To those that don’t spend regular time around the academy, the code we use to communicate can be confusing. Recently the Louisiana State University System President John Lombardi made some remarks that presumably reflect the system’s views. But from deep within its bowels, let me offer a translation for those uninitiated in the discourse.
Lombardi: On the topic of funding higher education, he claimed that the state was too chintzy in doling out money to it, and in charging too little to it. “So out of nothing we’re going to have a high-quality higher education system,” Lombardi said.
Translation: “If I keep repeating something like this, it will distract people from understanding that, on a per capita basis, of the states and the District of Columbia Louisiana has the tenth-most amount of money spent on higher education, its tuition rate is ranked 31st, and in real terms despite ranking on 22nd in numbers of 18-24 year olds and 23rd in overall population, it ranks sixth in the number of public community colleges (including technical schools) and eighth in the number of baccalaureate and higher institutions. As long as people don’t know these facts, they won’t know that Louisiana higher education overall, with exceptional campuses here and there, is run very inefficiently, and I can get away with complaining there’s not enough money for us.”
Lombardi: The Postsecondary Education Review Committee established to look at potential efficiencies and savings in the state’s delivery of higher education is, by its nature, going to be worthless. “They will propose dramatic and radical transformations of the world in ways that our political process can’t possibly comprehend and that our fiscal resources can’t possibly afford,” Lombardi said.
Translation: “I’m scared to death it may figure out how inefficiently we do things and actually propose radical and dramatic presentations which are entirely possible, but to me and the special interests I protect are inimical to our way of doing things. We don’t want to make any fundamental reforms to help the taxpayer, we just want to make cosmetic changes that will direct more money to us so we can do more of them same.”
Lombardi: Critical of suggestions made that the five boards that coordinate public colleges and universities in Louisiana should be consolidated into a single entity, he described the exercise as “a controversy without content” that will only serve to “occupy time and energy and prevent anybody from doing anything significant.”
Translation: “Even though no other state takes such an inefficient, convoluted path to governance of higher education that costs the state in terms of duplicated bureaucracy and programs, I’m going to claim consolidation represents some weird kind of ‘centralization’ of higher education that discourages ‘competition’ because if consolidation happens the board that employs me will be eliminated and I’ll probably lose my job and power.”
Lombardi: The Taylor Opportunity Program for Students, which uses taxpayers’ money to pay for the tuition of mostly state high school graduates to a Louisiana university if they meet some very minimal standards, should be based on “need,” not ability.
Translation: “If you’re not a family below middle class, we want to stick you with the bill even if academically your kid is just as deserving on merit for scholarship money as any from a poorer family. That way, we can throw as much of the money around as we do now, either through TOPS or by taking any excess created by this change and moving into our accounts, and then collect extra from those whose children will be getting exactly the same service from the state but we will make them pay more because we can get away with it.”
Lombardi: These better-off students and/or their families are untapped resources to gouge to throw more money at higher education. He asks if “feeling sorry for these kids” to stroll through the student parking lots. Hardly a car there is valued at less than $25,000, he said. “That means there are a significant number of students who attend LSU who are capable of paying a higher tuition rather than buying a fancy car,” Lombardi said.
Translation: “I’m pompously clueless. My entire worldview is shaped by drives in my fancy car from my spacious workplace to my luxurious residence and back, interrupted by fine dining at the taxpayers’ expense hobnobbing with the influential and powerful. I can’t be bothered to take a walk through the parking lots at the New Orleans and Shreveport campuses to see the large proportion of cars of middle-class families competing with those of the faculty and staff to see how many escaped the ‘cash for clunkers’ roundup, because even with their tuition paid they still have to work other jobs and scrimp to afford the books needed for class and the many fees our system throws at them, in addition affording to their families’ living expenses.”
Lombardi: Having the Legislature determine whether tuition increases of a certain level should occur is too restrictive. These decisions should be left in the hands of higher education.
Translation: He got it right; even a blind hog finds an acorn occasionally.
I’m glad to have provided this translation for my readers. And when my promotion request comes back from the system level next spring denied, we’ll know the provision of this service for me at least didn’t exactly come free. (And the head of my campus, who has nothing to do with these comments, probably will get chewed out for this, but he’s got enough fortitude to stand up for free speech rights of his faculty members.)
Regardless, it’s necessary because unless higher education comes to grips with the reality of its situation, it’s going to be worse off when the inevitable changes come. When those with the facts encounter the attitudes echoed in Lombardi’s speech of turf protection, job maintenance, and reluctance to critically self-examine one’s organization, the budget cleaving by state policy-makers will be deeper and done with more zeal. Genuine leadership would be searching for ways to face facts, rather than asking for more money from policy-makers and from the people who are growing more and more skeptical of this defense of existing interests with every passing day.
23.9.09
Critics overreact to assumed Jindal view on CO2 policy
People on both sides of the political spectrum are getting mad at Gov. Bobby Jindal concerning the possibility that Louisiana might get in the carbon credit market, and from the looks of the controversy, it seems on this occasion that means, so far, he’s playing it just about right.
Garrett Graves, who heads up the governor’s office’s conservation efforts, indicated that if federal legislation were passed that established a “cap and trade” regime – where pollution standards were lowered obnoxiously and applied inappropriately but could be breached by entities willing to buy “credits” from suppliers who presumably are engaged in activities to lower the amount of alleged harmful gases in the atmosphere – Louisiana’s coastal reclamation and preservation efforts could make the state a big supplier of these. His exact words are instructive: “We can tap that market to the tune of hundreds of millions of dollars without making any modifications to our projects whatsoever.”
This has upset liberals that favor the economy-killing, useless, unworkable regime because they think it makes Jindal a hypocrite since he wants to “take advantage” of concern over the man-made global warming myth yet not publicly declare that he believes in the concept and also wants to have government take action on it. Some conservatives have gotten mad at Jindal as well, because they see him as selling out on principle in order to pump revenue into the state.
But neither view correctly understands his preferences as he has so far articulated in public settings by himself or his surrogates. Note that Graves, speaking for him, said the state could take advantage of this regime, if it comes to exist, without making any modifications to the existing projects designed to restore from and halt coastal erosion. Jindal does not appear to be deciding what to pursue on the basis of hope that the regime will come into place; rather, his motivations are independent of whatever policy comes out of Washington on this matter. Regarding either criticism, he is not saying one thing and doing another.
Of course, that could change if the regime comes into place, but, to date, Jindal has indicated he does not favor what would turn out to be a “cap and tax” system. About as public as he has gotten on this issue was his vote while in Congress on the 2008 appropriations bill for the U.S. Departments of Energy and the Interior when he voted against removing a section that expressed “the sense of the Congress that there should be enacted a comprehensive and effective national program of mandatory, market-based limits and incentives on emissions of greenhouse gases that slow, stop, and reverse the growth of such emissions at a rate and in a manner that: (1) will not significantly harm the United States economy; and (2) will encourage comparable action by other nations that are major trading partners and key contributors to global emissions.” In his rebuttal speech to the State of the Union address earlier this year, he also refused to endorse the idea and instead lauded alternatives policy preferences to it.
So it takes overactive imaginations on both the left and right to view Jindal’s present public policy on coastal matters as either hypocritical and/or unprincipled on the issue of cap and tax. But in the future, if it gets rammed down our throats and Jindal confirms publicly what he appears in the past to have believed about the issue, liberals might have more reason to bellyache.
Garrett Graves, who heads up the governor’s office’s conservation efforts, indicated that if federal legislation were passed that established a “cap and trade” regime – where pollution standards were lowered obnoxiously and applied inappropriately but could be breached by entities willing to buy “credits” from suppliers who presumably are engaged in activities to lower the amount of alleged harmful gases in the atmosphere – Louisiana’s coastal reclamation and preservation efforts could make the state a big supplier of these. His exact words are instructive: “We can tap that market to the tune of hundreds of millions of dollars without making any modifications to our projects whatsoever.”
This has upset liberals that favor the economy-killing, useless, unworkable regime because they think it makes Jindal a hypocrite since he wants to “take advantage” of concern over the man-made global warming myth yet not publicly declare that he believes in the concept and also wants to have government take action on it. Some conservatives have gotten mad at Jindal as well, because they see him as selling out on principle in order to pump revenue into the state.
But neither view correctly understands his preferences as he has so far articulated in public settings by himself or his surrogates. Note that Graves, speaking for him, said the state could take advantage of this regime, if it comes to exist, without making any modifications to the existing projects designed to restore from and halt coastal erosion. Jindal does not appear to be deciding what to pursue on the basis of hope that the regime will come into place; rather, his motivations are independent of whatever policy comes out of Washington on this matter. Regarding either criticism, he is not saying one thing and doing another.
Of course, that could change if the regime comes into place, but, to date, Jindal has indicated he does not favor what would turn out to be a “cap and tax” system. About as public as he has gotten on this issue was his vote while in Congress on the 2008 appropriations bill for the U.S. Departments of Energy and the Interior when he voted against removing a section that expressed “the sense of the Congress that there should be enacted a comprehensive and effective national program of mandatory, market-based limits and incentives on emissions of greenhouse gases that slow, stop, and reverse the growth of such emissions at a rate and in a manner that: (1) will not significantly harm the United States economy; and (2) will encourage comparable action by other nations that are major trading partners and key contributors to global emissions.” In his rebuttal speech to the State of the Union address earlier this year, he also refused to endorse the idea and instead lauded alternatives policy preferences to it.
So it takes overactive imaginations on both the left and right to view Jindal’s present public policy on coastal matters as either hypocritical and/or unprincipled on the issue of cap and tax. But in the future, if it gets rammed down our throats and Jindal confirms publicly what he appears in the past to have believed about the issue, liberals might have more reason to bellyache.
22.9.09
Political courage can mitigate LA health funding crisis
If you think the budget difficulties for Louisiana were bad for this current fiscal year, unless federal largesse becomes unexpectedly generous in an era of enormous federal budget deficits, you haven’t seen anything yet in the area of state health care expenditures.
For the upcoming year, as Health and Hospitals Secretary Alan Levine told the Senate Finance Committee, three monetary problems, two of a recurring funding nature, loom for the state. (This does include likely mid-year budget cuts, either.) First, the state’s proportion of expenses paid for Medicaid is scheduled to rise to 37 percent from 20, costing an estimated $992 million extra next year. Second, what the federal government will reimburse to the state for procedures done for many of the indigent (because since the state runs a charity hospital system, it spends the money directly for care where in other states a non-governmental entity would be doing it) will be reduced, costing an estimated $200 million extra next year. Third, because of past erroneous practices the state owes $800 million to the federal government for reimbursements it should not have gotten, although this money has been set aside for payment.
In each instance, the state is trying to get around the necessity of absorbing these costs. For the first, it is arguing that the rise in its share of payment is an artifact of the hurricane recovery-inflated economy and not genuine, meaning it should stay at the 20 percent level. For the second, it wants this new rule to be waived, as most new rules regarding care reimbursement have been. For the third, it wants the federal government to waive the amount owed if it is then applied to a revamp of the indigent care system in the state along the lines suggested by Congressional Republicans in regards to the national health care policy debate.
Whether even some of this relief will come is open to debate. The Democrat-run national government is catching enormous heat for its beyond record-busting deficit spending, and as it continues to lose the national health care debate it may be loath to allow Republicans’ ideas to demonstrate their superiority in a trial run in Louisiana. Therefore, Louisiana should not count on total relief in all of these areas.
Some self-help can be the key. If Louisiana shows it will deal with some of these costs itself, maybe this will cajole the federal government into providing some relief. Levine has mentioned eliminating the Medicaid pharmacy program (little to no cost drug prescriptions that many can purchase participation in) and rolling back reimbursement rates to 2007 levels, which he apparently believes won’t chase too many providers out of the system, could save as much as $350 million a year. He also is looking at privatization of mental health service provision. Still, all together these moves would save maybe 30 percent of the annual projected increased cost.
To make its case stronger, several other things could be done. One of the biggest areas of expenditures is nursing home reimbursements (about 85 percent of their delivered care is Medicaid-compensated by the state) which have a privileged position for political reasons. The Legislative Auditor has estimated that nearly $100 million a year could be saved simply by making Louisiana homes follow the rules the majority of other states follow, and also the favorable law that compensates them for empty beds because they counted on continued state generosity that led to overexpansion costs transfers an estimated $20 million a year of taxpayer funds into their pockets for no good reason. These two changes would require changing the present case mix methodology stupidly put into law in 2006.
Also, the resource alloacation model currently being applied to better align spending on the developmentally disabled in home- and community-based situations needs to be applied to nursing homes, which presently are exempt from it. This likely would allow many who are in homes to be moved into their own homes, their families, or community settings at a far cheaper cost to the taxpayer. Finally, the state can exit for the most part running its own developmental centers and nursing homes, closing most as their per patient costs are much higher. Together, these tactics would save tens of millions of dollars a year, perhaps into the hundreds.
Perhaps these changes could rack up at least a couple of hundred million more in savings. Combined with the other changes, maybe the state could argue for it can pick up a lot of the increased reimbursement, in exchange for the federal government taking care of the rest and waiving the new rule. Further, it would demonstrate that Louisiana can reform itself so it should be given a shot for even more changes through waiving the penalty. But all of this takes political will by the executive branch and particularly by the Legislature. Unfortunately, the courage to do so is found in small quantities among legislators who typically are unwilling to buck special interests or to scale back state operations in their zeal to show they are doing “something” and claim they provide (state) jobs.
Levine has shown he will do what’s necessary within the possible parameters of his office to deal with this unpalatable situation. Whether politicians will follow with the policy changes required is another matter and may make all the difference as to whether Louisiana comes out of this looming disaster in acceptable shape or in crisis.
For the upcoming year, as Health and Hospitals Secretary Alan Levine told the Senate Finance Committee, three monetary problems, two of a recurring funding nature, loom for the state. (This does include likely mid-year budget cuts, either.) First, the state’s proportion of expenses paid for Medicaid is scheduled to rise to 37 percent from 20, costing an estimated $992 million extra next year. Second, what the federal government will reimburse to the state for procedures done for many of the indigent (because since the state runs a charity hospital system, it spends the money directly for care where in other states a non-governmental entity would be doing it) will be reduced, costing an estimated $200 million extra next year. Third, because of past erroneous practices the state owes $800 million to the federal government for reimbursements it should not have gotten, although this money has been set aside for payment.
In each instance, the state is trying to get around the necessity of absorbing these costs. For the first, it is arguing that the rise in its share of payment is an artifact of the hurricane recovery-inflated economy and not genuine, meaning it should stay at the 20 percent level. For the second, it wants this new rule to be waived, as most new rules regarding care reimbursement have been. For the third, it wants the federal government to waive the amount owed if it is then applied to a revamp of the indigent care system in the state along the lines suggested by Congressional Republicans in regards to the national health care policy debate.
Whether even some of this relief will come is open to debate. The Democrat-run national government is catching enormous heat for its beyond record-busting deficit spending, and as it continues to lose the national health care debate it may be loath to allow Republicans’ ideas to demonstrate their superiority in a trial run in Louisiana. Therefore, Louisiana should not count on total relief in all of these areas.
Some self-help can be the key. If Louisiana shows it will deal with some of these costs itself, maybe this will cajole the federal government into providing some relief. Levine has mentioned eliminating the Medicaid pharmacy program (little to no cost drug prescriptions that many can purchase participation in) and rolling back reimbursement rates to 2007 levels, which he apparently believes won’t chase too many providers out of the system, could save as much as $350 million a year. He also is looking at privatization of mental health service provision. Still, all together these moves would save maybe 30 percent of the annual projected increased cost.
To make its case stronger, several other things could be done. One of the biggest areas of expenditures is nursing home reimbursements (about 85 percent of their delivered care is Medicaid-compensated by the state) which have a privileged position for political reasons. The Legislative Auditor has estimated that nearly $100 million a year could be saved simply by making Louisiana homes follow the rules the majority of other states follow, and also the favorable law that compensates them for empty beds because they counted on continued state generosity that led to overexpansion costs transfers an estimated $20 million a year of taxpayer funds into their pockets for no good reason. These two changes would require changing the present case mix methodology stupidly put into law in 2006.
Also, the resource alloacation model currently being applied to better align spending on the developmentally disabled in home- and community-based situations needs to be applied to nursing homes, which presently are exempt from it. This likely would allow many who are in homes to be moved into their own homes, their families, or community settings at a far cheaper cost to the taxpayer. Finally, the state can exit for the most part running its own developmental centers and nursing homes, closing most as their per patient costs are much higher. Together, these tactics would save tens of millions of dollars a year, perhaps into the hundreds.
Perhaps these changes could rack up at least a couple of hundred million more in savings. Combined with the other changes, maybe the state could argue for it can pick up a lot of the increased reimbursement, in exchange for the federal government taking care of the rest and waiving the new rule. Further, it would demonstrate that Louisiana can reform itself so it should be given a shot for even more changes through waiving the penalty. But all of this takes political will by the executive branch and particularly by the Legislature. Unfortunately, the courage to do so is found in small quantities among legislators who typically are unwilling to buck special interests or to scale back state operations in their zeal to show they are doing “something” and claim they provide (state) jobs.
Levine has shown he will do what’s necessary within the possible parameters of his office to deal with this unpalatable situation. Whether politicians will follow with the policy changes required is another matter and may make all the difference as to whether Louisiana comes out of this looming disaster in acceptable shape or in crisis.
21.9.09
Bad Landrieu resurfaces with inane work comments
Maybe it’s because she’s been making more sense than anybody else in her party on the health care reform issue, so it was time to say something stupid. Or perhaps she perceived it was time to refurbish her liberal credentials since on this issue she has been sounding not liberal enough. Whatever the excuse, Democrat Sen. Mary Landrieu delivered nonsense that has typified her utterances on public policy issues.
Louisiana’s sensible Sen. David Vitter, a Republican, did not allow Senate Democrats a pass in refusing to renew a decade-old standard that mandated that many unemployed people who live in public housing to do eight hours of community service a month. Many exceptions apply so that it applies only to those who are able and do not have caretaking commitments. As Vitter pointed out, this is an entire sensible requirement for able, unemcumbered people living in a community to do something for the community who are not otherwise contributing to society through their economic output.
Enough Democrats grudgingly supported the amendment for it to be restored, but not after Landrieu excoriated the idea, calling it “mean-spirited.” The inanity of her objection from the Senate floor deserves full disclosure:
What I don’t support is making people and mostly minorities do community service while other people sit on the sideline and are never required to do it even if the largesse given by their government is much greater than a resident of public housing could get if they lived there for 50 years. If you lived there for 50 years you could not possibly benefit as much from the general treasury as you would if you were the executive of AIG who we just gave a gazillion dollars to. Did we ask him to do eight hours of community service? We didn’t even ask him to pay the money back.
Where to begin with this illogical rant? First, if Landrieu objects to the situation where some people who receive government benefits don’t have to participate in community service, then she should support a law that would require every able-bodied unemployed individual receiving any government benefits to perform community service. Why remove such a valuable learning opportunity from all because not all now do it? Instead, make all experience the opportunity and help out the overburdened taxpayer whose funds might have to go to getting performed what can be covered through community service.
Second, if Landrieu was so upset with government bailouts of private industry, why has she supported them? Or at the very least, why did she not offer amendments to make community service part of the arrangement, where if somebody got payment from a firm that took bailout money then it had to be performed? Or, if she’s upset at payments that went to people in bailed out companies, why didn’t she offer an amendment to prevent that? She should be upset at her own lack of foresight and laziness, instead of at a reasonable and valuable request.
Third, performing community service for receiving free government housing while not working despite ability to do so is a different matter than government money being used to compensate somebody for contributions they have made to society – contributions probably far in excess of those by the able-bodied laying around taxpayer-supported housing. The economic contributor has earned it in some fashion, while the former has done nothing to do so. And if somebody is either or both truly unmotivated to go get work and/or whose skills are so marginal that they can’t perform any meaningful work, or someone who had a run of bad luck to trigger unemployment, the gift they receive from those who contribute is reasonably acknowledged through a community service requirement.
Not being the sharpest tool in the shed, Landrieu may not have figured out all of this. Or maybe she thought it was time to shore up her liberal base; maybe both. Regardless, it shows the more sensible Landrieu on the health care debate is more the aberration from the liberal partisan Landrieu than the reverse.
Louisiana’s sensible Sen. David Vitter, a Republican, did not allow Senate Democrats a pass in refusing to renew a decade-old standard that mandated that many unemployed people who live in public housing to do eight hours of community service a month. Many exceptions apply so that it applies only to those who are able and do not have caretaking commitments. As Vitter pointed out, this is an entire sensible requirement for able, unemcumbered people living in a community to do something for the community who are not otherwise contributing to society through their economic output.
Enough Democrats grudgingly supported the amendment for it to be restored, but not after Landrieu excoriated the idea, calling it “mean-spirited.” The inanity of her objection from the Senate floor deserves full disclosure:
What I don’t support is making people and mostly minorities do community service while other people sit on the sideline and are never required to do it even if the largesse given by their government is much greater than a resident of public housing could get if they lived there for 50 years. If you lived there for 50 years you could not possibly benefit as much from the general treasury as you would if you were the executive of AIG who we just gave a gazillion dollars to. Did we ask him to do eight hours of community service? We didn’t even ask him to pay the money back.
Where to begin with this illogical rant? First, if Landrieu objects to the situation where some people who receive government benefits don’t have to participate in community service, then she should support a law that would require every able-bodied unemployed individual receiving any government benefits to perform community service. Why remove such a valuable learning opportunity from all because not all now do it? Instead, make all experience the opportunity and help out the overburdened taxpayer whose funds might have to go to getting performed what can be covered through community service.
Second, if Landrieu was so upset with government bailouts of private industry, why has she supported them? Or at the very least, why did she not offer amendments to make community service part of the arrangement, where if somebody got payment from a firm that took bailout money then it had to be performed? Or, if she’s upset at payments that went to people in bailed out companies, why didn’t she offer an amendment to prevent that? She should be upset at her own lack of foresight and laziness, instead of at a reasonable and valuable request.
Third, performing community service for receiving free government housing while not working despite ability to do so is a different matter than government money being used to compensate somebody for contributions they have made to society – contributions probably far in excess of those by the able-bodied laying around taxpayer-supported housing. The economic contributor has earned it in some fashion, while the former has done nothing to do so. And if somebody is either or both truly unmotivated to go get work and/or whose skills are so marginal that they can’t perform any meaningful work, or someone who had a run of bad luck to trigger unemployment, the gift they receive from those who contribute is reasonably acknowledged through a community service requirement.
Not being the sharpest tool in the shed, Landrieu may not have figured out all of this. Or maybe she thought it was time to shore up her liberal base; maybe both. Regardless, it shows the more sensible Landrieu on the health care debate is more the aberration from the liberal partisan Landrieu than the reverse.
20.9.09
Unworkable plan wastes time in search for options
The old adage “if it looks too good to be true, it is,” certainly applies to a somewhat-eccentric idea that gained a public hearing which shows in even considering it that state lawmakers have reached a certain level of anxiety over a challenging budget situation for the next few years.
Ron Eldridge, an accountant with no apparent expertise in the area of constitutional law, in front of the state Senate’s Select Committee on Consumer Affairs and Technology explained his idea that could raise, depending upon the implementation of the plan, anywhere from $198 to $400 billion annually. He also asserted that as much as $57 billion a year could roll into the state’s coffers on an annual basis after hundreds of billions get spent on coastal restoration – tripling the current revenues coming into Louisiana.
Senators politely listened and murmured about how it was their duty to search out all options related to the fiscal picture of the state. Translation: especially if they have seen the companion web site associated with this effort, they realize that it is nowhere as simple as it was presented, both legally and politically, to the point that it may not have been a very productive use of their time even to entertain it.
Despite the formulator’s assertions, even to someone without a formal legal education problems with the idea’s constitutional status at the federal level leap out. Eldridge claims the tax passes the U.S. Constitution’s muster because he argues it meets the four-part test in Complete Auto Transit, Inc. v. Brady (1977). As it is, that turns out to be quite a stretch.
One part of that test demands that the state must not tax more than its fair share of the income of a taxpayer. Slicing as much as $400 billion annually out of oil and gas and/or pipeline operating companies seems to be a bit much for credence on this account (ExxonMobil Corp., the world’s largest nongovernment oil company, had a little over $31 billion in net income last year). This scheme establishes taxation by volume but that per capitation would have to be dramatically reduced before the reasonable jurist would opine that it met this part of the test.
But the proposal would founder hopelessly on another part of the test, that the tax must be fairly related to services provided to the taxpayer by the state. The rationale being used is that it is the value of the pipeline being taxed, but it is not really an activity, it is infrastructure – property. To get around this, Eldridge comes up with an argument so tortured that if its intensity could be applied to alleged terrorists in the extraction of vital intelligence, the War on Terror or whatever euphemism Democrats now use in reference to it would be over tomorrow – that it’s all connected to assumed coastal damage connected to transportation activities and therefore much of the proceeds would have to go to repairing that.
The very method of taxation also runs into federal constitutional problems. To avoid other aspects interpreted from the Constitution’s Commerce Clause, the tax supposedly is not on the product itself, but on the value of the pipeline even as that value is calculated by the value of the product going through it. This sleight-of-hand, however, does not compare to the legerdemain present in that the tax itself proposed is treated as excise in valuation on real property. Eldridge tries to deflect from this in declaring that Alaska and Montana have similar kinds of taxes, but this is incorrect. In Montana, for example, while the value of the pipeline is valued by its cost and revenues, it is a property tax millage that is applied to it.
This proposed approach runs into real problems with the Louisiana Constitution and also politically. The state’s constitution states (Art. VII Sec. 19) that the only state property tax that can be levied is up to 5.75 mills annually (currently none is levied). This would produce microscopic revenue figures compared to the ones advanced in front of the committee.
However, this does not seem to trouble Eldridge, who breezily admitted to accomplish this there would have to be state constitutional amending and, in his written documents, seems to expect a federal constitutional challenge that might well be successful. Still, he writes this should not be a deterrent to the plan (which in its full-blown form actually would end up eliminating other forms of taxation and instituting rebates on income and property) because even with an adverse judicial decision politically it would be impossible to refund monies already paid. And even if all of this was tempting enough to legislators and the public to proceed, oil and gas prices would skyrocket, he admits. Thus, this lack of realism in understanding the politics of the situation makes it more likely it never will be taken seriously than it ever would get into law and face a suit.
It’s good think creatively about these matters, but legislators would do better to turn their attention to more thoroughly baked suggestions than this one.
Ron Eldridge, an accountant with no apparent expertise in the area of constitutional law, in front of the state Senate’s Select Committee on Consumer Affairs and Technology explained his idea that could raise, depending upon the implementation of the plan, anywhere from $198 to $400 billion annually. He also asserted that as much as $57 billion a year could roll into the state’s coffers on an annual basis after hundreds of billions get spent on coastal restoration – tripling the current revenues coming into Louisiana.
Senators politely listened and murmured about how it was their duty to search out all options related to the fiscal picture of the state. Translation: especially if they have seen the companion web site associated with this effort, they realize that it is nowhere as simple as it was presented, both legally and politically, to the point that it may not have been a very productive use of their time even to entertain it.
Despite the formulator’s assertions, even to someone without a formal legal education problems with the idea’s constitutional status at the federal level leap out. Eldridge claims the tax passes the U.S. Constitution’s muster because he argues it meets the four-part test in Complete Auto Transit, Inc. v. Brady (1977). As it is, that turns out to be quite a stretch.
One part of that test demands that the state must not tax more than its fair share of the income of a taxpayer. Slicing as much as $400 billion annually out of oil and gas and/or pipeline operating companies seems to be a bit much for credence on this account (ExxonMobil Corp., the world’s largest nongovernment oil company, had a little over $31 billion in net income last year). This scheme establishes taxation by volume but that per capitation would have to be dramatically reduced before the reasonable jurist would opine that it met this part of the test.
But the proposal would founder hopelessly on another part of the test, that the tax must be fairly related to services provided to the taxpayer by the state. The rationale being used is that it is the value of the pipeline being taxed, but it is not really an activity, it is infrastructure – property. To get around this, Eldridge comes up with an argument so tortured that if its intensity could be applied to alleged terrorists in the extraction of vital intelligence, the War on Terror or whatever euphemism Democrats now use in reference to it would be over tomorrow – that it’s all connected to assumed coastal damage connected to transportation activities and therefore much of the proceeds would have to go to repairing that.
The very method of taxation also runs into federal constitutional problems. To avoid other aspects interpreted from the Constitution’s Commerce Clause, the tax supposedly is not on the product itself, but on the value of the pipeline even as that value is calculated by the value of the product going through it. This sleight-of-hand, however, does not compare to the legerdemain present in that the tax itself proposed is treated as excise in valuation on real property. Eldridge tries to deflect from this in declaring that Alaska and Montana have similar kinds of taxes, but this is incorrect. In Montana, for example, while the value of the pipeline is valued by its cost and revenues, it is a property tax millage that is applied to it.
This proposed approach runs into real problems with the Louisiana Constitution and also politically. The state’s constitution states (Art. VII Sec. 19) that the only state property tax that can be levied is up to 5.75 mills annually (currently none is levied). This would produce microscopic revenue figures compared to the ones advanced in front of the committee.
However, this does not seem to trouble Eldridge, who breezily admitted to accomplish this there would have to be state constitutional amending and, in his written documents, seems to expect a federal constitutional challenge that might well be successful. Still, he writes this should not be a deterrent to the plan (which in its full-blown form actually would end up eliminating other forms of taxation and instituting rebates on income and property) because even with an adverse judicial decision politically it would be impossible to refund monies already paid. And even if all of this was tempting enough to legislators and the public to proceed, oil and gas prices would skyrocket, he admits. Thus, this lack of realism in understanding the politics of the situation makes it more likely it never will be taken seriously than it ever would get into law and face a suit.
It’s good think creatively about these matters, but legislators would do better to turn their attention to more thoroughly baked suggestions than this one.
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