The Commission has been taking
its lumps lately, in part due to a controversial
financial deal putting taxpayers on the hook for millions in a venture
capital deal. Essentially, the parish purchased the former General Motors plant
and set up a deal to allow three-wheel vehicle startup Elio Motors to lease it
for production. Elio claims it has collected at least 10,000 reservations
for these but production seems nowhere near ready to commence and the
Commission signaled its own dubiousness about the arrangement when it allegedly
dangled the
property to another concern for purchase, about which some commissioners were
not even aware.
Apparently the mystery firm
turned down the parish. All this went down right before the election, with the
central question of whether the parish, sitting on tens of millions of dollars
in idle funds collected through the shale boom of recent years, needed to ask
to issue up to $23 million in debt – the only difference from the defeated
measure being asking for about a million bucks fewer – at the same 1.75 mill
rate set to expire in June. At least this time Caddo released a laundry list of
projects that would cost about $19 million to try to justify the need.
But that only deflected from the
major question of what purpose had the general fund reserves, over twice the
amount of the proposed issue. Many commissioners and those in the community
prone to crony capitalism argued that substantial sums had to sit idle for
quick expenditure on “quality of life” concerns that include everything from
spaying for mosquitoes to luring Elio and other unnamed companies to bring
jobs.
However, these arguments misunderstand
economics and the proper role of government. In essence, tax proponents argued
the one-off nature of shale money did not change the dynamics of government
finance, but failed to understand how that sum could be used to change those
dynamics. The sum can subsidize a tax cut that would stimulate economic
activity that could assist in paying for general government expenses – and one
must wonder how much of those expenses truly are needed, for since 2007’s
beginning of shale extraction the parish’s operating expenses skyrocketed from $79.1 million to $93.6 million in
2012, an increase of over 18 percent where in this period the increase in the
urban Consumer Price Index was only 10.7 percent. Notably,
property tax as a portion of revenues declined from 61 percent to 55 percent in
this period.
A better argument is that the
Parish has gotten more free-spending with this chunk of change lying in the
background, and the economic boost from cutting taxes plus a more
discriminating attitude on spending means some the Oil and Gas Fund excess
could be used for immediate capital needs during the few years it would take
for the stimulus to ramp up parish economic activity to recover forgone tax
revenues. And if any big emergency came up where debt truly seemed necessary,
the Louisiana Constitution has plenty of election dates to bring a new measure
to voters, or even allows for an emergency vote at any time. Alternatively, the
parish could have come back with a reduced millage in light of the surplus, but
commissioners just wouldn’t back down.
No doubt the parish sitting on a
pile of cash, its dalliance with venture capitalism, and its acceleration of
spending all played a role in the crushing defeat, over an issue where
allegedly fiscally conservative Republicans who played the major role in
pushing forward both votes met opposition from the local party and elites. They
were humiliated when a thousand fewer people showed up for this election, but
two thousand more voted against it. Did they, who also got sent a message last
fall about hubris when an attempt by them to stretch out term limits was
defeated as decisively at the polls, learn their lesson this time? They may
need another before they understand the concept of right-sizing government –
and that may come in 2015.
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