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22.1.09

Rebuilt Big Charity increasingly seems best option fo LA

It sounds like the state needs to start listening closely to those who favor rebuilding of the Medical Center of Louisiana – New Orleans (“Big Charity”) from its existing structure rather than embarking on a costly new structure that may not be cheaper for the same quality and whose new construction can disrupt historic neighborhoods.

Today at a legislative committee hearing questions were raised about whether the state should build an entirely new facility, which would raze 74 acres in Mid City New Orleans, instead of taking the existing Avery C. Alexander Memorial Hospital building that was severely damaged by Hurricane Katrina and rebuilding it. While damage was extensive, the only independent survey to date, authorized by the Legislature, shows as expensive as renovation is, at $550 million, still would be cheaper by $282 million over a total replacement – and that after the Gov. Bobby Jindal Administration ordered scaling back some of the grandiose ideas for it previous to his taking office. Additionally, they argue rebuilding would occur two years quicker than building anew.

The Louisiana State University system which runs the facility has ordered evaluations which it says – but will not publicly reveal the details of – shows it would be more expensive to renovate the existing facility. One selling point in its favor is that it could combine some functions with a U.S. Veterans Administration hospital to be built next to it. But even so, including extraneous items that he argues would be needed in a rebuilding, state facilities director Jerry Jones claims it would cost $70 million to rebuild than build new.

Consider, then:

  • Renovating promises a benefit of as much as $282 million and a cost of as much as $70 million. The risk-return ratio here would seem to favor rebuilding, especially as it appears it could be done more quickly.
  • The federal government has disputed the state’s claim that the damage to the old building was $492 and has offered only $150 million to compensate (up from $24 million), saying much of that damage was through state neglect of deterioration. Many have argued all along that since the state was looking to replace the building prior to the storm, Katrina is being used as an excuse to request much higher financing than otherwise. It would seem that since rebuilding offers a greater likelihood of lower costs, if full compensation is not certain that should be the route to go.
  • The envisioned rebuild might be too grandiose given the Jindal Administration’s own plans. In his overhaul of indigent health care, Jindal is seeking to shift access to care away from the acute aspect which would argue, in addition to the New Orleans metropolitan area decline in population, for less need for hospital capacity. The lower projections of need there are, the more cost effective rebuilding rather than building new becomes, as Sen. David Vitter has argued.

    And to the intangibles add the fact that historic structures need not be threatened by a rebuilding. Given the above, it would seem the best expected value – lowest cost to the taxpayer – of comparable alternatives would be rebuilding rather than building anew.

    Legislators are right to be skeptical of a new facility. The VA can adjust to build with the state if the state makes the decision in a timely fashion, and one wonders whether the pitch for a new facility is nothing more than a ploy to try to extract as much money as possible from the federal government to compensate for what the state should have been doing in terms of maintenance over the decades. Given current objective conditions, the argument is swinging in the favor of rebuilding and the Legislature this next session, which must make some final decisions in this regard, needs to keep the state taxpayer in mind when resolving this question.
  • 21.1.09

    Some LA educators must put children, not selves, first

    Sticking with the recent theme of economic development to mitigate outmigration from Louisiana, last week served up some perfect examples of attitudes in the area of education which explain why economic development has been so difficult to create in the state.

    One set of events revolved around the delayed announcement by the state of what local schools would be taken over by it. The state would take eight Baton Rouge and two Shreveport schools under its wing. In every case, these schools had been scored as “academically unacceptable” for at least four years, and in each case not just majorities, but large majorities of their students were scoring in the bottom categories in tested subject areas. Overall, in almost every category at least two-fifths of East Baton Rouge students cannot perform up to the basic level of achievement, and for some grades and subject areas it is over three-fifths.

    Yet concerning the East Baton Rouge School District, not only did its School Board fight the possibility of 12 schools taken from their control, rallying interest groups and religious groups to back it, but when the eight were designated to be removed talk from it turned to lawsuits to prevent the perfectly legal transfer. One must wonder why such desperation exists to keep these schools governed locally.

    It’s not like the low performance is anything new, so over the past few years the Board either turned a blind eye to the problem or implemented ineffective solutions. Either case would argue for a new approach by a new institution; just how many years does the Board want in order to show definitively it can’t solve the problem?

    Of course, this consideration is irrelevant to the Board, who by its opposition is looking out for its own power and privilege at the expense of children. The more schools it has, the more resources it has and the more powerful it can be. To remove schools, thus resources, threatens that power. If it cared less about its own power and more about children getting a quality education, it would have changed things long ago then and now would facilitate the transfer. If it truly cared about educational quality, it would have recognized (long ago) its inability to provide such quality and deliberately sought anything better, including reducing its own power, because it’s hard to imagine a worse job could be done. (Recently it came up with a half-hearted plan belatedly that would have turned some schools into charter schools.) The fact that now this is resisted only shows it does not have the best interests of its former charges at heart and reflects shamefully on these politicians.

    Meanwhile, a different set of established interests found another way to show disdain of children’s education. In Monroe, teachers and support workers tried to stage a sick-out strike because they weren’t going to get a raise that traditionally they had in the past. Statistically, the Monroe Schools District’s teachers each make over $40,000 a year for their nine months of work, a couple of thousand dollars higher than the median family income for Louisianans working an entire year, while anywhere from a quarter to half, depending on grade and subject level, of their students cannot meet basic levels of achievement.

    While it seemed the sick-out did not have many adherents among teachers, the fact that some of them and unions advocated it shows just how little they cared to perform their jobs and how much money they wanted to grub. That these privileged ingrates, whose students on the ACT average 18.3 meaning they can’t get into any college that has any admission standards, think they can be derelict in their duty speaks volumes as to why educational quality is suffering in Monroe city schools.

    Until the state gets more educators, both in the classroom and in administrative and policy-making positions, unlike those in East Baton Rouge and Monroe, who see as their first priority the educating of students instead of trying to acquire more money or power, establishing the quality educational base needed to ramp up economic development in Louisiana is going to be most difficult.

    20.1.09

    Cut red tape, forgo economic bribery to prevent outmigration

    Yesterday I mentioned ways that Louisiana could accomplish a pro-growth agenda to jolt the state out of its downward quality-of-life trajectory. Recent comments illustrate perfectly one aspect of necessary reform in this regard.

    Louisiana Association of Business and Industry President Dan Juneau gave some examples of tax cuts which helped business in the state, removing nonsensical taxes unique to the state. But perhaps more importantly, in this interview he gave examples of procedural reforms that could be made that would ease obstacles on business.

    Tax cuts get the publicity, but making these kinds of changes could go further to promote a climate in the state that encourages wealth creation. In fact, Gov. Bobby Jindal first gained political prominence as a technocrat in government who found ways to make government work smarter, so he ought to be the ideal person to lead the charge to get government out of the way of business by eliminating unnecessarily complicated structures in areas such as tax collection.

    At the same time, Jindal has to resist the ideology disseminated by his Secretary of Economic Development Stephen Moret that somehow the state can do a better job of directing investment. As one major interest group that advocates in the area of tax policy states in reference to the idea of targeted tax breaks, “Lawmakers create these deals under the banner of job creation and economic development, but the truth is that if a state needs to offer such packages, it is most likely covering for a woeful business tax climate,”

    It cannot be stated too often that in order to make people love their country, i.e. not want to leave, their country must be lovely. That happens by sweeping away bothersome government regulation that hampers business efficiency and taxes that suck the life out of commerce. This means in the near future that Jindal, if unable to offer more tax breaks because of ailing government finances, must back legislation to cut red tape and give up on this notion that monies must be set aside to bribe business into locating in Louisiana.

    If some prospects come through, Moret wants to replenish a fund that has over $400 million designed to attract big employers. Money of that magnitude if talking economic development would be more wisely spent on tax relief, and cutting regulations won’t cost a cent. These are what need to be concentrated on in the 2009 legislative session, while the fund should be allowed to be drained away if it at all succeeds. If Jindal takes this course of action, it will show he truly understands how to solve the state’s outmigration problem.

    19.1.09

    Jindal correct to reject mistaken tax hike emulation

    Perhaps the way to summarize the effect of the separate problems Louisiana faces in creating economic growth is it has an outmigration problem – more people leave the state and enter, and it’s getting to the point that the excess of births over deaths won’t be able to compensate. But maybe the state will get lucky because fiscal policy of many other states may give Louisiana a boost, if Gov. Bobby Jindal sticks to his guns.

    Jindal has said he will not consider any tax increases of any kind to work the state’s way through an impending budget crisis, preferring smarter use of funds and cutting functions. However, some other states are raising taxes, mostly on consumption of certain good deemed to impart something deleterious, hence the name “sin taxes.”

    There is some stupidity out there on this issue that actually argues personal income or consumption taxes on the wealthy should be raised, the rationale being that the really rich have so much money they’ll never miss it and it might actually be good for them to have a more “realistic” understanding of a good’s true value. This is not the space to analyze the intellectual confusion of this view (an excellent job is done here) but it suffices to say that the historical empirical evidence exactly contradicts this view, as cuts in tax rates particularly among the wealthiest bring the strongest economic growth because their resources get deployed in the most efficient fashion through investment, as opposed to government spending it in a much more inefficient manner for purposes that fail to contribute to society.

    Republican Jindal seems to understand the obvious, that if a choice has to be made, it’s a pretty safe bet that there are low-priority, essentially unneeded things being done in government that can be excised rather than government sucking a greater proportion of society’s resources out of the economy into its own maw which, in the long run, will only serve to depress the economy even further. That other states (notably, almost exclusively those with Democrat majorities in their state governments) that don’t have the wisdom to understand this simple truism are willing to do the opposite are going to hand Louisiana a competitive advantage over the next few years.

    As Jindal’s Secretary of Economic Development Stephen Moret has noted, Louisiana suffers from having low growth in economic areas where it could have a competitive advantage. Yet the solution is not, as he intimates, some kind of government policy targeting assistance to these sectors because that reflects the same folly of belief that government somehow knows better than the market where to commit resources. Instead, it is policy that reduces generally tax and regulatory burdens, a direction into which Jindal has made small steps and perhaps, at least on the regulation-reduction side, will make more soon.

    Tax reduction may be suspended for a short while given other reformist goals of Jindal’s such as in health care and from receding economic tides, but a relative reduction may come if other states and the federal government make the mistake of raising taxes. This will make Louisiana more attractive precisely to those groups Moret frets about being in short supply in the state going forward, the younger and more educated/motivated. Jindal is smart to continue resisting the ignorant suggestion of the chattering classes to follow the course of these other states.

    18.1.09

    Parish must emulate Bossier City on fiscal rectitude

    Gov. Bobby Jindal’s aggressive approach to reducing state taxpayer handouts to nongovernmental organizations and local governments largely was well received by the public earlier this year. One northwest Louisiana government seems to have learned from this, while another apparently has not.

    Last year, the Bossier City Council wisely did not act on a request by the Ark-La-Tex Mardi Gras Museum which is located in the city, to subsidize it to the tune of $25,000, approximating its current revenues. (This is regardless of the fact that, given the stipulations the city placed upon krewes several years ago, Carnival krewes no longer parade in the city.) Its executive director held out the museum as a great educational opportunity, and asserted that with its disappearance of public grants that its donors and admission fees collected from roughly 5,000 annual attendees could not keep open its doors much longer.

    One must admire the audacity of the request while being repelled with its inanity. Are there not other grants out there to be had, and, if not, don’t their absence or rejection of applications from the group tell us just how valued of an enterprise organized philanthropy thinks this is? And if the museum is so important to the concept of Carnival around these parts, why don’t the krewe members themselves come to the rescue? With several hundred of them parading in any given year, each could carve $50 out of their throw, costume, ball, and/or libations budget to donate to the museum which would more than make up the deficit.

    Simply, there is no moral imperative for the overburdened Bossier City taxpayer to have to pony up for this cause given the myriad alternate sources of funds for it. Failure for these to come through would demonstrate that the museum brings so little value to the community that it makes anything but a compelling case for public dollars.

    If only Bossier Parish seemed to have on other issues the same sense Bossier City has on this one. Less than a year on the job, Police Juror Barry Butler complained how hundreds of thousands of parish dollars annually were being spent on educational matters – a policy area supposed to be expended for by the Bossier Parish School District. He even claimed that a widespread perception existed among school personnel that they could hit up the parish if the district didn’t want to fork over for a project.

    Much of that money came from the Police Jury's discretionary funds. Each juror is annually given $5,000 of parish money to use at his or her discretion (the parish will match up to $2,500). The remainder comes in the form of subsidy from the parish workers assigned to complete larger projects where the parish fronts money first, then has gotten reimbursed for materials later by the School Board.

    In a remarkable display of talking out of both sides of his mouth, the originator of the discretionary funds practice, Parish Administrator and Juror Bill Altimus said “Bossier Parish tax dollars are precious no matter who they are paid by,” and then actually argues this saves taxpayers’ money (it is largely the same set of individuals paying for both jurisdictions) because “it is much cheaper to the taxpayer for the School Board to pay for the material and allow the Police Jury to utilize its highway crews to provide the labor and equipment.”

    Entirely disingenuous about this remark is that if parish employees are doing work for the school district then they are not doing work for the parish. Further, if one would argue there is enough slack time among parish employees to permit this without neglecting parish work, then the parish is overstaffed and wasting taxpayer dollars.

    At best, this practice blurs accountability and transparency among local governments; at worst, it inefficiently uses the overburdened Bossier Parish taxpayers’ resources. The discretionary funds part of it absolutely stinks, echoing the old state practice abolished only a few years ago with virtually no public oversight – the Jury certainly doesn’t advertise how much money goes where upon the request of which juror.

    Despite what the recently-passed budget allocated in this way, these slush funds must end as well as the practice of giving gifts to other local governments who should pay for their own things out of their own pockets. At least the jurors recently, after noise from several talking about how much sacrifice they were making in their jobs, had enough sense to stop any talk of raising their own pay. Hopefully enough police jurors will put the citizenry first and their ego-stroking and/or reelection desires, courtesy of being able to shower supplicants with money, second to abolish these abusive practices.