course, is belied by the fact that the city’s population decreased about 8 percent in his years, both well behind the miniscule gain made statewide and much larger population gain nationally.

Salesmanship, as Hightower has implied, may be useful in generating a perception whether it corresponds to reality and to persuade people to vote for you, but it will go only so far in light of an inferior record opponents are willing to publicize. As time passes, fewer will believe his conjuring and the warts of his decisions will become more apparent. That’s why a 2008 run for the U.S. House may be the only chance for the continued shelf life of a politician whose governance style has no place in a progressive Louisiana searching for self-improvement.