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22.6.07

Strange budgeting may cost disabled, roads, citizenry

It’s a half-year to Christmas, but the Louisiana House of Representatives constructed a Christmas tree bill in an attempt to save the essence of one bill that might end up bringing down another good idea – a rescue needed only because of stupid spending priorities.

SB 98 started out as a bill to fund the New Opportunities Waiver program. This would create a stable funding mechanism these transfer payments to people who have serious disabilities yet are able to live outside of institutions. It would end up saving money for the state because institutionalization of these folks is more expensive and almost always paid by the state because the costs of care entirely strips most families of their assets and essentially makes them wards of the state. Currently, nearly 15,000 individuals remain on a waiting list for an opportunity to get a waiver.

But while the House was in session, over in the Senate the Finance Committee postponed action on HB 722, which would ensure that any funds collected from transportation-related taxes and fees would be spent only on transportation capital items (86 percent priority highway projects). This would free up almost $320 million a year to tackle a roads backlog relatively even greater than the NOW backlog of $14 billion and at the rate of growth of revenues statewide by next year the $370 million cost would be made up.

The panel’s major concern was that since the money now was being used for operational expenses statewide would be short those funds, throwing the budget out of balance at budgeted spending rates. But HB 722 doesn’t go into effect this year; rather, next year. And this totally ignores the fact that HB 765, for example, shoots out $150 million in one-time spending for highways and another $150-plus million can be gained from stopping spending on artists, non-taxpayers, legislators’ pet projects, and refusing to add 1,200 new state jobs despite a shrinking state population, so redirection of this spending can make HB 722 work even if sales taxes grow only minimally for next year.

As a result of this rejection, over at the House dealing with SB 98 suddenly became a chance to build a Christmas tree bill – one where legislators seeing a popular, laudable bill load up very disconnected things stymied elsewhere in the hopes all will pass. State Rep. Jane Smith got thrown parts of her HB 257 which sets up, but the amendment doesn’t fund, a mechanism to pay $500 bonuses to veterans from the Afghanistan and Iraq Wars.

But state Rep. Blade Morrish got tossed in his HB 87, stalled in the Senate, which would divert money to bail out the Louisiana Citizens Property Insurance Corporation to the tune of $100 million which would start this year. And then state Rep. Bodi White got put in the guts of HB 722, ringing the total now up to over $470 million next year. All amendments went on without objection and the recorded vote for it was 99-0.

All of which puts the original intent of SB 98 at risk. If the Senate (almost all of whom co-authored SB 98) rejects the changes and stays firm in conference committee and the House refuses to lop out these amendments, SB 98 goes down the tubes. Again, some juggling of bills and amendments of others could save the HB 722 portion, and the HB 87 part can be sacrificed since the state’s going to have to pay for it anyway whether from a special fund or the general fund. (If the Senate accepts and the budget ends up with a deficit, Gov. Kathleen Blanco would have to pare the excess through her line item veto power.)

Let’s hope budget sanity prevails and room is found for both SB 98 and HB 722 in their intended forms to be signed into law, for the sakes of the disabled, transportation needs, and wise spending of the peoples’ funds.

21.6.07

Artists, non-payers get real tax benefits, but not most filers

Finally, the Louisiana Legislature meaningful tax reduction legislation that will bring down marginal rates – but only if you’re an “artist” or you don’t pay state income taxes at all.

Sitting on $3.5 billion in surplus, while the Gov. Kathleen Blanco administration and Legislature have found funding for over a thousand new jobs (and giving raises to vacant positions) as the state’s population shrinks, to increase reimbursements for health care institutions even as the dictates of quality and efficiency signal the need to move away from sending money to institutions and basing it on people instead, to throw more money at teachers without any mechanism to ensure they’ll actually do a better or even competent job, and $45 million in projects steered to local governments or nonprofit organizations that have nothing to do with state needs, they were unable to cough up even 10 percent of that surplus for tax reduction (and if the Senate and its chief opponent of tax reduction Sen. Robert Adley have their way, it’ll be less than five percent).

That reduction involved only deductions, not lowering rates which would provide more than a pittance. But one segment of the population got its state taxes lowered to zero for the first $50,000 in earnings – painters, photographers, sculptors, composers, singers, instrumentalists, actors, directors, mimes, dancers, fashion designers, writers of fiction and creative nonfiction, screenwriters and media professionals – with additional partial breaks at higher levels: half from $50,000 to $100,000 would be excluded, 25 percent of their next $400,000 of income would be excluded, and 10 percent from there on up.

Not only is this the only profession in the state where these generous breaks would apply, but HB 495 also sets the Department of Culture, Recreation, and Tourism as the formulator of the rules. This is going to be a bureaucratic quagmire and enforcement nightmare waiting to happen, from the blizzard of paperwork to the chicanery people will perform to try to qualify. (And, let’s be frank, do we really need more mimes clogging Jackson Square, starving artists plastering their wares anywhere they can find free space, experimental theater productions making Rorschach tests look understandable and uniform to all, fashion statements creating haute couture out of bag lady attire, and two-chord house bands and one-chord street vocalists with a CD player multiplying noise pollution?)

But there’s even a better deal out there, courtesy of SB 341 which allows the state to issue money to those who file and don’t even pay state income taxes. This bill allows those who claim a federal earned income tax credit to get 3.5 percent of that amount given to them by the state, regardless of whether they paid any state income taxes. So now the state will be in the business of giving out checks to those who already get a break by not being made to pay state income taxes.

These two measures will benefit a small proportion of the population will cost the state but will cost the state tens of million of bucks. (We don’t know exactly how much because at this time an updated fiscal note for SB 341, amended on the House floor yesterday, hasn’t been produced but the best guess was about $40 million, and the HB 495 note refuses to be definitive but says it could be $7.2 million a year along with some additional costs, both probably grossly underestimated given the machinations that will result if this becomes law – and the note mentions that a somewhat-similar program in Ireland pays out the majority of its funds to the wealthiest qualifiers). Let’s call it $50 million.

Yet yesterday the Senate chopped in half tax reduction that would go to the majority of the population, costing Louisiana citizens $150 million. Get rid of the pet projects, refuse to add the new jobs to state government, and make sure these two bills never see the light of day, and there’s your $150 million more to allow semi-meaningful tax reduction.

If nothing else, at least the Senate needs to get things going by rejecting (or by not considering) both of these bad bills within the next week to promote some small semblance of sanity within this year’s budget.

20.6.07

Democrat budget preserves party at state's expense

When, as predicted, enough Louisiana Republican House members caved in to allow full funding of the dramatic spending increases in Gov. Kathleen Blanco’s record state budget, it allowed state Democrats to pursue their vision for the future of the state – one primarily based on their own partisan considerations at the expense of the people of the state.

Over the next week or so, Democrats will ram home a budget over 10 percent larger than last year’s, chock full of spending increases that will eat up more than 90 percent of the recovery/oil economic bubble on which the state floats, of which about a third concerns recurring expenditures. There were several motivations as to why Democrats took this path, including their core belief that government knows better than people how to spend their own money, to reward special interests, and to attempt to lavish goodies on constituencies in order to assist reelection chances in this fall’s elections.

But the main reason was to make governing more difficult for the next governor, since chances are slim that a real Democrat will be elected (their best hope is a Democrat-turned-Republican-turned-Democrat who would govern more as a conservative). They know Rep. Bobby Jindal is a big favorite to win, that Jindal would be the first genuine conservative to hold that office, and that he will force many necessary changes on the dysfunctional state government that run counter to the interests of liberalism and populism.

They also know that their power slowly is slipping away. They stand a good chance of losing the House this fall, and four successful years (including reapportionment) of conservative governance from Jindal probably would mean entire Legislative control passing to the Republicans for the foreseeable future. It is this possibility that mainly drives their budgetary decisions this session.

In this current budget, Democrats seek to set up a firewall of spending that will be politically difficult to reduce by a future governor, even as revenue rate of increase begin to decline faster than this spending rate will increase. Their ace in the hole is potential large new commitments for the Road Home program caused by Blanco’s mismanaging; if the state must next year ask the federal government for a bailout, the Democrat-controlled Congress which also has a vested interest in delaying the state’s ascendancy into Republican control can deny that and try to plunge the state into a fiscal crisis, further tarnishing the next administration even if it had nothing to do with creating the situation.

Depending upon the severity of the downturn and of the negligence concerning the Road Home, a Republican governor and potentially Republican House would face hard choices that could raise enough ire among the voting public to delay, if not reverse, the party’s electoral gains, Democrats today are hoping. Sweeter still would be if this could lead to the demise of Jindal’s political career, Jindal seen by national Democrats as a major threat on the national stage because of his ideology and the symbolism he brings that thoroughly discredits Democrats’ bankrupt liberal ideology.


Make no mistake about the end result of this Democrat-controlled budget process. What will come out of it reflects more the will and needs of the future of state and national Democrats that it does those of the people of Louisiana.

18.6.07

Turncoat Republicans ready to defeat party on budget

Round 3 of the budget tussle between Democrat Gov. Kathleen Blanco and the Democrat-controlled House of Representatives in the Louisiana Legislature and Republicans went to the latter, contrary to Round 2 but like Round 1. However, the numbers and recent history seem to indicate the match will go to the reckless, free-spending Blanco.

Unable to stop the majority Democrats from passing a bloated budget born of a surplus exceeding $3.5 billion dollars that gives almost none of that money back to its owners the people and creates costly, unsustainable new commitments, Republicans have tried to use various means where two-thirds votes are involved (they have 42 of 105 members plus an independent who usually votes with them) to force some compromise out of the Blanco Administration. Their first tactic involved trying to prevent enabling legislation for bond sales to go through unless tax cuts were increased and recurring spending decreased.

But after two votes, it became clear enough liberal Republicans and Republicans-in-name-only would cause this strategy to fail, so then they moved to the tactic of trying to veto the state government from exceeding the Constitutional spending cap to the tune of $1.9 billion, offering an $827 million excess instead. The state’s spending cannot grow faster than the private sector economy unless two-thirds of legislators in each house approve.

Today, the GOP offered an amendment to exceed the cap by $827 million, defeated 42-61 – almost a straight party-line vote except that Democrat state Reps. Troy Hebert and John Smith and recent convert Republican state Rep. William Daniel IV and economic liberal Republican Hollis Downs crossed up their parties and recent converts Republican state Reps. Neal Heaton and Billy Montgomery were absent. That move obviously failed, but then it succeeded when a Democrat motion to bust the cap by the higher figure failed 68-36.

On this one only Heaton was absent, while the previous defectors did so again except for Smith who on this stayed loyal to his party this time and was joined by Montgomery who, now present, abandoned his new party. In addition, unreliable Republicans state Reps. Dale Erdey, Donald Ray Kennard, Tank Powell, and Bodi White crossed along with independent Joel Robideaux.

Unfortunately for Republicans, this puts Blanco and the Democrats on the brink of victory. The absent new Republican Heaton and liberal Republican state Rep. Tom McVea initially voted in Round 1 with Blanco, and Democrat Hebert may wilt under pressure. Put the squeeze on these three and any two (assuming everybody shows up and votes as they did previously) bring victory to Blanco. With almost a two-thirds majority in the Senate to Democrats, winning the House is tantamount to Blanco getting it all.

So, once again, it seems Republicans insufficiently committed to sensible government spending and to the people will foist bad policy on Louisiana.

Federal govt hopefully will save LA from wasteful building

Courtesy of a Democrat-led Legislature and governor, Louisiana is frittering away its opportunity to accomplish meaningful indigent health care reform that will increase quality at decreased costs to taxpayers. Once again, the federal government may have to step in to prevent this foolishness from happening.

It isn’t so much the vague SB 1, which will make its way to the House floor later this week, that is compelling the state to retain its antiquated money-goes-to-the-institution indigent health care system, as that bill is written to allow but not mandate the continuance of a system that no other state in the Union thinks is good. Sure, it’s a bad bill because it gives the appearance of reform where there is none and because it’s a vessel to discourage moves towards a more efficient money-follows-the-person system that produced better quality care. But worse is how it is designed to be combined with other bad decisions to keep putting vested interests ahead of those of the indigent and of taxpayers.

It’s worse what the House did with SCR 76 which authorizes the building of a palatial new “Big Charity” hospital in New Orleans, an edifice which would far exceed the needs of that of a hospital whose mission primarily is to educate. Many supporters say a consultant study required to determine the size showing a larger hospital, one at $1.5 billion that may cost double what was first envisioned, justifies the grandiose version.

But the study they cite was commissioned by the Gov. Kathleen Blanco Administration which all along has plumped for a big hospital in order to justify continuance of the charity hospital system, as a state-run indigent care system provides more avenues for patronage and increases the size of government and its power – specifically the Louisiana State University system which runs it. Further, it based that conclusion on the assumption that the charity hospital system would continue; otherwise, the complex will be much too large and wasteful.

This gets more convoluted and ludicrous: with a large hospital as a “sunk” cost, the state will argue that it will be too expensive to forgo its two-tiered system, justifying its continuance. The two concepts work hand-in-hand: the larger hospital only can be justified under the current system, but then continuance of the current system is justified by saying such a large hospital would make changing that system more costly.

Most (but not all, those mostly being the usual liberal and RINO) Republicans saw through this nonsense and voted against SCR 76 (mirroring somewhat the previous Senate outcome). They joined with Democrat Treasurer John Kennedy in noting that system reform should come first, and then a hospital built to fit that. Waiting even a year would not be a big deal for, as Kennedy as noted, quick renovation of parts of the old Big Charity could keep adequate care going for years (especially given the reduced population being served in the area). Nor would this imperil any deal with the U.S. Department of Veterans Affairs to build the new facility next to a new VA hospital where some parts would be shared; decisions on land acquisition and the joint operations can continue as the size question is answered.

But that would reduce the power and privilege enjoyed by government, especially of the LSU system and the hospitals in the system, and so the Democrats could not have that. Passage of both chambers means this kind of legislative instrument goes into effect, but there are two chances for the federal government to step in and essentially negate this wasteful decision. First, the VA may select a site that would not work for this health care castle, and already has given indications that it might do that. Secondly and more crucially, since federal recovery funds would be used in the building of it, the U.S. Department of Health and Human Services would have to give its permission for their expenditure on this – and accordingly to Republican Sen. David Vitter, an opponent of the larger version, that agency doesn’t look too kindly on this notion.

So it may be that the federal government once again may have to rescue Louisiana from its own follies. Let’s hope it does.

17.6.07

Budget train wreck better than Blanco intended course

While some may disparage the emergence of a “train wreck” over a portion of Louisiana’s budget to be decided in the next couple of weeks, given certain circumstances, that may be the most desirable option.

The “train wreck” is the scenario where House Republicans stay mostly solid in their opposition to raising the state spending cap, increases pegged by the Constitution matching the growth of the private-sector economy, which would slash $1.9 billion from the Democrat Gov. Kathleen Blanco budget. The cap can be raised only by a two-thirds vote and over half of the GOP members, about two-thirds of the total needed, have pledged to block that raising unless significant tax cuts and reductions in proposed spending increases occur.

Granted, the GOP is absolutely correct in its assessment. Blanco and her Democrat legislative allies willfully are ignoring economic indicators and common sense as well as economic theory in plunging ahead. The Republicans’ problem is that they don’t have the votes to stop the bill, HB 1, that spends too much because that requires only a majority to pass. Under a politicized interpretation of the definition of the cap, passage of that bill will not exceed it.

But implementation of the supplemental bill, HB 765, in essence will be stopped without raising the cap, which a majority of Republicans say they can live with delaying that spending until after fall elections – the “train wreck.” Most of the items in that bill have widespread support and would be helpful to the state – highways, coastal restoration, technology, and general capital outlay items being among the biggest in cost – but of the items, really only one has any potential sense of urgency to it, $447 million in funds to bail out the shortfall in the mismanaged Road Home program (which really comprise funds given to the state by the federal government).

Even this, however, is not that urgent. The program will be paying out for well over the next year, and the federal government has given signs that it will make up a good portion of the shortfall which would be several times what the state is offering in its recycled funds. The federal government could put up some funds and then tell the state it’s on its own, and the state can use those funds through the rest of the year.

The best scenario for the state would be for Democrats to accept the Republican position. The worst would be to allow all the spending contemplated in HB 1 and HB 765. If the only compromise that comes about is the spending just in HB 1 and delaying HB 765 items until 2008 – the train wreck – that’s better than the worst scenario if the best one can’t be attained.