This is a state special district
that oversees the Morial Convention Center and related lands and properties.
It’s funded from a variety of sources, including from state taxing authority,
city taxing authority (that expires at completion of its most recent capital
projects), surcharges on Regional Transit Authority tickets, a state grant
based on hotel occupancy, and its own fees for service.
All of which have been very good
for its bottom line. Through 2012,
it sat on $636 million in asset value, of which was $171 million in
unrestricted current assets while for that year it cleared $44 million in cash,
while having only $161 million in debt tied to supporting $226 million in
capital assets with another $169 million paid for – meaning it could pay off at
any time all debt related to its facilities by writing a check. This is why
that year it easily could afford to have $20 million transferred to the state
in 2012, of which $10 million came back in capital contribution and the
remainder due last year.
Jindal wanted
an arrangement for a similar deal for its 2013 fiscal year – get idle cash
now, pay back with capital projects later – except he jacked the figure up to
$100 million. While the lower figure had elicited no dissent from the Authority
or local legislative delegation, this higher figure did, and the idea was
scrapped as a result with tax amnesty proceeds eventually filling in the hole.
But a proposal
for this year’s budget, siphoning $50 million, has been much better
received by the Authority, and as yet has not drawn complaints from most of the
local delegation because the budget contemplates (the transfer of which must be
done through legislation separate from the general appropriations bill)
replenishing the Authority with $75 million worth of capital expenditures over
three years. Still, this leaves some officials wary because, they argue, the
repayment is promissory, it costs the state $25 million more, and it represents
a use of debt for state expenditures.
Although legislation must
authorize the transfer from the Authority to the state, subsequent legislation
binds the repayment in kind. Treasurer John
Kennedy argues that a future governor – term limits would have Jindal as
governor for only a few days into the 2016 year for the Authority – might not honor
the last $25 million of capital expenditures paid for by the state by including
it in a future operating budget. But Jindal could include it also in the FY
2016 budget, and if he didn’t his successor seems unlikely to renege in the FY
2017 budget given the negative publicity and relationships it would spawn. Even
if he did, the Authority would be no worse for the wear, having gotten the
equivalent of $50 million back and being out only the time value of the amount,
as in the case of the $20 million.
It’s important to remember that
the Authority is not a separate, independent entity of the state. Existing
legally as a political subdivision of the state, it operates only through
powers granted by the state. In this sense, the revenues it raises to operate,
accumulate cash, and build assets serve as a kind of dedication, and like
almost all of its kind in the state (a very few are protected legally from use
of their funds for something other than their legally dedicated purposes)
legally may be subjected to removal of funds to a certain point. So in a way,
this deal is just shuffling money among accounts, and if the state chooses to
divert one way and later divert 50 percent more back, or not, that reflects
nothing more than a policy choice about where to spend money. (Also worth
keeping in mind that the state loaned money to the Authority that is continues
as part of its long term debt, illustrating the intertwining further.)
So if the Legislature assents to
the funds sweep bill where this item would be included, and then to future
general appropriations bills governing repayment, it tacitly agrees that the
Authority is to spend likely $75 million more on capital projects than already
budgeted. It has such building plans on the boards – funding
for which was vetoed by Jindal last year when a separate bill
attempted to create another way for the Authority to borrow. He explained his
decision in that the method outside of the normal capital outlay process might
count against the constitutional limitation of net state tax supported debt –
perhaps as a prelude to enabling the Authority to have debt funding for it but
in the state’s name that also would count against this limit. Put another way,
if the Legislature would not cooperate to finance the debt the way Jindal
wanted, he would set up a mechanism to entice all concerned to see it his way,
with the current deal. But, again, the net result is the same.
Nor does the deal count serve as
a means of converting debt proceeds into cash, as it uses a different source of
debt – state-backed for Authority purposes – but debt nonetheless. But what it
does do is replace state capital outlay expenditures with those of the
Authority, with an additional $25 million thrown in, as a critic from the
previous attempt state Rep. Cameron Henry observes.
Again, though, if the Legislature goes along with this, it gives it consent to
these kinds of priorities.
Actually, all of this
transactional complexity to the point of absurdity that draws complaints from the
likes of Henry is something the Legislature forces upon itself. There’s no reason
the Authority should have, courtesy of state sources, so many tens of millions of
dollars of extra revenues coming in annually, building up idle funds that never
will be used for the purposes of the Authority unless it goes all Nicolai
Ceausescu palace-building. Much less stupidly, the Legislature could change
the laws to reduce these, perhaps diverting them to other purposes to obviate
this rigmarole.
Unfortunately, the political courage
to do that commonly escapes legislators unwilling to buck special interests
that agitate for these streams to continue and because it would lend less
credibility to excuses they make to prevent carping by budget losers, about how
they are “forced” into having monies spent on certain purposes. They’d rather
throw up their hands and let funds sit idle or go through complicated exercises
that promote obscure budgeting, divisiveness, and opportunities to grandstand
against the very practices they refuse to change.
1 comment:
So the GOVERNOR proposes to take money from a SUCCESSFUL entity to spend on current programs and repay it with BORROWED MONEY, and you say somehow it is the Legislature's fault.
WHY DOESN'T THE GOVERNOR QUIT DOING THIS KIND OF STUFF. WHAT A HYPOCRITE! HE ASSAILS OBAMA IN WASHINGTON, WHILE AT HOME EXECUTING THESE KINDS OF THINGS THAT WOULD MAKE OBAMA PROUD.
Surely, surely, no matter how hard you try to hide it behind tripe like this, you don't really believe this is legal, or fiscally sound, or even rooted in common sense.
If so, let's just do it everywhere we can find in extra money - take and spend it and pay it back with borrowed funds.
How about the retirement systems? They have billions in cash and other liquid assets.
INSANE!
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