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21.5.14

Mutated contracts bill to cause more trouble than worth

The paradox about a bill to reduce contracting costs by Louisiana is that in order to save its intent you have to destroy its intent.



This session’s HB 142 by state Rep. Dee Richard is the latest iteration of these efforts from past sessions. Years ago, it started off as a meat cleaving, indiscriminate 10 percent excision of money spent on contracting, as determined by agency heads. Even as the Gov. Bobby Jindal Administration pared some contracting expenses over time, the bill continued reappearing in evolving form.



This year’s version initially called for the same 10 percent reduction, although exempting some areas of government with critical need to contract out certain functions, for a single year and taking that money and placing into a fund for higher education. This would put that fund at an estimated $528 million, from which investment earnings could be used to fund higher education. But with these only in the $25-50 million range realistically any given year, it was hoped that, after spending a year on a contracting diet, having realized the world didn’t end as a result in succeeding years the state would continue the practice and shovel the dollars not spent to needs of higher priority, where the author and major cheerleading Treasurer John Kennedy hoped higher education would become the beneficiary.

While the original concept had a certain appeal – certainly a number of the 19,000 of them seem rather unnecessary, if not superfluous – even this year’s first try had a bluntness and lack of flexibility to it that, even as improved, still made it questionable as an instrument of public policy. Yet its weakest point would have been that it would have shifted responsibility from and provided political cover to those who should drive this effort, and who don’t need a new law to do it – legislators themselves. If they really wanted to reduce contracting by around a tenth, they simply could have whacked $500 million or so out of this year’s budget – and in a better, more deliberative, targeted fashion to maximize the chances that the really low priority stuff gets left out.



But, just as with the “one-time money” chimera manufactured by legislators who refuse to create a state fiscal structure where revenues and the amount of them are matched to genuine needs, they try to avoid making these decisions because then they would face pressure from constituents and special interests that didn’t get spending allocated on their pet project or activity. The last thing legislators want is upset voters, so they use every trick available to deflect blame onto others in these cases, and in the form it was introduced HB 142 only perpetuated that.



So at first glance it’s notable that a revised version of the bill that passed out of a Senate committee this week to some extent actually clamped responsibility onto legislators in the goal of reducing state contracts. Except it’s only a handful of legislators, and a handful of contracts, and, when all is said and done, a handful of dollars.



The new bill now would redirect only contracts using state general fund dollars of at least $40,000 to the Joint Legislative Committee on the Budget for the next three years, at the discretion of its members, for review. Savings from those disallowed or reduced still would go into that fund for higher education. The law would sunset at the end of fiscal year 2017.



Of course, while giving responsibility to a segment of the Legislature in a roundabout way – Legislature appropriates money generally, executive branch proposes a specific use, some legislators vet it – it inappropriately turns part-time legislators into micromanagers. The executive branch with its full-time and presumably expert managers should perform administrative tasks of this nature, and in a way which plays to the strengths of both branches – legislators initially budget with available dollars on the basis of priorities guided by executive input and then later the latter fill in the blanks. Legislators should be choosing at the start the amount of money, given its availability, to appropriate to contracting on the bases of the necessary condition of worthiness and on the sufficient condition of need, cutting out the step of accepting a ballpark figure and then returning latter to oversee categorizing and amount decisions that should have been made at the beginning.



And it’s this inappropriate role that dooms the product to minimal impact. The JLCB going over every contract is prohibitive, and even the limited number – the Legislative Fiscal Office estimates there would be about 500 of them – theoretically could create more costs to pay the daily salary and mileage for members of the JLCB to meet even more often between sessions than might be saved. That’s highly unlikely, but any savings will be reduced by at least $5,000 a day in extra work.



Savings in any significant amount seems even less probable when considering of the estimated $250 million up for grabs, probably most of the really sketchy ones are to be found at the lowest end and many sketchy ones fall below that range. For example, in Kennedy’s 2012 list of what he saw as the 13 worst offenders, five fall below the cutoff. And it’s likely that agencies also would engage in gamesmanship by purposely pricing contracts below the amount when they could, or find strategies to break large ones into multiples below it, just to avoid the hassle. It’s anybody guess as to what the amount diverted could be, but it’s not unreasonable to think that the 5 percent of at-risk contracts of the total might have 5 percent in total dollars vacated, or $12.5 million (Kennedy’s 2012 trashy 13 only account for $9.5 million, 70 percent of this by one contract alone.).



Naturally, $12.5 million saved is $12.5 million earned, but why go through all of this, especially if legislators just grew spines to resolve the issue? Worst of all, the best feature of the bill got amended away, which stated that any line item vetoed that reappears as a contract that fiscal year would have to pass JLCB muster to be issued. At this point, the best thing would be to gut the bill, reinstate the line item vetoed language in the original on Page 6 lines 12 through 29, and pass it. Otherwise, in a likely counterproductive way it simply asks too much for too little return.

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