After the hurricane disasters in 2005, in 2006 the state passed legislation
setting up a lending program for local governments to borrow money to service
debt during the presumed difficult period of recovery. It’s kind of like taking
out credit card debt to pay off an existing mortgage – except the terms were
far more generous: state general obligation backing to get a low interest rate,
delayed payments, and a two-for-one deal in that the federal government coughed
up for nothing $200 million that the state would match.
But unlike the relationship between issuer and cardholder, some local governments now want forgiveness of their debts, despite the generosity of the terms and that they
had years (five, or three more than the minimum in the legislation with payback
therefore beginning in 2012) to prepare for this. Even though legislation has
appeared (such as this past session) to forgive it, the Constitution prohibits state
donation of assets not surplus property.
Some jurisdictions have no qualms about honoring their debts, such as
the Orleans Parish School District, which paid off its $77.9 million in full at
the first opportunity, saving $31 million had then instrument run to term. But
the much larger City of New Orleans continues to carp about the $66.7 million
it owes, coughing up $4.9 million this year. Its deputy mayor Andy Kopplin, who
was a functionary in Gov. Kathleen
Blanco’s administration that created the program, says these loans weren’t
actually intended to be loans.
Which then begs an obvious question: why wasn’t the money just flat out
given to local governments, if that’s what was “really” meant? Because that was
not politically possible at the time, with state officials fearful that the
storms’ aftermath would wreak havoc with the state’s financial picture. So, it
appears a little game of hide-and-seek involving taxpayers was plotted among
Kopplin and other politicians, where the state “loaned” money (wink-wink, nod-nod)
and local governments pretended it was borrowed, while all along knowing it
would be forgiven.
Except Jindal then came along with the inconvenient attitude that the
law was the law, and that if the people’s representatives had figured had their
constituents wanted it to be a gift, they would have voted to make it a gift.
Worse, there would be no winks and nods connoting secretive, private deals with
the people’s money about which they were, in essence, being misled.
Called on this, Kopplin moans and complains that the city could use
this money to fund parks and police. Surely, but the annual payment in question
in 2012
represented a whopping 0.6 percent of the city’s revenue – in a year it ran a
$72 million deficit or about 9 percent of its total revenues as spending
climbed almost 10 percent, fueled mostly by general government.
This coincides with the whining that
Kopplin’s boss, Mayor Mitch Landrieu,
makes constantly these days about the city’s monetary shortfalls, with the
general theme that past problems are coming due now on his watch – while
entirely ignoring the poor spending decisions that he has made. For example,
there was no genuine need for the city to back a hospital in New
Orleans East when emergency
facilities were not far away and clinics would have done the rest of the job.
The money poured into that alone would have paid off the debt to the state.
And that’s really the entire point of this all, accountability that
creates responsibility in governing. The wink-wink, nod-nod relationship
envisioned by Kopplin subverts the ability of the people to understand which
politician caused what. Maybe if Landrieu did not blithely assume the
under-the-table agreement would come to fruition he might have made different
choices, and state taxpayers would not suddenly realize that without their
consent they had financed a hospital in
New Orleans that a large number probably would think was a poor policy decision.
Landrieu and Kopplin still can have their way legally, by getting the
Legislature to make a direct appropriation to New Orleans in the amount of the
debt. But, oh no, that would be out in the open and subject to the actual
lawmaking process, and as such likely would not be well-received by the people
and sour their representatives on ever allowing that to make it to the
governor’s desk – where if it did, in part because of the public reaction, he
very likely would veto that line item.
ReplyDeleteI would suggest that you "enhance responsibility" by keeping your word, by not reneging on your agreement.
But, that's not politically expedient, is it?