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4.3.10

Objections discarded to make worthy state pay plan

Wisely, the State Civil Service Commission passed new standards regarding Louisiana classified civil service employees, over the objections of a few commentators. To understand the merit of the new regime, it is instructive to review it and the weakness of the complaints against it.


Slightly modified from a proposal rejected by Gov. Bobby Jindal earlier in the year, whose final approval must come to enact the new standards, it gives agencies discretion to give annual pay raises to these employees of up to three percent for employees evaluated in the middle category of merit, up to four percent for those evaluated in the second-highest category, and up to five percent for those evaluate in the highest category. Employees in the two lowest categories, which are the ones designating less-than-satisfactory performance and typically comprise less than one percent of all rated employees, receive no raises. Agencies may give lesser percentage hikes as long as levels from lower eligible categories do not exceed higher ones, for budgetary reasons.


Currently, typically almost 60 percent of employees are rated in the two highest categories.

Clearly this system better matches pay to performance than did the old one, where the 99 percent or so rated at least satisfactory except in times of high budgetary stress got four percent raises regardless of rating. Now, financial incentives will exist to motivate better performance and to guide less enthusiastic workers out of the state employment. The improved performance will provide better service delivery at reduced costs (even if the current bias towards unrealistically-high evaluation remains, which hopefully will be the next matter that the SCSC reviews for change).


But a few complained about this among the comments gathered pursuant to the drafting of the new regulations. One argued that the change really needed was addressing unclassified employees, specifically political appointees, that there were too many. Yet the fact is that fewer than five percent of all state full-time employees are appointees so savings would be pretty marginal by their reduction in numbers. At the same time, dealing with that does not mean then you don’t have to deal with compensation reform; they are not mutually exclusive.


Another opined that the new system would allow agencies to adopt informal policy not to give out ratings in the highest categories, which was echoed by a union flak at the hearing who added then raises may not be granted at all. However, that can be done already (and the failure to grant happened last year) under the current system so that is irrelevant as to why the new system would not be as good. And, as noted above, the evaluation system does need work precisely in the direction of realism that should cause fewer high evaluations to be given out.


Also, one seemed to be confused by calling potentially smaller increases “a cut in pay” when in fact no pay cuts are proposed (they are illegal without cause or when part of a reduction in force, in any event) and they were “a slap in our faces.” To which the appropriate response would be that if the remuneration was found inadequate and the organization demeaning, perhaps exiting the organization and finding a job elsewhere would bring the assumed deserved pay and respect. If enough quality people leave, then pay scales will rise to attract them back if this new compensation plan truly is flawed.


Finally, a note lodged by another union hack named Rodney Dufrene showed he neither understood the purpose of a classified civil service nor could use math as part of his critical thinking. He wrote, in advocating higher maximum levels of increases that “Any less than a 4 percent raise is in reality, a hardship on an employee, denying him or her the possibility of a true living raise.” Perhaps only he knows what a “living raise” is, but he certainly doesn’t know that the inflation rate for the past decade has been on average just about 2.5 percent, so what he suggests at 4.5 percent or better is almost twice the rate of cost-of-living increases.


Further, he wrote, “Please remember that the Civil Service Commission’s original goal was to protect the state’s workforce,” which is not in the Constitution as a duty of the SCSC. Even the broader concept, that of a civil service, is to provide protection for workers from political interference, not from salary increases lower than some would like.


This incoherent whining fortunately did no good as the SCSC astutely moved on, and by approving the resolution Jindal will allow the state to start saving perhaps tens of millions of dollars annually and to get better service from its bureaucracy. Jindal needs to sign this version and with that another hidebound institution would be reformed for the better under his watch.

3.3.10

Caddo Parish avoids blunder on debt unlike Bossier City

Recently, the Caddo Parish Commission voted to send, and then not to send, to voters on May 1 a $25 million bond issue devoted to road, park, and building maintenance. In essence, it would have renewed a pair of 1991 issues that are serviced through 1.95 mills dedicated to the Debt Service Fund. Passage of this effectively would have more than doubled the amount of debt of the parish and, in terms of proportion of debt service to all general expenditures would be at an all-time high. To sweeten the deal, the Commission also voted to reduce gradually the rate over 20 years millages dedicated to funds to pay for health care, detention facilities, and public works from 10.4 to 8.45 mills.


If all these needs are genuine, there might not have been any controversy – except that the parish is sitting on over $30 million in its Oil and Gas Fund which holds the proceeds from royalties derived from this kind of activities on parish lands, or about half of the annual intake of the parish excluding royalties and intergovernmental revenues. Every indication is that, thanks to the discovery and exploitation of the Haynesville Shale, several million dollars a year will flow into this fund, meaning if the $25 million was extracted for capital needs immediately (which is unlikely) it would not be emptied and would be replenished in only a few years.


Yet commissioners voted for the issuance anyway, with Lindora Baker saying savings should be maintained as the reason why. This is despite the fact that the interest expense from the debt almost certainly will be higher than any interest earnings from the full fund. Only Commissioners John Escude and Matthew Linn who originally voted against this seemed to understand initially it made more sense that, in essence, servicing debt no longer is necessary because capital projects no longer will require debt for the foreseeable future. The entire Commission agreed eventually and pulled the item.


Proponents may argue to vote down the measure means an immediate loss of around $2.7 million a year (as of 2008) and a gradual loss of the same again in constant dollars. However, if they are so concerned about revenues, why borrow so much with a gradual tax cut? Hopefully, Caddo voters will figure out they don’t need this extra expense and won’t be fooled into thinking a renewal is inextricably linked with a tax cut – the parish can afford things both without the former and with the latter so they must defeat it at the polls.


Across the river, the $30 million figure has held prominence now for nearly 15 years. Among Bossier City politicians, it is a figure cited in sacred tones as it was the magic number proclaimed when riverboats pulled into town as to how much revenues from them had to be held in reserve (in the Riverboat Gaming Special Revenue Fund) before amounts past that could be spent. It was invoked by several elected officials when discussing the budget meltdown of last year caused by the city’s profligacy concerning money-losing, unneeded capital expenditures.


Thus, dipping into this to resolve the $6.5 million, 13 percent shortfall never was discussed, nor the tactic of paying of debt early with it to release debt service money the need for which will cripple the city for years to come. Yet this was despite the fact that there is no provision by ordinance nor in the charter that mandates such a lockbox.


Where it comes from is a mystery. The 2008 Comprehensive Annual Financial Report states that funds collected prior to 1999 were required to follow this by city ordinance – which not longer appears on the books (through the Municode update of Jun. 2, 2009). It reported nearly $32 million in the account.


Seeking the legal basis for it, over the span of a month beginning at the end of last year I made repeated inquiries of both City Attorney Jimmy Hall and members of his staff for an explanation. Perhaps befitting a government whose willingness to provide information makes North Korea look transparent, I never received any reply. (One request to the Council was acknowledged, recommending that I ask Hall.) Apparently not only is the Bossier City taxpayer overburdened, he can’t even get his employees to give him a straight answer about their tax dollars.


With even more long-term financial problems coming down the road, Bossier City must look to emptying this account to reduce debt and certainly before it acquires more debt. It will be the final chapter to the squandering of riverboat bounty engineered by the ego-driven coup counters that have filled the city’s elective positions since the opportunity arose, matching the bankruptcy of public trust already frittered away, but it regrettably is the best course of action to save the city from themselves. Caddo Parish wisely avoided the same ruinous road.

2.3.10

Thompson prefers saving govt than taxpayers or disabled

One reason why Louisiana struggles to provide efficient services, where the failure to do so retards economic development and shortchanges overall service provision, is that certain policy-makers prefer to protect government and special interests before people.


One such dinosaur is state Sen. Francis Thompson, famous for such abuses of taxpayers’ trust as getting the state to spend tens of millions of dollars to build a reservoir for which his brother was convicted for corrupt activities surrounding it, trying to add fees to milk to facilitate oversupply in the milk production industry, and forcing fuel consumers to send subsidies to ethanol producers. Now he’s whining about trying to save taxpayers more than $8 million without any deterioration in government service provision.


Earlier this year, and confirmed with Gov. Bobby Jindal’s presentation of his budget, the state plans to close 31 state government-run community homes for the developmentally disabled focusing on residents who cope with what used to be called mental retardation. This would result in the relocation, mostly to homes not run by government, of about 155 clients at a savings of about $57,000 annually each – more than enough to pay for an additional client currently without services to receive services through a waiver program for every current client transferring out of a state-run home. These non-government homes, many in existence for decades, are fully authorized by the state for this kind of care and also are by the federal government, allowing Medicaid to pay for services.


Yet this seems to be a problem with Thompson. In the Senate’s Finance Committee, he complained about why this is happening now and insinuated cost savings was the only reason, to the detriment of clients. He also indirectly took a slap at the non-government providers, implying through his saying that the state used to hold out state-run homes as ideal institutions so therefore somehow other providers come up short.


Of course, as is typical with Thompson, it was hard to find any logic in his meanderings. On the one hand, he seems to believe that government provision in this is superior – why else bring up cost savings as an issue, implying that reduced costs meant reduced service? Yet on the other hand, he is questioning the same administrative structure that runs the houses currently. So how is it that the same agency that performs this task so well in caring for clients in his eyes is now accused of selling them out for lucre? Which is it – government provision and oversight is good or bad?


If Thompson is arguing that other providers can’t do as well as the state in this area, he needs to say it and defend that accusation. If he doesn’t, that provides a clue to his real motivation in questioning the move – the fact that state government will be smaller as a result. Some of the homes are in his district and these are state employees who will be out of government work – jobs that Thompson can claim he helps maintain.


The Jindal Administration’s plans on this issue will save the state money, provide more services to those who need them, and hardly disrupt the lives of those being transferred from state-run to non-government community homes. Why Thompson seems perturbed by this only can be explained in that he’d rather protect big government than serve the disabled or taxpayers.

1.3.10

Tax hike chance spurred by inability to admit mistakes

March has arrived and time has just about run out on Bossier City as to whether it wants to try to make taxpayers foot the bill for the mistakes of its politicians.

At year's end, more unintentional humor wafted from the Bossier City Council chambers as it concluded its 2010 budget deliberations under the rarest conditions: actual debate and dissent forsaking its typical Politburo-like unanimity behind Mayor Lo “Obama Lite” Walker. But at least the end product and comments about it showed some awakening from the dream its members blissfully and ignorantly have lived in for the past dozen or so years.

The passed version took a more nuanced approach than Lo Ob Lite’s meat cleaver approach in hacking away at the debt-induced deficit. In the end, it eliminated only five line fireman, so if attrition isn’t too bad over the next year with a hiring freeze in effect, the city may yet avoid losing its Class 1 firing rating and prevent passing its mistakes on to property owners in the form of higher insurance rates. Freezing many salaries, especially at the top levels, also was welcome and another year or so of this might actually bring top bureaucrats’ salaries in line with their counterparts in Shreveport who typically have more responsibilities to deal with.

However, the black comedy continued when the Council pledged throughout 2010 to monitor the budget to forestall any unpleasant surprises such as happened late this year. It’s a wonder that the audience did not then stand and break into sustained applause for the Council’s members saying they’ll actually do their jobs for once, rather than spend their time celebrating their names going onto plaques and signs on city buildings and roads. Anytime this past year, as each of them knew the national economy was going into the tank, they could have made a few calls and found out from the city, which keeps regular tally on this, how far behind its revenue projections were running.

(If they were actually in the dark. Since the city does keep regular tabs on revenues and it was clear to all the decline in the economy, do not be surprised if LOL kept a deficit projection quiet, and even warned councilmen running for reelection to do the same, so that word would not leak out prior to qualifying for city elections, information about which surely would have drawn many more opponents to perhaps send them and Walker packing as a result of the spring election.)

But while common sense has been in short supply on the Council for ages, at least there are faint signs at least some of its members are acquiring some. No such luck is evident from LOL and some sycophants in their support, however, of his idea that the city call an election to raise property taxes. Yet before dismissing this stupidity as a classic case of cognitive dissonance, understand the political motivation behind this thinking.

As by now is well known, Bossier City doesn’t have a revenue problem, but a spending problem. This is because by the end of 2008 it had taken on more than $317 million in debt, or more than $4,900 per capita (with more on the way – looks like the city will have to spring for a sewerage fix that will cost $21 million). Repaying this equates in the neighborhood of a quarter of the city’s total revenues annually – for the next 15 years, then it slowly begins to diminish. To put it another way, the total receipts minus earnings by the U.S. government budgeted for 2010 are about a fifth of its total debt; Bossier City’s total receipts minus business operations are about a seventh of its total debt – and Bossier City can’t print more money to mask its deficit. Repaying debt has sucked away resources that could have gone to financing sensible current operations.

Although Bossier City is exceptional in its huge debt, by contrast it is average in its property tax level. Among its four peer cities in Louisiana, two are higher, two are lower (and all noticeably lower in debt), shattering the myth that it is “under-taxed.” LOL’s plan rests on this assumption, as he is asking the Council to approve an election that if successful would raise property taxes to the rate prior to constitutional reduction.

Of course, after making repeated statements that he would not raise taxes, LOL has to make his backtracking look like it isn’t by trying to put the political onus on, respectively, the Council and citizenry by having them approve of the election and then pass the measure. It would give the Council cover as well, as it already can unilaterally raise rates to that level, in taking this route by having voters ratify.

All of these machinations leading to a tax increase are to dodge reality: it was inane capital spending decisions by the city that made the debt bomb what it is. Plowing around $112.5 million into a money-losing arena, a parking garage gift that is unlikely ever to be repaid, and into part-ownership of a high-tech office building that is even less likely ever to recoup expenses and opportunity costs set the stage for the crisis. Without this spending, absence of the principal and interest payments would mean no yearly deficit would exist now or for the foreseeable future.

This LOL, the Council, and stenographers parroting their line cannot ever acknowledge. For to do so becomes an admission of their own bad judgment in their enthusiastic backing of these wasteful projects and of others of much smaller scale. Thus, they must pretend the consequences of these mistakes don’t exist to legitimize the wish to export their costs to taxpayers

Fortunately, even the Council probably has figured out the political price is too high for as torpid as Bossier City voters as a whole may be, so much resentment has developed over the arrogance of the city’s officials that this measure could not pass and the Council would not want to be seen as supporting it and wasting the money on an election it knows it can’t win. Still, the public must keep the reminders coming over the next three years that the best solution to the crisis, in addition to efficiency measures in the works and others (for example, has anybody checked on the expenditures of the City Marshal’s office recently?), is by debt reduction through sales of unneeded assets and privatization, not by needlessly squeezing the citizenry for more resources in a time of national economic difficulty.

Regardless, the deadline for putting an item on the May 1 local elections fast approaches. and with LOL in charge and a critical mass of moronic councilmen available, the citizenry may have to go to battle this time not against stupidity, but deprivation of property and therefore liberty.

28.2.10

Jindal, Legislature must act to support legal integrity

Attorney General Buddy Caldwell will make the right move in appealing the decision made by a three-judge panel of the U.S. Fifth Circuit Court of Appeals that would impose New York law on Louisiana, and now it’s up to the Legislature and Gov. Bobby Jindal to back him up.


The case involves a couple of men who, according to New York law, legally could adopt a child, who was born in Louisiana. They requested a copy of his birth certificate to be out with their names as the “parents.” However, state law permits only a married couple, defined constitutionally as a man and a woman, or a single person may adopt, thus only one name could appear on the certificate in the view of the attorney general, whose office recommended that the Louisiana Supreme Court hear the case to determine whether by implication that the constitutional provision defining marriage and the law regarding adoption meant that only one name had to appear on the certificate.


The panel agreed with the lower district court decision that the full faith and credit clause of the U.S. Constitution decide in favor of allowing New York law to trump the implicit relationship in Louisiana law and indirectly in the Constitution, negating any need to have the Louisiana Supreme Court deal with the matter. That clause is interpreted to mean that states reciprocally honor laws from other states unless they explicitly conflict with an existing law in an area in which states are assumed to have express power as in this case regarding what is termed the general police power of states.


So Louisiana would strengthen its argument by passing a law that makes the linkage direct. State Rep. Jonathan Perry tried to do so last session, but after House passage Senate leaders kept the bill from moving forward until the end of the session when it was too late to overcome apparently sufficient opposition in the Senate. This additional clarity will either entice higher courts to deal with the constitutional question of the meaning of the full faith and credit clause instead of the procedural use of it, or to overturn lower court decisions altogether now satisfied Louisiana has the power to make the refusal.


Perry or another legislator needs to take the initiative to get a similar bill going again, and Jindal needs to give his explicit support for this kind of bill and make efforts to get it passed into law this time. Unfortunately, last year those in the Legislature who wanted to make this case into a political football as a backdoor attempt to chip away at the state’s same-sex Constitutional prohibition got away with using intellectually unsound and emotive arguments that did not convince the House but may have led to enough senators to feel they could prevent the bill from passing. Some resolute legislators and Jindal’s intervention can preserve the integrity of Louisiana's law and Constitution by preventing this allowance of their degradations from potentially occurring.