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25.6.09

Jindal vetoes create more opportunity for smaller govt

Gov. Bobby Jindal didn’t have to issue line item vetoes on HB 1 – the timeline allowed him to do so after the Legislature had adjourned so it would dramatically reduce the chances of any overrides – but he sent it back with a day to go in the session. What he vetoed and when he sent it back reveals much about the dynamics of the petering out of the 2009 regular session.

As expected, Jindal excised all provisions dealing with revenue-raising matters the Senate had tried to pass into law, or transference of monies from the Budget Stabilization Fund, essentially ratifying preferences of the House. He could do so precisely because he knew no override would come from the House. Now the situation is that other pieces of legislation contain in themselves the seeds of any budget deal and, as mentioned previously, the House and Jindal have the upper hand in any deal-making which must happen today.

More interesting, while most of the vetoes concerned these items, of the few that were not, many dealt with the exact area over which is the focal point of controversy – higher education. Six items vetoed reflected this, totaling $25.55 million – over a fifth of the disputed amount that the Senate wanted to add back in of $118 million. This may factor into negotiations

Most interesting, unlike the almost 250 items dealing with appropriations to nongovernmental organizations and local government vetoed last year, only one got the axe this time around. There are several reasons why this happened.

First, the publicity from the previous year about these no doubt altered the decision mechanism by legislators. Requests that did not follow Jindal’s standards, and entities that did not seem at least somewhat compelling were not forwarded. Second, shortage of money discouraged these kinds of requests. When higher education and health care were losing hundreds of millions of dollars, it probably dampened the enthusiasm of legislators to pursue these. Third, some such amendments were stuffed into some other bills, and some probably are still floating around waiting for a bill to attach to before 6 PM today.

Still, the high success rate compared to the significant casualty rate of last year may indicate that Jindal may have wanted to ease off the vetoes in order to get his preferred budget through. Last year, with a surplus, he may have had more leeway to veto with impunity but with a deficit making for more contention in dividing up a smaller pot, he may have had to tread more cautiously to create more goodwill among legislators.

In the final analysis, with these actions Jindal (with the higher education vetoes) strengthened his hand and demonstrated good faith not only to legislators but also, and most importantly, to the people as he pushed the budget that will come into a more parsimonious direction. Our wallets still won’t be safe for another several hours, but, so far, Jindal has done much to reassure us the bite won’t be as bad as it could be.

24.6.09

Dynamics favor smaller govt advocates in budget tussle

The Louisiana House and Senate continued its weird mating dance over the budget, narrowing issues down to just how much will come out from the Budget Stabilization Fund after the House resoundingly rebuked the Senate’s strategy of raising taxes just recently lowered. With all matters of extracting more money from the people set aside, the main issue now is how much is to come out of the Fund and what does this mean to the size of government?

After the House ejected the tax increase, the Senate went ahead and amended HCR 236, the enabling resolution to draw on the Fund. The House wants only a little over $86 million, in large part because it is believed though HB 720 that creates a tax amnesty enough money will be hauled in from that to replenish that which gets taken out of the Fund. The Senate wants more, an even $204 million – note the difference is almost $118 million, the money promised to higher education to offset cuts totaling $219 million for next year. The difference sent the instrument to conference.

There it joins HB 802, which contains mainly funds transfers but also an appropriation for $118 million for higher education and a reversal of a transfer of a fund designed to attract insurers that by another piece of legislation was to have been put into the general fund, both Senate amendments. The Senate conference strategy will be to bargain for the $76 million in the insurance fund for the $118 million extra in the “rainy day” fund.

But now the House’s hand has improved over last week, when its interest in this bill was much greater than the Senate’s because now this is the Senate’s only vehicle by which to pry loose at least the $86 million the House has since volunteered with all other options closed. Neither can afford to let the bill founder because of the funds transfers, and if the House just let it go as is it would actually involve less spending if it also let HCR 236 expire (118 – 76 = $42 million). The problem is the money would not be going the places it wants nor is the actual draw from the fund in place, so a deal must be made.

That determined, if there’s real hardball involved on the House’s side it could say it will accept the $118 million and creation of a fund to send it to that supposedly would send it to higher education expenditures if the fund raid is not reversed, and then depend upon its backstop Gov. Bobby Jindal to veto that line item. The Senate will want assurances that will not happen, but it needs the bill, too, and likely will try to stake out some middle ground in terms of amount to avoid being put in a situation where it can be double-crossed.

Further strengthening the House’s hand is the current posture of HB 720. The only difference between the chambers with this instrument is the House version directs as much of the available revenues from the amnesty as possible to higher education while the Senate, to get leverage for its vision of funding this area, stripped that provision. The House could simply concur on this and HB 802 and HCR 236 with the Senate’s promise of not reversing the insurance fund draw. This would create a much bigger draw on the Fund than it wants, but then the proceeds of the amnesty are left unappropriated past constitutional requirements, which works in the favor of the House and Jindal because the first place they could go would be back to the Fund. In other words, acceding would create only a temporary draining that could be replenished to the level the House and Jindal prefers.

However, note that the Senate has every incentive to play hardball here as well, not because of the superior mechanisms at its disposal, but because so much of their political capital is on the line. Almost 30 senators, some nominally anti-tax, made themselves politically vulnerable by twice voting for tax increases. If they get at least some additional funding to higher education, they can claim they had to adopt extreme measures to reach this payoff and successfully. But if there is no payoff, or at least not any way to argue there is one even if substantively there is not, they will look quite foolish.

This has come down to a contest of wills because of a fundamental difference in belief about the appropriate size of government between Jindal and the House majority, and the Senate majority, where the latter believes government should be larger than the former. Given the constitutional, legal, and procedural structures of the state and its governing institutions, unless the former group loses its nerve its preferences are going to triumph in the main.

23.6.09

Firm Jindal can wrap up sensible budget, protect wallets

Louisianans still need to keep their hands on their wallets as the 2009 regular session of their Legislature plunges into its death throes, the dying often committing acts of desperation that could yet trump the state’s Constitution, break promises, and produce poor public policy. A dedicated attendant, however, can and must manage the crisis.

Of course that would be Gov. Bobby Jindal, who has emerged as a referee of sorts between the more cautious House and free-spending Senate. Quite sensibly, the House majority, effectively Republicans like Jindal, recognizes a looming fiscal crisis over the next three years and an economic recession dictate sometimes painful prudence in spending and keeping as many of the people’s resources in their hands as possible. By contrast, the majority Democrat Senate resists the idea of downsizing government to match resources and, as part of its plan, has gone so far to concoct a solution of dubious constitutionality.

That would be encapsulated in HB 689, essentially hijacked with the permission of the author state Rep. Karen Peterson to take back a tax cut that began nearly six months ago for those who itemize on income taxes. The original attempt, SB 335 by state Sen. Lydia Jackson, was denied a hearing by House Speaker Jim Tucker because it clearly violated Art. III Sec. 16 of the Constitution: “All bills for raising revenue or appropriating money shall originate in the House of Representatives, but the Senate may propose or concur in amendments, as in other bills.” Having tacked the SB 335 language into HB 689 the Senate presumes takes care of that.

This probably is something that, regrettably, will have to go to the judiciary. HB 689 never was designed as a revenue raising bill in the House but got mutated into such a bill by the Senate, so where did the revenue-raising capacity actually “originate?” Also constitutionally a problem is that it appears to be retroactive in nature, prohibited by Art. I Sec. 23 of the Constitution.

However, in the short term the constitutionality question can be mooted by Jindal, who may be playing the role of referee, but a biased one in favor of the House. The latest negotiations, excluding areas of agreement, seemed to have boiled down to acquiescence on his part to use about a ninth of the Budget Stabilization Fund to offset some cuts, but that the Senate resists the House’s attempt to use expected funds from a tax amnesty program to offset others and instead still pushes the tax hike to squeeze out even more revenues. The bargaining chip they seem to employ is about $30 million in House “member amendments” – specific line item appropriations to organizations in and out of local government – which they have stripped out of the supplemental appropriations bill HB 881 which contains also the appropriations language for HB 689. The offer seems to be trading some or all of the revenues raised in HB 689 for assent to the member amendments.

As noted previously, it does not have to come to this because Jindal has the upper hand. He needs to state simply that he will not sign HB 689, even if the House debates it (allowing the Senate to save face, although it is possible Tucker again could refuse to hear it out of constitutionality concerns) and it will vote it down. Further, he should declare what is sauce for the goose is sauce for the gander: if House member amendments don’t go through, he will veto every Senate member amendment. Given the dynamics of the process and bill languages at this point, these two remarks checkmate the Senate’s expansionary desires as its members know those vetoes will not be overridden by the House as it would have nothing at stake. Jindal is going to veto some from both chambers, but the two must cooperate in order to convey that too many Jindal vetoes on these line items and on other whole bills could trigger a veto override session.

Jindal doesn’t like to micromanage the Legislature, having articulated that governors ought not be in that business. But practicing what he preached last year put him in a position where he wasted political capital on the matter of pay raises to full time status for legislators. Being firm with the Senate now will avoid a repeat of that outcome and do a service to the Louisiana citizenry.

22.6.09

No justification to give more money to make movies

Shreveport’s City Council, mayor, and the Caddo Parish Commission recently demonstrated that these yokels remain as blinded as ever by the chimerical bright lights of Hollywood.

The Council unanimously, and with Mayor Cedric Glover falling all over himself to sign the ordinance into law as quickly as possible, voted to relieve filmmakers working in the city of at least some city sales tax. The measure permits as much as a $150,000 rebate (depending upon just what activities are paid for and how they are taxed, perhaps as much as $6 million in expenditures) but any concern that spends at least $300,000 in the parish is eligible. Repeat performances increase the ceiling even more. The parish came up with a much less intrusive, but equally as obnoxious program that will rebate as much as $23,200.

It’s more than just star-struck politicians who now get the chance to puff out their chests a little more and will find more opportunities to rub shoulders with film industry types. Slick producers and glad-handing lobbyists (which include city film officials) also praised the move to the skies. As well they would – the former now can get corporate welfare and the latter can justify their fees and paychecks.

21.6.09

Melancon eyes Senate out of weakness, not strength

Louisiana’s Democrat Third District Rep. Charlie Melancon seems to be reevaluating his previous position not to challenge Republican Sen. David Vitter. In the end, it will come down just how risk he is willing to assume to have a longer political career.

The calculus has changed somewhat for him over the past several months, but not in any consistent, or even politically favorable way. Even with Vitter’s only vulnerability being admission of a “serious sin” connected to an escort service, overall Vitter would be a difficult opponent to defeat, and events since the beginning of the year have made him even more formidable:

  • He continues to raise huge sums of money, already over halfway to a $5 million. Melancon, who doesn’t yet have $1 million, probably would have to spend in that area to be competitive if Vitter does the same.
  • No distracting challenge within the GOP has emerged to dilute Vitter’s efforts.
  • Opinion polls continue to show that a solid majority approve of Vitter’s handling of his job, and he is just under 50 percent in head-to-head matchups with opponents (if 50 or above, he would be considered a lock at this juncture, and it is instructive to note that these numbers were better than Sen. Mary Landrieu’s at the same point in her contest two years ago which she won with only a minor degree of difficulty).
    1. The capture of the White House by Democrat Pres. Barack Obama has been as blessing in disguise for Vitter in four ways:
    2. It has allowed Vitter to become one of the highest-profile critics of Obama, showcasing his conservative ideology in a state that barely mustered 41 percent of the vote for the very liberal Obama last year when the major alternative was a moderate.
      It has hurt Democrats like Melancon in particular because it has become increasingly difficult for Melancon to masquerade as a moderate, with the self-proclaimed deficit hawk voting on numerous occasions with Obama to dramatically expand the size of the federal government.
    3. It conveys a small electoral advantage in 2010 to members of the out-party like Vitter in their contests. Historically, members of the party not in the White House running for the House do disproportionately better in off-year elections, while Senate candidates do slightly better.
    4. Unless something unprecedented happens, Obama and the Democrats’ economic policy is going to lead the country into a recession as bad as the late 1970s-early 1980s, and maybe even worse. There is no way Vitter would lose to a Democrat under those conditions.

    However, pressuring Melancon to run isn’t so much a result of an improving statewide profile for him, but of a deteriorating district situation:

  • He already has a serious GOP challenger talking about opposing him, state Rep. Nickie Monica, in a district that delivered only 35 percent of its vote to Obama (Melancon ran unopposed last year).
  • Seizing on the inconsistency between his rhetoric and actions, national Republicans have been running media pieces highlighting this and appear to be committed to do so for the next 18 months regardless of what office he intends to pursue.
  • Redistricting plans floating around already have his district being merged with the Second by 2012, and this will be the preferred plan by Republicans and black Democrats likely with a reelected Republican governor in order to maximize the chances of Republicans and a black Democrat to be elected to comprise the state’s House delegation if as is probable Louisiana loses a seat through the 2010 census.

    Melancon’s problem is two-fold. As any politician at this level must do, he has to act soon on forecasts a year out which may be wildly inaccurate. Also, indications are his chances are deteriorating at both the district and state level, and it is never good for a politician to feel compelled to act out of growing weakness as opposed to growing strength.

    So when he states he will make a decision in the coming weeks, this translates as he needs more time to assess the way the political winds are blowing. But if current trends continue, expect him to go with the office he would be favored to win which might disappear in two years rather than the one he would be an underdog in that definitely would give him six more years in Washington, unless he feels really insecure about his district and/or hubris seizes him.