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14.5.08

Jindal finally on board tax cut train, but paid high fare

Finally, almost a month later, Gov. Bobby Jindal jumped on the train spawned by state Sen. Buddy Shaw’s SB 87 which would provide a tax cut for middle-class households to the tune of $302 million a year. The wonder is why he didn’t leap early into the engine cab rather than catch onto the caboose, and what prompted him to do so?

Despite information showing excess state funds beyond what Jindal’s 2008-09 budget had anticipated, despite the House cutting spending that would have partially offset the “cost” of the cut, despite legislative criticism of some of Jindal’s spending plans, the most Jindal ever committed to on this bill was after initial opposition he agreed he would sign in it if commensurate cuts were made. Meanwhile, others perceived that in allowing a poison pill amendment that altered the bill to make it wipe out individual, estate, and trust income taxes over 10 years that would give Jindal an excuse not to sign it, Jindal really wanted to kill it.

This line of behavior, given Jindal’s stated desire to reduce the size of government and his goal of reducing or eliminating income taxes in the future, could lead only to two assumptions about Jindal’s thinking on the matter. One was Jindal had very serious concerns about looming budget deficits and the use of “one-time” money (generated from non-recurring sources like federal grants, even if they would be considered “recurring” under the state’s definition for budgeting purposes) to fund recurring commitments and even given his enthusiasm for tax relief he felt he simply could not do it.

However, Jindal never tried to make a public case to justify his opposition on these grounds, which either was a sign of poor political skill or implied the other potential motive, that Jindal really didn’t care about delivering tax cuts when he had a decent chance to do so. Whatever the reason, Jindal today announced his support for the original bill with only one change, beginning implementation in tax/budget year 2009 rather than 2008.

What changed Jindal’s mind? Was it irreversible momentum that made him go against his better judgment about the budget and/or skepticism about tax cuts? Did further review satisfy him that a 2009 start would not be imperiling state finances? Or was there some kind of deal made? (Maybe some of all of the above?)

If a deal is involved with the House and/or Senate, likely it would involve either or both of two things. One is with the issue of earmarks slipped into the state’s operating budget that Jindal promised to review very stringently, the other is legislator pay raises to among the highest in the nation and the highest in the South despite this being a part-time job in a state that underperforms in almost every way, which one might presume Jindal would oppose on the principle of smaller government.

The House and Senate may have threatened Jindal to send the amended bill through and dare him to veto it unless they got these kinds of concessions. If they did and Jindal blinked, in a few weeks he unenthusiastically will pursue these ends. Thus the people would suffer unwise spending if so in addition to Jindal’s squandering of political capital. But if he shows zeal with his veto pen, nothing may have been brokered.

Regardless, Jindal took a big hit to his reputation on his issue. In order for him to reassure a number of conservatives and reformers that heretofore have supported him, in the future he may have to be act more boldly more quickly than he had planned on their agendas.

New public records exemption approach needs action

While it’s agreed by the Gov. Bobby Jindal Administration and reformers that there ought to be more transparency in the governor’s office, finding the right way to do has been elusive and demands a new approach.

Right now, over five dozen agencies that got folded into the office remains exempt from public records requests. The problem is the original law that established the general concept of exemption simply said the governor’s office was exempt, and over the decades various reorganizations have stuffed more and more agencies and functions into it.

One approach, passed out of committee in the House, HB 1100 by state Rep. Wayne Waddell, would specify a select few positions in the governor’s office. However, the bill leaves too much ambiguity regarding the relationships of those officials to others who work for them and interrelate with them. For example, argued executive counsel Jimmy Faircloth, would a communication from a secretary in a covered position to one that was not count? No doubt meaningful and appropriate lines eventually could be figured out, but at the cost of a great deal of inefficiency and even court challenges.

Another, supported by the Administration, represented by SB 629 by Sen. Mike Walsworth which awaits the full Senate, specifies many exceptions although many fewer than currently exist. But the problem there is that in most cases they were chosen because some part, no matter how minor, of their duties logically would fall under an exception but the remainder of their duties which should not be exempt would be.

The problem is these bills focus on the jobs and positions, not on the actual content of the communications which is an approach many other states use. The ideal bill, which as yet doesn’t exist, would offer a very few blanket exemptions – governor, chief of staff, executive counsel, and others whose jobs routinely handle sensitive information like the inspector general and Office of Homeland Security and Emergency Preparedness. Otherwise, for all other communications, categories based on content should be defined legally and exactly, leaving no room for ambiguity but at the same time not covering under the umbrella things that have no justification for being there.

Either of these instruments can be amended into these forms, and should be, in order to reach a goal that theoretically everybody wishes to attain.

13.5.08

Arguments of opponents to capital outlay reform "fluff"

So does it or doesn’t it? While most of the Louisiana Senate agreed SB 808 by state Sen. Rob Marionneaux improves the current capital outlay process for the state and thereby passed, a few senators did not and voted against it. Let’s figure this out.

The bill makes several changes. It allows a rise in the $200 million cap on capital expenditures by the rate of inflation. It requires at least 75 percent to be spent on state projects and on those that aren’t in most cases the local of nongovernmental must come up with 25 percent of the funding on its own. It collapses the categorization system into a five-year plan set by law. It pushes back the change date from Nov. 1 to Dec. 15. These aren’t controversial provisions.

Two, however, were. One is that the proposed law retains the present law’s absence of a cap on the total amount of that could be put into the bill. Theoretically, the five-year plan submitted by the governor would include a little over $1 billion. But nothing under either present or the proposed law would prevent the Legislature from putting in more requested amounts than the cap, whether the annual limit now or the proposed five-year plan limit. As a result, presently the Legislature loads up the bill and passes it, leaving in the hands essentially of the governor (because the State Bond Commission gives formal assent to selling the debt per project and the governor’s appointees and allies have a majority on it) to decide what gets funded.

The other is that the proposed law seeks to change how feasibility is determined. The present standard is documentation submitted to the Office of Facility and Planning Control in the Division of Administration in the governor’s office alone suffices. The bill mandates that objective standards are to be developed and employed to assign a ranking to each project which is now not done.

State Sen. Robert Adley was the vocal critic of the lack of a cap on requests. Adley, who had a competing bill that was almost identical to this one and who amended it to reflect the bill prior to SB 808 (it is a substitute) in committee, wanted to put one of 140 percent and have the final list going before the Commission to be approved by legislative committees. Together, these would give much less flexibility to the administration in championing projects.

When his amendment that would have done these things failed by one vote, Adley sulked and declared he wouldn’t vote for the bill almost like his because it had too much “fluff” and wasn’t real reform. Of course, through his pouting Adley neglected to mention something that completely negated his argument: it is solely up to the Legislature to choose whether to fund projects. The Legislature chooses to load up the capital outlay bill and hands the selection power to the governor. Further, Adley’s idea of having committees approve a slate of projects after the governor’s signature violates the idea of separation of powers by first giving the governor the list and then approving whatever he approves again. If the Legislature really wants to control the process, all it must do is send $200 million worth of projects and leave the governor only with the options of vetoing the entire bill or exercising line item vetoes – both which the Legislature could reverse. Adley is trying to legislate willpower into the Legislature through dubious constitutional means.

State Sen. Troy Hebert voiced the other main objection, that the feasibility studies now made formal into the administration’s role will skew the process in its favor. Again notable is what is left out here: the Legislature is under no compulsion to give any weight in its capital outlay decisions to the results of the studies. It can appropriate for any project it wants (subject to the new 25/25 rule and ceiling), as long as it there was a feasibility study submitted for it (constitutionally they must be listed in order of priority but higher priorities aren’t forced into the budget over lower). Besides, the rules promulgated for analyzing the projects are themselves subject to review by committees of each chamber before implementation. Again, it’s just a matter of legislative willpower if it wants to assert its authority in this matter.

Analysis shows that if there’s any fluff in on this issue, it’s in the arguments of Adley and Hebert. SB 808 is a welcome change and deserves to become law.

12.5.08

Tax, budget cut jockeying may allow Jindal comeback

The drama continues concerning the earthquake-like effects of SB 87 by state Sen. Buddy Shaw which has turned into a needless political chess game causing anxiety both for elected officials and taxpayers. However, particularly for the state and Gov. Bobby Jindal a successful resolution presents itself.

The bill as originally envisioned would have changed income tax brackets back to those of five years ago which would create a middle-class tax break of $500 or $1,000 per taxpaying household. Instead, it was amended in a Senate committee to eliminate all individual income taxes over ten years, with rates decreasing by a tenth every year. Many “supporters” of the amended bill in reality wanted to make it such a poison pill that either the Legislature would defeat it or Jindal would veto it – and by all indications Jindal seemed willing to cooperate in this.

Jindal’s story kept changing on it. First, his Administration said it was against it. Then it said it would sign it if cuts elsewhere in the budget to compensate for it would be made. Then the bill got amended, and not long afterwards the Revenue Estimating Conference declared an $824 million surplus a portion of which easily could “pay” for the cut, yet Jindal announced all of that surplus should go to substitute for “one-time” money – meaning he didn’t think it should be used for offsetting the cut, whether in the bill’s original form.

Yesterday, the House committee responsible for suggesting cuts to the governor’s budget did some of that -- $120 million which almost exclusively targeted education and health care which it said was using these “one-time” dollars. But more egregiously, it shifted other money around to fund about 140 local projects to the tune of around $15 million, even though Jindal had said that he was going to line-item veto projects of which many appeared to be of the kind that were added.

Today, debate in another House committee on SB 87 should have commenced. Yet today it got postponed for more research – which presumably had been going on since Friday’s surplus announcement – into options and feasibility.

An expensive game of chicken may be going on here. House members may be bargaining with Jindal, saying they will put the bill into a form he seems willing to sign – the latest rumor being phasing in the cut over four years – keeping the new surplus in essence unspent to allay Jindal’s stated fears of using “one-time” bucks on recurring expenses which was the rationale for cutting the $120 million and maybe even restoring that, so long as Jindal doesn’t touch most of the newly-added spending (no doubt the leadership would allow for a few symbolic strikes of the veto pen). If Jindal doesn’t deal, then they send the bill through as is and dare him to veto it and the negative political repercussions that could result from a governor who said his goal was to get rid for the individual income tax doing exactly the opposite.

But if this is what is going on and Jindal is smart and sincere in his tax-cutting desires, he can use this to turn the tables. He can tell the Legislature (the House would be carrying the Senate’s water on this deal, making the deal on its behalf as well for its senatorial projects) that unless they give him the original SB 87 that he will sign to make everybody look good and trim most of the added spending, he’ll sign the amended version and then kill off all those earmarks, plus a lot more of what they may value in other places, in the name of savings to “afford” the cut. That would dare the Legislature to try to overturn the line item vetoes (it never has) or to kill the tax cut on its own and bring the negative attention onto itself.

Ever since Jindal let the tax cut issue get out of his control by refusing to endorse it, his rhetoric about tax cuts and “one-time” money has been used against him. This bold stroke would put him back in control and it would take equal boldness for the Legislature to try to oppose, such as keeping those $120 million in cuts and calling what they may think is a bluff. But after the House’s words of caution about “one-time” money it can’t suddenly go out on a spending spree to compensate, and Jindal will then be sitting nearly a billion bucks that can be used (through debt reduction thus lower service payments and other means) to compensate for the tax cut in either form (both would cost about the same for the first year, but then obviously the amended version would escalate much more afterwards).

The scenario may offer Jindal a way out of the mess he created for himself and with successful enforcement of budget discipline through his veto pen and a tax cut presented way ahead of schedule, he’ll come out looking really good – besides, of course, doing prodigious service to the people of the state. We’ll just have to see if this is the opportunity presented, and what transpires.

11.5.08

Shreveport/Bossier needs real development leadership

While Shreveport metropolitan area denizens hear all the hype about the area’s burgeoning film industry, conventions supposedly coming to town, or the probable coming of the U.S. Air Force Cyber Command, the reality is the area ranks near the bottom of places for business and careers, according to Forbes Magazine. If area politicians can stop breaking their arms patting themselves on their backs for a moment and pay attention to this, maybe they can learn how to try to improve matters.

Shreveport’s metropolitan area ranks 162nd on the Forbes list out of the largest 200 metropolitan areas. Not that this placement is exceptionally bad in Louisiana – the best ranking is held by Baton Rouge at 142, and Shreveport is sandwiched by New Orleans and Lafayette. Among smaller areas, nor does Louisiana’s rank well either, ranging from 128 to 156. Nine categories were used to make this ranking, which provide clues as to how the area can increase its desirability.

Incredibly, Shreveport ranks this low despite being fifth-best in terms of the cost of doing business, which includes taxation and costs of labor, energy, and office space. Even more incredibly, the taxation component depresses this specific ranking, because even though Caddo Parish (like most of Louisiana’s on the list) ranks in the bottom 20 nationally because of the homestead exemption, sales taxes are above average. It’s the resource costs which are really low, but only energy’s for a good reason – lots of it nearby being pumped and refined. Office space is cheap because of a glut, and labor costs are cheap due to several other factors.

Two are colleges (number of four-year institutions in the area) and educational attainment (proportion of population older than 24 with a bachelors’ degree), ranking 130 and 158, respectively. This in large part is out of the hands of local policy-makers because it has been state educational policymakers that have given Shreveport in the form of LSUS the state university enrolling the smallest proportion of its population of any metropolitan area in the country at just over one percent, through its policy of benign neglect and favoring other state institutions. Lower levels of educational attainment mean lower-paying jobs.

While this situation also relates to a stronger component to the ranking, putting the area’s cost of living in 66th place, it also aids in creating the two worst rankings – 193 in crime rate and 200, yes, dead last, in income growth. A better educated population, not just with college degrees but with meaningful high school diplomas, simply is less likely to be stupid enough to think crime pays and more likely to bring value added to jobs to increase productivity thus pay.

Add to this that job growth is a decent 81 in rank and this tells us what growth is occurring is in the least productive kinds of jobs – waiting tables at the Boardwalk, sweeping up at the boats, and doing wardrobe at film sites. Throw in the fact that relatively there’s not much culture and leisure activity (defined as museums, theaters, golf course, sports teams and other activities) to attract or keep those in more productive professions (rank of 163) and net migration is problematic (130th) and it’s a wonder this area ranked as high as it did.

(Not that this is any surprise: the area’s rankings have been, since 1999, 153, 188, 185, 165, 123, 131, 142, 133, and this year’s 162. It should be noted that 1999 had only 162 areas ranked, and 2004 only 150. In other words, no real improvement.)

Two things have to change to alter this situation, although one is partially out of the hands of local policy-makers. That is provision of better education. At the tertiary level, much higher state priority needs to be placed on my employer, LSUS.

At the elementary and secondary level, while Louisiana pumps more than enough money into it and has made big strides in student and school accountability, it has failed miserably in teacher accountability – it practically doesn’t exist. Programs such as teacher subject area testing for job retention, merit pay, and introduction of competition through vouchers means salary increases won’t be a matter of throwing good money after bad in many cases, but will begin to match the value expected.

Also, the “Field of Dreams” economic development strategy plaguing government on both sides of the Red River – build it and they will come – must be replaced by the obvious notion that it is not government that creates economic development, but people when it leaves them sufficiently alone to do so. Using taxpayer resources in the subsidizing or building convention centers, arenas, movie studios, outdoor shopping centers, and the like, instead of spending on infrastructure and/or giving the people’s money back to them to allow and to attract investment, has created this situation of the only jobs created being the least productive ones.

I’ll bet for most readers this is the first they’ve seen of the Forbes rankings; area elected officials (or local print media) certainly haven’t been advertising them. Now that we know of them, are we finally going to start doing something to change the situation?