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14.3.09

Fiscal conservatism in pared LA budget vitally needed

The harshness of the budgetary conditions under which Louisiana must operate for at least the next couple of years illuminates the roadmap of reform of the Gov. Bobby Jindal Administration, as the policy preferences encapsulated in his fiscal year 2009-10 budget show.

Federal dollars once again play a prominent role in interpretation of these. As always, a good chunk – this year nearly half – comes from the federal government, but more than ever now. Until a few years ago, much came from regular federal programs of matching and formulaic grants, but with the hurricane disasters of 2005 a significant portion started coming to the state for that reason. Now for this upcoming year, another specialized portion from the federal government is on its way, the American Recovery and Reinvestment Act funds better known as the deficit spending package, and it creates its own set of solutions and problems.

The impact of federal funds always complicates interpretation, and for Jindal this has led both to overstatement on his part and under-appreciation on the part of others concerning assessments of his fiscal policy. Last year, Jindal took credit for “cutting” the state’s budget which was lower considerably over the previous year’s. But backing out federal monies dedicated to disaster relief showed a small proposed increase in state spending on continuing operations, 3.31 percent or $466.5 million. The area over which Jindal had the most control, the non-dedicated, non-self-generated portion of the general fund, he asked for a 6.19 percent increase or $536.9 million.

12.3.09

Income tax cut bills desirable if used the proper way

State Sen. Nick Gautreaux’s bills, SB 6 that would eliminate the state income tax on individuals, estates, and trusts over 10 years starting next year, and SB 8 that would allow nonrecurring state surpluses to be given out in tax rebates, both have some good essentials but as is won’t achieve optimal economic development.

A cut in income taxes always is welcome but the question presently is whether legislators would be willing to risk this when the budget already seems seriously out of balance to the estimated tune of $1.75 billion (we’ll know more tomorrow when the official budget is released). No fiscal note on this request yet has been compiled, but the December Revenue Estimating Conference forecast predicts that individual income taxes will be over $2.8 billion in collection for next fiscal year – over a third of general fund revenues meaning the 10 percent reduction that would start halfway through the budget cycle would clip over $140 million from this pending budget, then $280 million or more each year in addition to the previous amount from there on out.

The forecast thinks state revenues will begin to pick up again in a couple of years, so as not to create budgetary chaos, a better plan might be first to drop rates sequentuially, then tackle the elimination of them. While it’s hard to tell exactly given the way the data are reported, the present two percent tax bracket appeared to bring in $111 million for fiscal year 2007-07, the four percent bracket $355 million, and the six percent bracket $2.179 billion. What could be done would be for the first three years starting next year would be slashing a percent off the lowest, then middle, then highest, or reducing (by tax year) state coffers by about $56 million, then $89 million more, and then finally $363 million. This would fit in with revenue projections with the most realistic withdrawal and opportunities to cut spending.

After those three years, then the cut by a tenth every year until elimination could happen. By then, the economic growth triggered by the first three years of reductions (starting with the lowest earners as the economy improves) will cushion the removal of the annual 10 percent. This may take three years longer but smoothes the process somewhat.

His amendment to allow usage of nonrecurring surpluses in rebates is an unobjectionable idea. But passage of this should not serve as a means to deflect attention from enduring tax cuts. Economists note that one-time rebates are far less effective in stimulating economic growth, simply because taxpayers know it is not recurring and they are reluctant to invest money of that nature.

Tinkering with SB 6 is a good start, and SB 8 won’t do any harm unless it is seen as the only cure necessary for a stagnant economic development climate.

11.3.09

Plenty of posturing, little intellect present in funds request

Partisan politics is alive and well with Democrat leaders in Louisiana’s Senate arguing for a ploy ill-conceived, counterproductive to the good of the state, and whose only impact would be symbolic to sow division and thereby try to embarrass Republican Gov. Bobby Jindal.

The contretemps has developed because Jindal refuses to accept about $98 million of federal dollars from the supplemental spending package that trebled the annual debt passed by the Democrat Congress and signed into law by Democrat Pres. Barack Obama. These would pay for the state to give unemployment insurance benefits to people who are not involuntarily separated from their jobs, an extra $15 a week per dependent, and add 26 weeks worth to benefits to those in training programs after having been laid off from a “declining” industry.

The problem is the money lasts only two years and then the state is on the hook for it – meaning state businesses and workers, who are assessed money out of payrolls to fund the program. Further, not only would one of these three conditions have to be changed in state law, the period for which eligibility may be established also would have to be changed in state law, creating a permanent obligation that expands the program. Jindal rejected the money because he did not think the permanence served the state well.

10.3.09

With adjustment, session start bill makes sense

From time to time comes a move to alter the regular legislative session schedule in Louisiana, and another such one is afoot. If it’s going to be done, it needs to be done right and for the right reasons.

State Sen. Neil Riser has prefiled SB 5 which would advance the beginning of the state’s regular legislative sessions to the last Monday in January for the even-numbered year general regular sessions, and to the last Monday in February for the odd-numbered year “fiscal only” regular sessions (meaning only fiscal bills, local bills, and five non-local, non-fiscal bills per member may be considered). He argues that with the latest start of a part-time legislature among all the states, too much chaos is created for Louisiana’s budgeting purposes for a fiscal year beginning Jul. 1. It would not change the number of days – 45 of 60 or 60 of 85 – that it meets.

The latter consideration in particular is not a bad thought. But as conceptualized, this will never happen, for it would have the Legislature in session many years the period that it simply cannot be in this state – Jan. 25 through Mar. 9, the potential days given the liturgical calendar that would encompass the entirety of the Carnival parade season, generally considered to last two Fridays before Ash Wednesday through Mardi Gras. Riser, from rural north Louisiana, may be forgiven for not realizing the depths to which Carnival enthralls southern state legislators and therefore will have at least a third of the Legislature against the constitutional amendment needed to accomplish this change.

At the same time, however, a minor tweaking of the schedule may be in order. Starting an even-numbered year session on the third Monday in March – never earlier than Mar. 15, nor later than Mar. 20 – would miss Carnival, and odd-numbered sessions never threaten it. Even a week could be a big advantage to getting the budgetary house more in order for the Jul. 1 new fiscal year. Starting the second Monday in March would interrupt Carnival only once every 84 or so years, so even that could be lived with (that Mar. 8 the Legislature could get its initial business out of the way, then adjourn until Mar. 10), so a two-week advance would be even better.

That still may not placate naysayers like state Sen. John Alario, who may complain this alteration cuts into tax preparation season, among other things, too much. Of course, if any legislator finds his public service too much of a burden on his real job, we thank him for his service and he may resign. And to suggest that the May deadline for budgetary estimates is sacrosanct, which also could be changed, is a red herring as a criticism.

This small change should provide some benefit with no real costs, and Riser’s bill should be amended to reflect as such.

9.3.09

LA Democrats must reject attack on workers, economy

If the likes of Democrats Sen. Mary Landrieu and Rep. Charlie Melancon genuinely and sincerely wanted to help reduce the impact of the unfolding Obama recession, they will vote down the misnamed Employee Free Choice Act when Democrats try to ram it through Congress.

This legislation would replace secret ballot organizing elections with publicly signed union cards, allowing union organizers to deceive, harass, and threaten workers into signing these cards. Workers would not even have to know about the organizing drive. Once organizers had collected cards from a majority of employees the employer would have to recognize the union as representing all workers, even if the rest of their employees knew nothing about the organizing drive.

This is opposed to the current system, where a secret-ballot election must be held if 30 percent of the workers in a potential bargaining unit sign cards authorizing union representation and the company contests formation of a union. Under this law, a union could continue collecting signatures up to an absolute majority and then skip the election entirely – something either Melancon doesn’t know or is being deceptive about when he says a company could call for an election under the new guidelines.

Another canard about the legislation is that it somehow reduces a pro-company bias in the process. There is no bias is the process currently precisely because indication of interest by gathering cards from 30 percent of the workforce then leads to a secret ballot where neither side knows who is voting for what. In reality, unions tend to aim for double that before asking for an election precisely because they know intimidation currently results in more cards than actual votes when voting unions cannot convincingly accost workers and pressure them – and they still lose about 40 percent of the time. This bill would pervert the process, allowing unions to know who has signed and who hasn’t while the company is left totally in the dark on that matter. To make things worse, it increases penalties against certain practices by companies during an organizing drive but not against unions.

But besides its assault on workers’ freedom, choice, and rights, the bill will have serious deleterious effects on the economy because it allows for the artificial distortion of the market, increasing the price of a good (labor) above its true worth as does any cartel. Studies consistently show that unionization reduces the number of jobs, a conservative estimate being 765,000 in two years if this bill is adopted. In one study, manufacturers reduced jobs by 11 percent two years after unionization, with losses disproportionately among smaller businesses. The Great Depression was aggravated in its length and severity by an expansion of unionism, not a good omen.

With unemployment skyrocketing upwards and the economy shrinking at a near-record pace, the last thing that needs to be done is anything that destroys more jobs and discourages more productivity. Landrieu had been a co-sponsor of previous incarnations of the bill but wisely opted out this time; she can use as the excuse to vote against it the economic deterioration under Obama. Melancon claims he likes the bill with some change, and when major alterations of it are not forthcoming he can follow suit. Regardless of the reasons for not supporting it, these Louisiana Democrats need to put workers and people first rather than party and greed.

8.3.09

Despite contrary assertions, numbers show Vitter strength

One begins to wonder just what kind of lens through which the political world outside of Louisiana views the political life of Republican Sen. David Vitter. Ever since Vitter began to demonstrate high-profile opposition to the leftist agenda of Democrat Pres. Barack Obama and the Democrat Congress, it seems that national – and some closer to home – media take pains to run stories about his “vulnerability” to a 2010 challenge. Another example (first reported on a loony tunes hard left website which may explain it) has come forward where the template is the same – except that the content directly contradicts any notion that Vitter is in much trouble.

The rules of thumb about an incumbent who might be vulnerable to defeat (at least until a few months prior to an election when information about actual candidates becomes widely available to the public) are that he is entirely untouchable barring future major scandal if he polls at least 50 percent in any hypothetical possible matchup and gets at least 40 percent in a question about whether someone who would vote for him again and it is at least 10 percent higher than the proportion who say they will not. By these standards, a polling firm that typically contracts out to leftist organizations reveals, Vitter is borderline secure in his seat.

This poll has him defeating current U.S. Rep. Charlie Melancon 48-41 percent and former and defeated Congressman Don Cazayoux 48-39. For good measure, he beats GOP Sec. of State Jay Dardenne 43-32 (presumably only Republicans were polled on that question, but the poll’s internals are not public information) in a putative GOP primary. (That he appears about as safe against a Republican challenger as against any Democrat already has been addressed.) Finally, 41 percent say they would reelect him while 27 say they would not with the remainder saying they would be willing to vote for him but consider somebody else.

As to the meaning of the roughly 40 percent that would vote for another candidate, one must always adjust that figure for the fact that, with blacks comprising 31.2 percent of the electorate, one could run a yellow dog against Vitter and the canine would be guaranteed 30 percent of the vote. This means Vitter is pulling 75 percent of the white vote already and the names mentioned got about 15 percent of it. If three-quarters of whites already are sticking with Vitter after a year’s worth of endless reminders that Vitter admitted to a “serious sin,” it’s going to be hard for any Democrat to peel off enough white support to win.

While some seemed impressed that Melancon’s gap came within the poll’s margin of error, at the same time Melancon is not a candidate and has said so (probably in part precisely because of these numbers). Vitter has a tremendous war chest, is raising money easily, and Melancon may feel he has a decent chance for his Third District to remain intact after redistricting. He said he could change his mind, which means he could jump in if Vitter’s numbers showed weakness. So far, they do not.

Nor is Cazayoux a realistic choice, as he is more interested in securing a federal district attorney’s job and after Democrats politicized debate about a president’s ability to hire and fire these officials at will in the previous administration, Cazayoux cannot even express interest in the Senate (nor would he be likely to win, being unable even to engineer his own reelection). And as far as other Democrats with any statewide name recognition, Lt. Gov. Mitch Landrieu also never has shown any interest, couldn’t even win in New Orleans when he ran for mayor, and surely knows enough of the public would feel uncomfortable having siblings in the Senate. Atty. Gen. Buddy Caldwell won his job just about a year ago because he was the least flawed candidate, hardly the credential to threaten Vitter.

If we weren’t already, after these guys we’re on to the second team. Former Member of Congress Chris John was blown out five years ago by Vitter and there’s little to suggest he would be much more competitive a year from now than he was then. Businessman Jim Bernhard would be an easy target for Vitter because of his associations as former head of the state Democrats and with former Gov. Kathleen Blanco who made politically everything that touched her toxic, and Vitter is one guy who could match the wealthy Bernhard dollar for dollar. And the quality of challengers goes further downhill from there.

At best, in the past year Vitter has gone from invulnerable to slightly vulnerable by these latest numbers. The only way he now can lose is if the right candidate comes along at the right time, and not only does that candidate seem unlikely to exist, but given the Obama Administration rhetoric and budgetary intentions that continue attacking America’s prosperity, early indications are 2010 is beginning to shape up as an ugly election year for Democrats and certainly not the environment to try to knock off a pretty secure incumbent like Vitter. Judgments that Vitter is in any real trouble at this time seem more indicative of wishful thinking than any valid analysis of the real world.