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24.4.08

Cable bill seeks to end local govt revenue-raising scam

The only thing that has changed in the two years since former Gov. Kathleen Blanco vetoed HB 699 is that this year’s SB 422, largely duplicative of the 2006 bill, is almost certain to be signed, if it makes it to him, by Gov. Bobby Jindal. If so, finally Louisiana cable consumer will have price relief even as local governments complain at the loss of a backdoor way to extract funds from their citizens.

The bill does many things, but most importantly it creates a statewide franchise, rather than local franchise, for cable provision. Local governments have manipulated this franchising power for many years, forcing providers into expensive operations which created a virtual monopoly situation as these requirements made it prohibitively expensive for new market entrants. These governments then took advantage of the situation as they legally could use franchise fees paid by consumers as a form of indirect taxation on them, and would do little to discourage the monopolistic cable television providers from raising rates since the franchise fee take would go higher as well. This is why many studies (not just the one released in conjunction with the bill) confirm the benefits of the arrangement in the bill include lower rates.

In terms of content of argumentation, nothing has changed, except that two years ago the cable company/local government alliance tried to sell opposition, laughably, that a decrease in competition would occur, obscuring their real motives that it was all about money (which I laid bare then). They displayed no such pretense yesterday in Senate committee hearings, but their whining about loss of revenue was again wanting – lower rates would increase usage and may offset any potential loss through volume.

Again, however, some pretense is involved. The real concern of local governments is that they cannot control rates, not only because there will be a greater chance of competition, but because the state now will have that authority, thus they cannot squeeze ratepayers at will. And high comedy was provided when their representatives asserted they, in fact, were all in favor of competition by trotting out the fact that a hundred local governments had passed resolutions asking for more providers to enter the market – but attached to a “model” agreement or something similar that was so heavily biased in favor of existing providers’ desires and the local governments that no competitor who wanted to make money would sign on to it. Not surprisingly, none have.

Another old, vetted argument trotted out against it was somehow gross revenues on which the (maximum) five percent fee would be returned to local governments would be manipulated to reduce it. But the bill’s wording makes this practically impossible, and no doubt if there is any genuine concern here, the bill can be tightened on the floor (it passed committee).

Two years ago, the cable television/local government alliance’s tactics were to cry foul on competition matters to hide the fact they wanted to be able to extract more money at their own will out of consumers. Now, the tactic is to complain they somehow won’t get a “fair” share, which still cloaks the fact that now it continues to be about that power of extraction. Exercising this power pits consumers against local governments, and while last time consumers lost, signs are good this time state policy-makers are going to make consumers the winners.

23.4.08

Full-time pay perverts LA's citizen-legislator ideal

As bills wend their way through the Louisiana Legislature to increase salaries of staff and elected members, the lack of appropriateness of the increase cannot be understood unless remuneration issues and the concept of a state legislature are first grasped.

One common misunderstanding, sometimes purposively maintained by the legislators themselves, is that except for a very few (leaders, who are paid much higher) they “only” making $16,800 a year ($1,400 per month). This figure ignores the per diem legislators receive for every day the Legislature is in session for which they are not declared absent, as well as for any interim meetings or activities (even convention attendance), this year at $143, meaning the base pay of all but the most negligent legislators will be, including special sessions, this year over $32,000. In fact, this is not much below the $36,729 median household income figure for Louisiana in 2005; throw in enough interim committee meetings and they’ll get there.

That this with no base increase represents a full-time salary is troubling because the guiding conceptualization behind most state legislatures, including Louisiana’s is that they are to be part-time institutions. (The above amounts do not include other benefits such as office supplements.) These officials are not supposed to be full-timers precisely because, with the Legislature in session only two or three moths of the year regularly, they are to circulate among and live as common citizens at least three-quarters of the year. It’s bad enough that the generous amounts already given permit many to avoid that status; it would be catastrophic to jack base pay to the levels paid in all but a couple of states in separating legislators from their constituents.

Some try to defend the final detachment of legislators from their roots as ordinary citizens courtesy of this increase by arguing the nature of the job is such that they should be considered full-timers. This has the relationship exactly backwards and perverts the original intent: if legislators seem now to have full-time jobs, it is because by their own actions they have expanded government beyond its genuine, essential functions to make enough work for themselves to justify presenting themselves as full-timers. The solution is not to acquiesce to this corruption of the true mission of government by declaring legislators full-timers, but by paring the size of government to make it easier for legislators to fulfill the role of citizen-legislator. If they choose not to, it is illegitimate to force the taxpayer to subsidize this conceit.

Finally, there simply can be no justification to pay ordinary legislators around $70,000 a year when at most they work full-time from 75-100 days a year. Unless the state wants to abandon the citizen-legislator model and create a professional legislature, at best this is egocentric; at worst, wasteful. Legislators must understand it is an honor and privilege to serve and compensation should not even be a consideration. If it is, nobody is putting a gun to their heads and making them serve, they are free to resign their offices and make way for those who have a better, correct attitude about the role of legislator.

There’s also no evidence that full-time legislators can do any better in governance. There are plenty of examples of legislatures in the U.S. that seem to do a far better job than Louisiana’s for much less pay. Neighboring Texas, for example, has its legislature meet only every other year, paying $600 monthly and a per diem the size of Louisiana’s – and Texas state senators have districts as populated and as geographically sprawling as U.S. House districts, yet there seems to be no shortage of people willing to serve in an institution whose policy output historically has been much better than Louisiana’s.

Simply, no justification exists for making Louisiana legislators full-timers, except for its elements of self-service and ego boost of existing legislators.

22.4.08

Jindal courts political trouble with tax cut opposition

A few Louisiana senators fired a shot across the bow of the Gov. Bobby Jindal Administration when they passed Sen. Buddy Shaw’s SB 87 out of committee. The bill would move back up the income levels that push individual income tax filers into the middle (4 percent) and highest (6 percent) brackets to what they had been prior to passage of the “Stelly Plan.”

Interestingly, besides Shaw himself one of the more persistent advocates of passing the bill out, which moved essentially on a party-line vote with Democrats opposing, was Sen. Robert Adley, more known for his restraining such moves in the past. Last year, in committee he verbally chided Shaw’s predecessor for a similar but more far-reaching bill. This time, he went on the offensive against a representative of Jindal’s.

When the adviser, John Carpenter, averred that Jindal could not support the bill at this time, although he also said in a few weeks as the budget process moved forward it might become possible, Adley offered not one but two reasons why Jindal should not hesitate. First, he agreed with comments made earlier in the day and in this hearing by the Legislative Fiscal Office that another missed budget projection should create another surplus for this fiscal year, especially as oil and gas prices remained high (at present $30 above the oil prediction and $3.50 over the gas guess, which if maintained for a year would bring in an additional $450 million -- $12 million per buck higher for oil, $600,000 per cent higher for gas). He also suggested Jindal’s requested $307.1 million enrichment of megafund to attract business be used to pay for the tax cut, as he correctly noted greater economic development potential would come from that use of it.

21.4.08

Bribery masks, does not change, LA disincentives

What all is this fascination that Louisiana state policy-makers have with bribing people to find employment in the state? We already have Gov. Bobby Jindal and pay-challenged Secretary of Economic Development Stephen Moret stumping to dump over $300 million in a fund to hand over to businesses which relocate into the state. Now we have a proposal to hand others taxpayer dollars – their own, it seems – to stick around or to return to take jobs for at least five years.

HB 1156 by state Rep. Neil Abramson would allow those who graduate from high school in Louisiana (regardless of where they went to college) who get a college degree to divert any state income taxes from employment in state they would pay for five years into an account that could be used for a down payment on a house bought within three years after the five-year period ended. But leave the state before the time is up or don’t buy the house within the time frame, and the money goes into the state’s treasury.

The bill, of course, will do little positive. Louisianans who fit the bill would be reluctant to enter into the program because it so limits their options. What if they find a position out of state with a raise more than sufficient to offset the forgone escrowed taxes within the five years? What if they want to buy a house in order to build equity much sooner? And what if the kinds of jobs appropriate for this level of education don’t exist?

But it’s the entire philosophy behind the bill that is the most objectionable. Like the business megafund idea (or at least its funding at the proposed exaggerated level), it treats symptoms but allows the disease to continue by dangling incentives to compensate for the state’s disincentives, rather than working on eliminating the disincentives themselves.

The disincentives stem from a state fiscal structure that penalizes investment and rewards inferior policy-making agendas. Or, put another way, Louisiana individuals and businesses are overtaxed and their tax dollars are not always wisely spent. To its credit, the Jindal Administration has started working on the latter, and it’s hoped that with things like moving the proposed addition to the megafund instead into a position where it can be used to offer tax relief in future years it will soon get going on the former.

In the interim, this bill may be disregarded as something which will not address the basic problem haunting the state. As Edmund Burke remarked, “To make us love our country, our country ought to be lovely;” Louisiana will begin its turnaround when people, jobs, and investment are attracted by its loveliness, meaning bribery no longer must be used to make it look lovely because it will have become lovely.

20.4.08

Republicans supporting Cazayoux disregard his liberalism

Curiously, some self-identified (whether all are registered as such is another matter) Republicans publicly have announced support for Democrat state Rep. Don Cazayoux in the May 3 special election for the U.S. Sixth District. They point to his beliefs “being pro-life, pro-gun and his ideas for national security” as the reason why. Therefore, one only can conclude they remain ignorant or deluded about his record in the state Legislature that does not support causes traditionally aligned with Republicans.

A review of the past three years of Cazayoux’s votes shows a legislator more than willing to raise taxes and fees to fund big government, to spend taxpayers’ dollars on wasteful projects, to neglect wise spending choices, to introduce greater government control over the economy, and to reduce citizens’ economic choices, among other things. Some of his more outrageous examples follow:
Regarding his views on government intervention into the economy, in 2005, he voted to put a floor on gasoline prices, artificially raising them, and in 2006 voted to increase them again potentially by mandating the use of alternative fuels at a certain point, for increasing the minimum wage which would have hurt business and the economy, and for allowing local government passing through revenue-raising on cable television bills and to restrict consumer choice in that area, and last year voted against the privatization of the state’s troubled insurer.
Concerning his record on taxing and spending, in 2005, he voted to increase taxes on health care providers, that enabled increased government spending, which would have been passed through to consumers, while last year he voted to authorize building of a palatial replacement for New Orleans’ charity hospital that would facilitate continuance of Louisiana’s present costly, inefficient indigent health car provision regime.
Reviewing the kinds of spending priorities he favors, in 2005 he voted to enable more money to be spent on the dubious “economic development” projects around the state, the building of reservoirs, in this case in Morehouse Parish, while in 2006 he did the same for the existing Poverty Point reservoir.
Last year, on several measures designed to reduce government spending that could have led to a tax cut, to cut the size of government through eliminating long-term vacant positions, and to prevent pay raises going to these “ghost” positions, he voted against all of them.
While a vocal of supporter of banning types of free tickets to legislators this year, in 2006 he voted against an almost-identical measure.
In 2006, he voted to extend government protections to practitioners of homosexuality, which would have embroiled government in needless litigation.
Finally, he practices enthusiastically what many are growing to dislike, earmarks, a practice that his Republican opponent Louis “Woody” Jenkins says he will stop.

What also should be causing severe cognitive dissonance for these Republicans is Cazayoux has had a fairly populist and liberal record overall in the Legislature. Over the past three years his scores on the voting scorecard produced in my Louisiana Legislature Log gives him numbers (where 0 is “perfectly” liberal/populist) of 44, 30, and 10. Either these Republicans are not very bright or are willfully ignorant if they cannot see Cazayoux does not believe in the ideas that Republicans typically do.

These wayward GOP identifiers are playing right into the hands of Cazayoux’s campaign which is trying to portray Cazayoux as more conservative than he actually is so he does not seem as out-of-touch which the district as much as he really is. Just because you cherry-pick a few conservative positions does not make you one, and if these Republicans themselves are conservatives they should know that.