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3.1.08

Bossier citizens still paying for city's wasteful spending

Bossier City citizens got another unhappy reminder about their elected officials’ $21 million blunder when it was announced during last year's City Council budget hearings that water rates were likely to go up in the future as a result of deficit spending in that area. They now are welcomed into a new year of higher rates.

This echoes the increase forced on overburdened ratepayers two years in order to halt yearly dipping into the trust fund established to collect gaming revenues. In the present case, the Water and Sewer Fund had a healthy projected surplus of almost $1 million in 2006 which within a year apparently has gone into the red.

Then as now, more prudent uses of surpluses in the fund could have avoided the need to hit up the citizenry. Instead of spending $21 million on a parking garage for the Louisiana Boardwalk that the developer could have built on its own, the million or more dollars a year from interest on this sum could easily meet water needs (many of which are infrastructural and would occur only occasionally).

Of course, every time news comes out that shows the poor quality of that decision, city officials and their media sycophants try to spin it to make it look half-decent, trumpeting impressive-sounding figures like the property making $21 million in sales taxes and $1.5 million in property taxes in its first 25 months of operations, $5.63 million in sales taxes specifically for Bossier City. But let’s cut through the spin and look at the comprehensive fiscal picture.

For example, in the seven months it was open in 2005, the facility itself generated sales taxes of $1.57 million – more than the increase from 2004 through all of 2005 for the entirety of Bossier City sales tax collections, although in percentage terms the increase was not unusually high given historic figures. The same is true for the next couple of years (although the 2007 figures aren’t very reliable because the city’s predicted sales tax take will not be met).

In other words, looking at the property in isolation of the entire retail scene in Bossier City misses the fact that the Boardwalk has cannibalized existing Bossier City retail business. As a result, retail growth hasn’t increased much past historical norms. The same applies to the property taxes.

Proponents also try to divert attention away from costs the development imposes. For example, go to the Boardwalk and you’ll see the several police officers on duty, their cars parked in that garage. The city never has released figures on its costs for police and the myriad other services it expends on the Boardwalk but it probably is in the hundreds of thousands of dollars a year.

And the real elephant in the room the uncritical boosters ignore is the opportunity costs – revenues forgone from the usage of the money in an alternative way, such as by investing it. Therefore, a reliable way to figure out breakeven costs of this kind of strategy is to treat the $21 million as if it were a loan. Generously assuming an interest rate of 5 percent, the development breaks even if, after all city revenues (sales and property taxes) from the property, less the reductions it has caused elsewhere in those, less the expenses, it brings in the city $1.35 million extra a year – in 30 years. And if it can clear only $1.06 million a year, the payback period will be 100 years! Chances are it’s not hitting the first target, and it may not even be hitting the second. Throw in another $15 million in spending questionable by the city for infrastructure for the complex and, well, Bossier City residents will get nightmares thinking of that.

(And there’s another unspoken assumption here: without the garage, the developer would have walked away. That’s highly unlikely: they would have had to raise their rents and economic activity would have been reduced somewhat as a result, but the lost tax revenues would be far less than what the city gave away with the gift.)

In the end, it’s a matter of priorities. Would the city rather try to keep taxes and fees lower by investing its gaming windfall and/or using it to build the really needed things like infrastructure items recently bonded out – an economic development strategy that would attract business, boost entrepreneurship, and generate revenues many times over what the foregone extra government spending could do? Or, does it spend the bonus on unnecessary luxuries of low to no return and worse that may boost politician egos and count coup but thereby require the citizenry to part with more of their hard-earned dollars than necessary?

That the most vocal journalistic shill of that latter strategy on which the garage gift is based likens the former view to thinking indicative of the “stone age,” an attitude which by their past actions seemed shared by Bossier City elected officials, tells us all we need to know of the foolish thinking behind what they call “economic development.”

2.1.08

Increasingly hard to argue LA not GOP-majority state

As I have noted previously, people who do demography by trade might be good at getting some numbers but then understanding their political importance is another matter that they often lack training to get completely right. Again, I offer my assistance in this regard to an analysis done of vote totals for the 2007 governor’s contest and legislative contests.

Reviewing these numbers, the analyst argued that because in many legislative districts the vote total of incoming Gov. Bobby Jindal did not exceed that of the winning legislative candidate, that these legislators are “less beholden” to Jindal. Such a contention suffers from both an analytical and theoretical problem.

Analytically speaking, relying on vote totals turns into an apples vs. oranges exercise because of the nature of the blanket primary. This allows primary elections to behave as general elections which created over a dozen gubernatorial candidates, fragmenting the vote. For these purposes, let’s argue practically speaking there were five in the governor’s race: Jindal, his three major competitors who got over 10 percent of the vote, and everybody else as a “field” or “none of the above” composite candidate.

By contrast, the typical legislative contest (where they were: 35 were not contested) had on average about three candidates. Assuming the analysis actually compares only the primary contests and not primary contests to the general election runoff (which makes no theoretical sense since there can’t be “coattails” for a lower-placed office if the higher-placed candidate is not on the ballot), Jindal will have two additional opponents so to speak on average than a legislative candidate, diluting his vote and making difficult to ascribe any substantive meaning to the comparison of winners’ totals.

Theoretically speaking, coattails as a political concept applies only under a pair of conditions, that there are strong party linkages in the political system and that candidates for both higher-placed and lower-placed offices act to acknowledge and factor them into campaigning. Neither condition held in last fall’s elections. Not only did Jindal disavow any attempt to appear as a partner or running mate to candidates (and wisely so, knowing he could not be assured of Republican majorities in both legislative chambers and did not wish to alienate those who won despite his having potentially supported candidates they beat, even as some of them tried to attach themselves to him), but the incredibly weak state and local party system in Louisiana would make any coattail effect slim to begin with. (National elections, however, are another matter since the national parties are so much stronger.)

So to state there are little in the way of coattail effects by Jindal’s election not only is to state the obvious – no need to crunch numbers on this because the concept simply does not apply in this electoral environment – but also is pointless. The real resources Jindal can use to corral legislative victories will come from his appeals to common promises (along the lines of the Blueprint Louisiana agenda, for example) and to the powers, more informal than formal, of his new office.

(As an aside, some have noted the minor drop in turnout from 2003 to 2007 for the governor’s race and wondered what that means for a Jindal “mandate” in the state. The answer is, nothing, because when factoring out displaced voters – who remained on voting rolls but were nowhere near their precincts on election day – turnout was almost identical between the two elections.)

The analysis also curiously argues that “the state is clearly leaning Republican. But it could go either way.” This assertion flies in the face of accumulated evidence over the past two decades, if not the past two years. From 1900 to 1964, no Republicans served in the Legislature (although a smattering of Populists and independents did). Twenty years ago, there were 17 in the House and five in the Senate. Both numbers have tripled since then, with the House alone up 14 members just from the 2003 elections. Further, two years ago no Republicans served in statewide executive office; now, five of seven do including the first Republican governor since Reconstruction who is a lifelong member of the GOP and defeated was the boss in practice of state Democrats, Agriculture Commissioner Bob Odom.

By no means can this “go either way.” The trend clearly favors GOP and the best Democrats can hope for is that it slows rather than continuing its breakneck speed that (from the GOP perspective) at best already has created a Republican majority in statewide politics, at worst makes matters a toss-up. Perhaps this mistaken judgment comes from the wholly erroneous belief, asserted by the analyst, that Republicans made gains because Democrats did not campaign vigorously enough. In fact, the opposite was true: Republicans scored lesser gains because the party has come so far so fast that it could not find enough quality candidates in enough districts while Democrats deliberately fielded a more conservative lineup to try to stem the tide.

Data are useful to inform about the world of politics, but if used without proper conceptualization or not within the correct theoretical context, they don’t.