Enhance responsibility by making govts pay their debts

The first and most politically popular and therefore easy policy Gov. Bobby Jindal pursued upon taking office was ethics reform designed in part to increase transparency in state government. That was over five years ago, but that spirit needs to live on to induce accountability into some hidebound local governments.

After the hurricane disasters in 2005, in 2006 the state passed legislation setting up a lending program for local governments to borrow money to service debt during the presumed difficult period of recovery. It’s kind of like taking out credit card debt to pay off an existing mortgage – except the terms were far more generous: state general obligation backing to get a low interest rate, delayed payments, and a two-for-one deal in that the federal government coughed up for nothing $200 million that the state would match.

But unlike the relationship between issuer and cardholder, some local governments now want forgiveness of their debts, despite the generosity of the terms and that they had years (five, or three more than the minimum in the legislation with payback therefore beginning in 2012) to prepare for this. Even though legislation has appeared (such as this past session) to forgive it, the Constitution prohibits state donation of assets not surplus property.

Some jurisdictions have no qualms about honoring their debts, such as the Orleans Parish School District, which paid off its $77.9 million in full at the first opportunity, saving $31 million had then instrument run to term. But the much larger City of New Orleans continues to carp about the $66.7 million it owes, coughing up $4.9 million this year. Its deputy mayor Andy Kopplin, who was a functionary in Gov. Kathleen Blanco’s administration that created the program, says these loans weren’t actually intended to be loans.

Which then begs an obvious question: why wasn’t the money just flat out given to local governments, if that’s what was “really” meant? Because that was not politically possible at the time, with state officials fearful that the storms’ aftermath would wreak havoc with the state’s financial picture. So, it appears a little game of hide-and-seek involving taxpayers was plotted among Kopplin and other politicians, where the state “loaned” money (wink-wink, nod-nod) and local governments pretended it was borrowed, while all along knowing it would be forgiven.

Except Jindal then came along with the inconvenient attitude that the law was the law, and that if the people’s representatives had figured had their constituents wanted it to be a gift, they would have voted to make it a gift. Worse, there would be no winks and nods connoting secretive, private deals with the people’s money about which they were, in essence, being misled.

Called on this, Kopplin moans and complains that the city could use this money to fund parks and police. Surely, but the annual payment in question in 2012 represented a whopping 0.6 percent of the city’s revenue – in a year it ran a $72 million deficit or about 9 percent of its total revenues as spending climbed almost 10 percent, fueled mostly by general government.

This coincides with the whining that Kopplin’s boss, Mayor Mitch Landrieu, makes constantly these days about the city’s monetary shortfalls, with the general theme that past problems are coming due now on his watch – while entirely ignoring the poor spending decisions that he has made. For example, there was no genuine need for the city to back a hospital in New Orleans East when emergency facilities were not far away and clinics would have done the rest of the job. The money poured into that alone would have paid off the debt to the state.

And that’s really the entire point of this all, accountability that creates responsibility in governing. The wink-wink, nod-nod relationship envisioned by Kopplin subverts the ability of the people to understand which politician caused what. Maybe if Landrieu did not blithely assume the under-the-table agreement would come to fruition he might have made different choices, and state taxpayers would not suddenly realize that without their consent they had  financed a hospital in New Orleans that a large number probably would think was a poor policy decision.

Landrieu and Kopplin still can have their way legally, by getting the Legislature to make a direct appropriation to New Orleans in the amount of the debt. But, oh no, that would be out in the open and subject to the actual lawmaking process, and as such likely would not be well-received by the people and sour their representatives on ever allowing that to make it to the governor’s desk – where if it did, in part because of the public reaction, he very likely would veto that line item.

It’s called the constitutional process, and Kopplin and his ilk need to understand the days of subterfuge to get around that are over, thanks to Jindal and a number of legislators both by their legislative changes and refreshing attitudes on the subject. Kopplin and his boss need to man up, quit begging for a magic wand to wave and solve their woes at other people’s expense, and face the consequences of their policy decisions.