To lower LA high sales tax rate, undo Stelly plan leftover

The invaluable Tax Foundation’s latest report on sales taxes placed Louisiana in the third-highest spot for combined state/local rates, having only the 38^th ranked state rate but the highest weighed local rate. In fact, in a sense, the state rate is both not high enough and too high, courtesy of the remaining part of an unwise constitutional change almost a decade ago.

While lower rates in any form of taxation are preferred, taxation itself is a necessary crime of theft in order for government to operate. But if we are to allow government to take our property, the general immorality of that is mitigated by making sure the burden is borne equitably by making sure it is done the most efficiently – in the manner that is least costly and most likely to encourage economic development that therefore brings wealth to all who contribute by their participation in creating that wealth. That is, nobody should be under- or over-taxed relative to their contributions to societal wealth creation.

Unfortunately, Louisiana’s present system violates efficiency rules. Most egregious at the state level is its refusal to collect from a broad base with undifferentiated rates. Its income tax is graduated and pockmarked with exceptions, while its sales tax exempts certain considered essential commodities and is subject to various tax-free calendar dates (such as the one this coming weekend). This distorts collection through avoidance strategies and wastes resources in pursuance of those strategies. Particularly with the sales tax, it misses opportunities to collect more without dampening economic development by ignoring the elasticity of taxable goods, and with income taxes it discourages investment and encourages debt.

Bernhard return should worry Democrats, Dardenne

As speculated, what if the impending sale of Baton Rouge’s Shaw Group frees the inner politician of its founder and former chairman of Louisiana’s Democrats’ Jim Bernhard? For one presumed future gubernatorial aspirant and the new party leadership it comes as most unwelcome news.

Bernhard will make at least $55 million off the deal if it goes through as planned, retiring at its consummation, even a portion of which would make him more than competitive in any political contest in the state. Some believe he might get an early start and run for his area’s Public Service Commission open seat. Businessman Ed Roy and state Rep. Erich Ponti, both Republicans, have announced their intentions to contest the seat for which qualifying beings in two weeks.

The thought is that Bernhard, who ran a Fortune 500 company whose products were subject to PSC regulation, would be seen as a natural fit for voters in a contest that downplays ideology that could offset his Democrat affiliation. That kind of contest also could mute statements from his brief past experience overseeing state Democrats, where his lack of political experience showed with so many articulated illusions about what both major parties represented – if he chooses to run and as a Democrat; he was a self-proclaimed independent prior to switching apparently at the behest of friend former Gov. Kathleen Blanco.

NW LA legislators need to turn cheap talk into real action

Maybe northwest Louisiana state Reps. Richard Burford, Thomas Carmody, Jim Morris, Alan Seabaugh, and Jeff Thompson finally will get serious about reforming Louisiana’s budget process so that it aligns resources to needs in order of priority with a right-sized government. Because up until now they have been all words and no deeds, and speaking fraudulently at that.

These guys, who include every Republican member of the House from the area save state Rep. Henry Burns, pledged themselves as founding members of the Louisiana Budget Reform Coalition – with Morris being tabbed its vice chairman – along with another 20 House members. The group is an offshoot of efforts during the past legislative session to pare down the size of the state’s budget principally by refusing to scoop monies sitting in hundreds of dedicated funds to transfer to the state’s general funds in order to pay for spending. It failed, but got attention and produced impetus apparently to make formal this group.

Unfortunately, that exercise was entirely disingenuous. The only difference between most of the “one-time” money they declared taboo and revenues coming into the general fund is bookkeeping in nature. Most of these funds, like those going into the general fund, are recurring in nature, except that the constitution or statute directs them to be spent on a particular purpose. The problem is, some portion of these end up being in excess of what is spent on those purposes, usually because those items aren’t that important but got locked in because of the power of particular interests that wished to see guaranteed financing of something. Then these dollars become useless, siphoned from the public yet piling up year after year unless an appropriations bill termed a “funds sweep” is passed rescuing a part of them for some often more important purposes.

Reform rightly rolls on even if political reasoning prevails

The recent ruling on injunctive relief sought by education reform opponents from a new Louisiana law’s implementation seems more timed to political considerations than rooted in law, even as its opponents’ arguments appear meritless, in order to store reserves of political capital.

On Aug. 1, the first distribution of public funds as part of reforms that permit families below certain incomes with children attending subpar public school to use these to pay for education at a private school outside of Orleans Parish will commence (a similar program already has operated in Orleans for a few years). Opponents filed suit weeks ago on the bases that this violated the Constitution by sending money through the Minimum Foundation Program for what is not done by public schools and that the instrument authorizing this did not have enough votes to pass in the House.

The matter was taken up by 19^th District Judge Tim Kelley, with it defended by a contract lawyer for the state Jimmy Faircloth. It was almost a reunion of sorts: Kelley is the husband of the first commissioner of administration for Gov. Bobby Jindal, Angelé Davis who two years ago returned to the private sector, while Faircloth was Jindal’s executive counsel during some of that time (Kelley, like all judges in the state, was elected to office). In the hearing, Kelley washed his hands of the matter, accepting Faircloth’s argument that the law states that state courts cannot enjoin administrative actions that would promote deficit spending, which would occur having to pay out the scholarship vouchers yet being unable to tap the MFP to do it if enjoined.

Obama DOJ asks sacrifice of rule of law to follow agenda

Let it never be said that the Pres. Barack Obama Administration’s Department of Justice won’t go all out for its allies and fellow travelers, wherever they may be regardless of the issue of controversy. Nationally, for political gain we’ve seen it for no valid constitutional reason attempt to prevent efforts at reducing voting fraud  and abjure from prosecuting those who attempt to intimidate voters. In Louisiana, in order to intimidate those not considered on its side to help those it considers friends we’ve seen threats against those unwilling to increase the possibilities for voter fraud and now is trying to push around the state’s Supreme Court.

It’s trying to bolster the possibility that black Democrat Associate Justice Bernette Johnson, whose surrogates have claimed contrary efforts denote racist sentiments, will get appointed as the Court’s chief justice upon the retirement of Chief Justice Kitty Kimball at the end of the year, by intervening in a suit brought by Johnson in federal court to prevent Kimball from convening the Court to decide who her successor will be. In the federal court where the suit rests, DOJ filed a brief arguing Johnson should inherit this role, whereas Kimball’s approach would acknowledge the juridical ambiguity involved and have the Court clarify, which means Johnson may not be eligible to assume the spot at this time.

Essentially, Johnson began serving on the Court in late 1994, but not as a member of the Court. This was because of a consent decree the state made in the early 1990s with the federal government, specifically overseen by the Eastern District Court of Louisiana, that would allow her position elected as a state appellate court judge to participate in the decision-making of the state’s Supreme Court, as a solution to what the state agreed was racially-gerrymandered judicial districting. She was first elected to the Court only in 2000, after two other justices presently serving with her.

Budget hawks finally willing to back words with deeds?

Have so-called fiscal conservatives in the Legislature finally decided to take what has been to this point a supremely unserious effort in budget reform on their part and actually give it some substance? One only can hope with the pledge by a more than a couple of dozen of them to form a caucus and with it a political action committee to pursue this matter.

To date, the manner in which they have approached this has been mostly symbolic with little in the way of substance. During the past legislative session, they declared a pox on “one-time” money, some which is actual non-recurring dollars but most of which is recurring money shunted to dedicated funds that run surpluses that then require an extra legislative step known as a “funds sweep” to free them from perpetual non-use. This threw the budget out of balance, for which they then declared they had a solution – let somebody else (the commissioner of administration) take responsibility for balancing it using vague criteria they established, including hypocritically the use of one-time money.

More responsible heads prevailed, but that doesn’t mean the self-designated budget hawks have a bad idea. In fact, the notion that state government is bloated is right on the mark. Louisiana always has had a spending problem, not a revenue problem. But the solution is not to create a straw man born of an accounting trick called “one-time money” and then excommunicate it from a discussion of budgeting. The answer lies in properly matching revenues in order of priority of need, although that itself must come only after a decision (perhaps the first steps of this being taken now) about what amount of revenue and from where is appropriate for the state to address these needs in order of priority.

Voucher program standards set effort up for success

Promised accountability standards for non-public schools participating in Louisiana’s scholarship voucher program materialized and were approved by the Board of Elementary and Secondary Education yesterday. A mixed bag, nevertheless they have more positives than negatives.

Participating schools will have students take the same academic tests as do students in the public schools, where reporting will occur for those with at least 40 program students or with one grade with at least 10 students. If after its first year of participation the school scores below 50 on a 150 point scale computed similarly as School Performance Scores for public schools (that being classified as “academically unacceptable) using only data from program students, it will be unable to accept additional program students and those there already may transfer out with priority. Do that three more years in a row, and the school gets yanked from the program.

But besides schools with few slots will have to meet these standards, many at least initially also won’t have to because testing only occurs from grade 3 on up. This means those that concentrate almost all of their slots in kindergarten through second grade will not have these standards apply – at this time about three-quarters of all slots available, although many schools appear willing to roll eligibility forward in grades as the years pass so soon most in the program will become subject to these standards.

Without genuine crisis, health care concerns reflect politics

What we must understand is that the concern voiced by Louisiana legislators over impending reductions in funds coming to the state’s charity hospitals has much more to do with their political careers than it does any reasonable worry that care for the uninsured or Medicaid clients will deteriorate significantly.

Yesterday, a number of legislators queried officials of the Gov. Bobby Jindal Administration about large reductions, nearly a quarter of the budget for the state’s charity hospital system, run by the Louisiana State University System, due to an unexpected clawback of the federal government of excess monies being sent the state’s way for Medicaid. The enabling legislation not yet a month old, they seemed unaware that Rome was not built in a day and pressed for details on specific cuts. Absent that, some lapsed into encounter group mode and testified about their feelings on this matter.

These, for the most part, revolved around a scenario of people clamoring for care that would be unable to access it at the facilities of the country’s only state-run hospital system for the care of the indigent, leading both to swamping non-state facilities or abandoning their quests to have medical attention for their hangnails or whatever else might ail them. Naturally, this dystopian view has next to no relation to reality.

Retirement systems keep tying to deceive the LA public

Although they were able to stave off any meaningful changes to retirement policy this past legislative session, Louisiana’s over 20 retirement systems overseen by it know they have to keep vigilant in maintaining an aura of competence or else very necessary and long overdue reforms will happen. Thus the public relations campaigns and extraordinary measures continue to try to prevent the public from understanding the fundamental problems that exist with the systems.

On the legal front, three of the smaller systems continue to try to rescue themselves from their own stupidity. The Municipal Employees Retirement System, the Firefighters’ Retirement System, and the New Orleans Firefighters’ Pension and Relief Fund presently are attempting Hail Mary legal maneuvers in foreign courts to try to claw back over $100 million all together in funds invested with Fletcher Asset Management years ago. The company refused, initially, to pay off a partial cash out, and, now, the entire amounts.

Idiotically, they allowed the investment adviser (of dubious worth) with which they retain to con them into thinking they would get a minimum of 12 percent return on investment. News flash for the tyros that comprise the governing boards: unless inflation is running rampant for an extended period of time, nobody can guarantee that return. Only fools, made the worse that it was not they but Louisiana taxpayers that bore the risk, get taken in by deals like this. Fletcher filed for and got bankruptcy protection earlier this month, amid calls it had been nothing more than a Ponzi scheme, a month after the Legislative Auditor issued a report critical of the practices of the three funds.

Subversion can negate LA higher education positives

Recently, this space reviewed the conditions that lead Louisiana higher education to a point where lack of accountability encouraged by both federal and state policy led to today’s delivery system plagued with inefficiency and subpar performance. A recent report highlights how state policy must continue to evolve, shaped by larger forces, in order to overcome this – and it’s as yet uncertain whether the proper policy response will come.

The Institute for a Competitive Workplace gave the state a lower-than-average overall grade in effectiveness, especially faulting the state for its ability to get students graduated and getting into the system students from lower-income families. But pulling the overall mark up was creating incentives for better performance, which system officials argued was a recent product of policy that should bring about this as time passes. They also argued the strategy shift to increase admissions standards at baccalaureate-and-above institutions while increasing community college capacity also would pay off in retention, the theory being that too many unprepared students got sent to four-year institutions.

With the increase in admissions standards starting this fall, theoretically those who do not meet the new standards would enter community colleges. There, the schools should function to mold students into scholars capable of handling courses that are sufficiently challenging to have them graduate and with a degree making them capable of success outside of academia. At the baccalaureate-and-above schools, with the chaff separated from the wheat, resources can be used more efficiently to do a better job of educating.