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24.6.10

Despite struggling state finances, film welfare continues


As the state struggled to make ends meet, while there was talk about as a solution ridding the state of some obnoxious spending programs such as the corporate welfare of the Mega-Projects Fund, perhaps the biggest, most useless state giveaway escaped any scrutiny at all – film tax credits, despite nationwide trends turning against them.

As almost every state faces tight fiscal times, a fresh and realistically critical reappraisal has gone on concerning these programs, now to be offered in 45 states with Virginia’s recent enactment of such a law. Several states’ programs had faced negatives reviews from either inside or outside of government, prompted by money woes, and Iowa is making moves to dismantle its. Louisiana’s has gotten a black eye with the recent criminal conviction of the former head of its program and of a financier that used the program as an excuse to bilk high profile investors.

Only this spring the Tax Foundation released the most recent comprehensive report, noting most jobs “created” are temporary with little upwards mobility, that laudatory studies of these incentives are rife with misleading assumptions, and, confirming what so many other studies have found, that these programs cost states more, usually far more, than the revenues they bring in. And the economic climate has found states more willing to be critical about who gets incentives, finally beginning to sensitize policy-makers into understanding the programs are nothing more than ways to subsidize the production of more and more dreck.

23.6.10

Stay, response to it helps LA, hurts Obama politically

Common sense came to the rescue over politics when an appointee of Pres. Ronald Reagan to the bench, Fifth Circuit District Judge Martin Feldman, stayed temporarily the moratorium Pres. Barack Obama had placed on drilling activity in the Gulf of Mexico. It gives Louisiana its life back but further imperils the political life of Obama.

Feldman, known for his scholarly attention to jurisprudence, showed erudition in his decision. Essentially, he noted that Obama did not pay close enough attention to the law in considering the moratorium, thereby hinting that political considerations had triumphed over rationality. That certain comports to other aspects of the incident where it has become clear that Obama’s decision-making has hewed to the desires of the know-nothings overpopulating the environmental lobby and of others who see the drawdown and elimination of oil production as part of their ideology and/or of their pursuit of profit. The composition of the sham panel that was supposed to meet to adjudge the future of offshore drilling (and on a schedule likely to have extended the inactivity further), chock full of blind ideologues and/or of insiders whose interests would prosper with the waning of oil production, was just another tipoff that the moratorium was first and foremost a political exercise to appeal to Obama’s base.

The ruling lays bare the politics behind Obama’s decision and predictably drew the political response of an appeal. If followed through, that means nothing about the moratorium will stay in effect until that is heard from the Fifth Circuit, several months in the future basically eliminating it. This signals that Obama clearly has gone all in with the anti-drilling Luddites because otherwise he would try to negotiate a compromise. That no negotiations during the injunction period seem likely now means he does not want to budge from the no drilling stance.

(A red herring as far as political aspects of the case go is Feldman’s reported ownership in 2008, the latest financial disclosure report for judges, of shares in Transocean, the owner of the rig that exploded to set the stage for the moratorium, and in Halliburton who made components incident to the attempt extract oil that failed. That he took the case strongly indicates he no longer has these shares – probably dumped them or a trustee dumped them for him two months ago like so many other investors – but even if he still held them on his own the ruling will do nothing to benefit either company for they can always do business elsewhere than in the Gulf. It’s oil companies, Louisiana, and U.S. consumers that were being hurt by Obama’s political decision, not these entities.)

In the state, almost every Louisiana politician comes up a winner, certainly at the national level where the only Rep. Charlie Melancon gains no clear benefit because he has articulated a vague strategy between current practice and a moratorium (and also because he accused oil companies of wanting to “kill Nigerians”), where all others wanted to moratorium gone, no conditions. Which yet again is an instance of Melancon turning the gun and firing on himself as his campaign for Senate becomes, unbelievably, even more hopeless than before.

At the national level, Obama clearly comes up the loser as he takes all the political heat for bending over backwards for the moratorium with nothing substantial to show for it. Continuing to do so may be red meat for his liberal base, but in a way it’s helpful to Louisiana also since that effectively prevents enforcement of the moratorium now and further destabilizes Obama’s chance at reelection in the future.

22.6.10

Hypocritical legislators bring back politicized pork

They just couldn’t help themselves and, worse, it reeked of hypocrisy when $30 million of slush fund money was shoveled back into the 2010-11 budget for Louisiana as the close of the session.

As previously noted, it wasn’t a great budget that had gotten decided by the Legislature, but one redeeming quality had been its lack of “member amendments,” or line items that direct money to private and public entities in legislators’ districts. Yet defeat was snatched from the jaws of victory when, apparently at the insistence of the House, items for its members and the Senate were plugged into the ancillary budget bill HB 76 and passed.

The hypocrisy of it all should not escape notice. The House had been stumping for a more fiscally conservative budget and its leaders asserted this as its reason for resisting the more free-spending Senate’s version for so long, but it seems one of the sweeteners to get the House to concur on a plan much closer to the Senate’s version than its was to allow this extra spending into the budget. Thus the presumed chamber of fiscal probity sold out completely and Senate Pres. Joel Chaisson seemingly correctly called the other chamber’s bluff.

Yet the Senate joins the House in a more general hypocrisy in that this was money that could have gone to more important needs when some were being cut dramatically, rather than for city walking paths, band instruments, or cattle fences. The money was siphoned out of the Overcollections Fund, in essence a holding account for presently-unencumbered funds attached to statutory dedications that, depending on circumstances, may in the future be called in to fulfill their legal purposes. So if the Pres. Barack Obama Administration’s war on free enterprise and political point-scoring cause the bankruptcy of BP and thus the flow of compensation to Louisiana, monies that could have gone to dealing with the oil spill instead will not be there courtesy of this gorging at the trough.

While legislator defenders of them say these things represent good causes – meals to the elderly, tourist attractions, educational programs, etc. – and help local governments that can’t finance stuff on their own, the merit of these stands independently of the process that allocates money to them. Why doesn’t the state simply set aside $30 million and create a grant process shielded from political influence that picks the most worthy projects for funding? Because then legislators could not take credit for “giving” something to their districts and the electoral benefits that conveys, but obviously this represents a far more politicized process.

So the brightest silver lining to this low-achieving budget get obliterated. Perhaps Gov. Bobby Jindal will salvage something out of this by liberal use of his veto pen (perhaps spurred by thought of payback, he’ll wipe out $13.6 million of these), but that’s just putting a finger in the hole in the dyke while true reform that would end these slush funds still waits for the light of day.

21.6.10

Opportunities missed on LA budget, but not all bad

Despite my exhortations, the Louisiana Legislature didn’t choose the best of options in finally resolving its toughest budget situation in a regular session in many years, and it may get worse.

Last night, the operating budget HB 1 and the supplemental budget HB 1358 got the assent of both bodies which ended up hewing mostly to the Senate versions of them at the urging of Gov. Bobby Jindal. This has its pluses and minuses.

The Senate version recognized a revenue picture more deteriorated, which apparently will be recognized formally today after House Speaker Jim Tucker agreed to retreat from his refusal to do so. Tucker’s longer-term strategy was to prohibit essentially draining part of the Budget Stabilization Fund for an extended period in order to force larger cuts now meaning lesser ones in the future. To reduce pressure to do so, as part of his role on the Revenue Estimating Conference he vetoed making official new revenue projections that were lower.

The approach to which he relented does comport more to reality and thus force larger cuts than if not recognized. However, with Tucker’s assent now to extract money from the BSF without any promise that it will be repaid in the next budget year, they did not have to be as dramatic as Tucker and others in the House might have liked under its plan which probably would have been better in the long term. The Senate also forced fewer cuts onto government in general and more onto already-drastically-reduced higher education and indigent health care, the latter particularly unfortunate give federal matching dollars that could have been obtained and be valuable as the state tries to make the transition to a more efficient health care provision system.

Tucker also was unable to hold the line on emptying the Mega-Projects Fund, a wasteful use of taxpayer resources that attempts to spend money to bribe employers to come into the state rather than reducing short-term revenues through tax cuts that would attract business. Instead, the Senate left that with $55 million and raided the Emergency Response Fund which may not be a big issue if BP comes through with promises to pay for all oil spill disaster costs. If not, this could backfire.

Zeroing out the MPF would have rid the state of a major flaw in its economic policy-making, but the Jindal Administration argued that much of it was committed to unspecified and unconfirmed projects. However, if these ever do come to fruition, surely the money could have been found to fulfill commitments somewhere like the ERF or BSF (being as indicators are the state still may be lower on state-sourced revenues making it eligible to be tapped again) instead of letting dangle money when it might not be available for years, if ever used.

However, one Senate tactic deserves to be maintained. It refused to put in and took out from the House version it got “members amendments,” line items that shovel money to private and public entities in their districts. Whether some device will be found to reinsert House requests and room found for new Senate ones today remain to be seen, but the elimination of these would be a silver lining to a rough budget cycle.

This and revenue reduction reality recognition that forces future cuts are small victories compared to what could have been, and the former may yet become defeat snatched from the jaws of victory, but something to recall is that reduction in the size of state government in general, whatever the reason, rarely is a bad thing.

20.6.10

End of fee hike battle completes triumph of triviality

Guess what, if the Legislature is single-minded enough, it can get the governor to blink, as the current one Bobby Jindal did by signing the bill to roll back an increase of and to refund if that increase was paid individual drivers license fees. Just don’t expect that too often and maybe next time not on an issue that became totally trivialized.

Presumed inside information held that Jindal was going to deliver a veto after the constitutional deadline for legislative session closure, this Monday (85th day in even-numbered years) at 6 PM, thereby asserting it still came back on the 12th day after presentation to him. By doing so this would require a veto override session and all the trouble and extra expense that would incur to discourage it from happening and thereby foil any attempt to override this veto.

Forcing such an outcome may have seemed to be the only way to stop the bill. Given the House passed it several votes above the two-thirds necessary for an override and the Senate on concurrence to House changes with a couple of votes to spare (and there were absentees in each case), that made override chances great. Further, Jindal could not be sure he would have had a potent arsenal for governors to try to persuade individual legislators, the ability to veto so-called “members’ amendments,” line items in the operating budget that shovel money to private and public interests in a legislator’s district. This tactic may not have been available because the Senate already had forgone any such funds for senators and stripped out House members’ requests. These slush funds may reappear before it’s all over tomorrow, but the Senate’s resolve threw this into doubt.

Without much real leverage to flip some votes and his only tactic a very legalistic interpretation of the Constitution that would have brought charges of imposing his will against the will of the large majority, while it didn’t look good for Jindal to sign and therefore imply a mistake in judgment, it would have looked worse for him to veto and face a tough public relations battle, so he crossed up the purveyors of the information that he was going to veto (perhaps in the end, it was a pint-sized feint to make the bill’s author, state Sen. Joe McPherson, look silly by sounding a non-existent alarm although McPherson historically hasn’t needed anybody’s help to do that on his own).

Nor does the implicit threat of reducing State Police operations (the increased fee was to support them) seem to have materialized. The bill itself partly obviated that by stating district offices could not be closed, and other reductions just may have been too difficult to achieve without significant decrease in performance. The money will have to come from elsewhere so somebody’s oxen will get gored, perhaps most likely from the indigent and disabled and/or higher education.

So the Legislature found a backbone and branches of government able to spar against each other cannot be a bad thing. But one wishes it had found it long ago over far more serious matters, such as getting rid of slush funds, or refusing to build reservoirs, or paying nursing home operators (like McPherson) for empty beds, or any number of genuinely wasteful uses of funds as this one arguably had merit and demonstrable purpose. This one only happened because it was too politically convenient for many legislators to show they “cared” about constituents and for some because it was a jab at Jindal. So whether this incident represents improved governance in Louisiana is debatable.