Solving debt crunch gives LA chance to make lemonade

It’s not that Louisiana has run out of money (or, as one breathless headline asserts, is “broke”) to pay for capital improvements, it’s that it faces a constitutional limit on what it can spend on them, compounded by slow growth in state revenues. And this points to the key to resolution, entirely within the spirit of the concept of the limitation.

The Constitution places a debt ceiling of six percent of state-generated revenues, as ascertained most recently by the Revenue Estimating Conference, on the total amount of debt outstanding at any given time, this put into place after the blatant end-run around the Constitution by former Gov. Buddy Roemer and the Legislature with its creation of the notorious Louisiana Recovery District that enabled debt to be spent on current operations. The problem that has come to the state is the slower, near zero, growth in these revenues have not kept up with the rate of increase in capital spending, creating a coming crunch predicted to hit the ceiling by the end of the legislative session.

In other words, the state take hasn’t increased as fast as its capital outlays, and the limit will choke off adding any more debt necessary to start or complete projects until current receipts can pay back to eat into the overall level. This seems to have caught everybody by surprise; last year at this time, Treas. John Kennedy issued the annual report on debt capacity which showed a comfortable cushion for a couple of decades to come, as well as a level of debt $30 million lower than actually transpired for this year. Even in the breach, several solutions present themselves, but almost all go against the grain of fiscal conservatism preached and, even if not always nevertheless often, practiced by the Republican-led Legislature and Republican Gov. Bobby Jindal.

Poll shows LA public made schizoid by populist past

Some interesting poll results emerged at the end of last week, the biggest story from which being the Louisiana mass public still hasn’t quite shaken itself from its populist heritage, and the implications that could have for some future political careers.

Commissioned by the Louisiana State Medical Society, the data collected focus largely on views on health care issues. The group has a history of supporting policy decisions that maximize the flow of taxpayer dollars to state physicians, as evidenced (until it realized nothing could derail it) by its past initial opposition to Medicaid reform that became known as Bayou Health that scrutinizes more exactly doctors’ billing requests (by breaking the fee-for-service mold in favor of patient premium support), and more recently by its indirect support for the state’s acceptance in expanding Medicaid eligibility under the money-goes-to-the-institution model rather than the more efficient money-follow-the-patient paradigm.

The Gov. Bobby Jindal Administration, quite wisely, has rejected expansion under those terms, which would increase demand for medical services under the old, inefficient model, and the survey represented an attempt to demonstrate public support for expansion under those terms as well as away from the Bayou Health model, which theoretically if the Pres. Barack Obama Administration would show any flexibility on the expansion model to allow that model to be used would entice Jindal to accept. Perhaps to get the media to bite on publicizing the results, it also included approval measures for the Legislature and Jindal, as well as favorability ratings for him and Sens. Mary Landrieu and David Vitter, Lt. Gov. Jay Dardenne, and Treas. John Kennedy.

Another try but same amending needed for legislator bill

State Rep. Dee Richard is taking another stab at limiting the ability of former legislators to slide into government jobs right after legislative service. His slightly different tack again heads in the right direction, but, as with last year’s version, needs a bit of modification.

Last year, his HB 212 would have prohibited state government employment by any legislator upon his leaving of office (during a term, by defeat, by term limitation, or voluntarily at the end of a term) in a state government job until two years after he left. The problem with that was it might have discouraged perfectly capable people with valuable contributions to be made from serving the state, so this space recommended some changes to do a better job of discouraging those who really were there to serve enough time to draw or to increase a state pension or that might influence their voting behavior in the Legislature to suck up to a governor in the hopes of getting such a job.

That bill never even got to a committee vote. This year, his HB 14 does just about the same thing, except it limits the restriction to “unclassified” employment. An unclassified employee is one who, for hiring and retention purposes, does not go through typical state civil service merit procedures. Most have their own agency-specific rules regarding this, based upon merit qualifications, but some unclassified positions are purely political appointees, able to be hired and fired at the will of the governor, other state elected executive officials, some state appointed officials, and some legislative and judicial leaders.

Add state sales tax centralization to state tax court plan

As the Gov. Bobby Jindal Administration continues with its plans to revamp the state’s taxation structure and philosophy, on the issue of sales tax administration talk of small ball should give way to swinging for the fences.

Recall that Jindal has not tried to sell the effort, essentially swapping sales for income taxes, as a way to boost immediately the state’s take from the people, but as a simplification device that will reduce the amount of compliance and procedural costs to allow increased investment and to encourage additional commitments to invest in state commerce. And there may be no area so rife with inefficiency in administration than with sales taxes.

Louisiana is just one of four states (of which one, Arizona, collects for most entities at the state level) where local taxes are levied, collected, audited, and adjudicated at the local level. This means, for example, that for a retail operation doing business in every parish of the state, 64 different protocols must be followed with 64 separate remittances on a frequent basis must be produced and delivered – in addition to the separate state levy.

LA, US need to tie student aid to institutional outcomes

A group with Louisiana connections has delivered advice on how to restructure student financing of college education, and while much of it addresses federal policy, if the basic theory behind it is heeded beyond its issues of execution, it will have ramifications both for state policy and the way Louisiana delivers public higher education.

The group American Dream 2.0, with a diverse group of individuals overseeing the publication of a report concerning financial aid, including Southern University System Pres. Ronald Mason and National Urban League Pres. Marc Morial, formerly New Orleans mayor, lists as its overall philosophy making policy where financial aid becomes a motivator of success, not as a fertilizer cast about in the hope of student success springing forth. That would create a fundamental change not just in this task, but in the very operational ideology of public higher education.

The current system began in 1970, first with the start of the Pell Grant program that shovels unrestricted cash at students, which supplemented the recent dramatic expansion of government-backed student lending, then complemented by court decisions against intelligence testing for employment that made a college degree the de facto credential needed to work in higher-status/income occupations. In short, this created a boon for higher education, a seller’s market that resulted in rapid expansion that has continued to this day, and only encouraged when income restrictions were dropped from federal student lending in 1992.

LA should pursue idea to link performance, FITAP benefits

With the request of a Tennessee lawmaker to base receipt of public cash assistance for families with school-age children on whether the children make passing grades in school, this invites Louisiana policy-makers to consider the question and to review the state’s own efforts in tying receipt of these benefits to attendance.

The proposed Volunteer State law would mandate that children at least pass their courses or tests or else the family might be penalized up to 30 percent of that benefit. It would not affect non-cash assistance programs, but only those like Family Independence Temporary Assistance Program, which is designed to last but a couple of consecutive years. Its theory is to motivate parents to become more involved with their children’s education to improve their performance.

Louisiana, like Tennessee, joins the majority of states (and more keep getting added all of the time) in that there is some attempt to tie school attendance to receiving such assistance. In order to qualify for Louisiana FITAP, which only may go to families with children, if children are school-aged the parent(s) must assent to a Family Service Agreement document that, among others things, provides penalties for truancy among those children, where truancy is defined in public schools as being absent or excessively tardy at least five times a term. On the first offense, the family is to lose a month’s worth, one-twelfth, of FITAP benefits; a second draws another two month’s worth and the third kicks them out of the program for a minimum of three months.

Talk show compounds waste by unneeded film tax credits

While the negative return to taxpayers on Louisiana motion picture tax credits is well documented, another negative often is ignored – brought home by activity surrounding the Super Bowl in New Orleans today.

It turns out that a network early-afternoon talk show decided to decamp to New Orleans for the week leading up to the game, enabling it to score perhaps a million dollars in state tax credits from two kinds available for programs of that nature. This begs the question of whether it would have made its way to the state without them and, given the glitz surrounding the event, it might have anyway. If so, the state threw away a million.

Extending this to entertainment programming in general, the fact is some of those made in Louisiana would have been made without a single cent tossed some fat cat’s way. Of course, many did come precisely because of the credits and would not have otherwise. But since in aggregate the program has cost state taxpayers over $800 million more than tax revenues created by this activity, the state would have been better off without the credits as even if they only returned a fraction of the subsidized revenues in state tax revenues, the costs would have been zero (instead of the estimated $135 million gained revenues versus approaching $1 billion in tax dollars forgone).

Support Jindal tax swap to give Saints chance to win more

Even with sympathetic Republicans commanding majorities in the Louisiana Legislature, Gov. Bobby Jindal still will have to pick up about a dozen Democrats in the House and at least a couple more in the Senate in order to get his income tax elimination/sales tax increase swap passed. And here’s the wedge issue to pick off enough votes: the Saints and soon-to-become Pelicans have better chances to be better teams with the swap.

By jacking its top income tax rate up to 13.3 percent, California effectively took an issue simmering in the background for professional athletes and put it into crisis mode. With its large population and conducive weather, the state disproportionately attracts athletes at the highest, and therefore most lucrative, levels of sport to call it home, either because teams are based there or because they participate in individual sports and they can choose where to live.

But, in statements the ideological content of which give lie his nickname, very successful golfer Phil “Lefty” Mickelson noted recently as a result of the hike he needed to evaluate whether he should continue to live in California. Fellow top linkster Eldrick “Tiger” Woods spent three years at Stanford and showed long ago he was no dummy: he quit the state years ago for income-tax-free Florida in part because of once-Golden State’s high rate even then.

Zoning fight requires political, not judicial, resolution

An interesting sideshow has developed where semi-perennial political candidate Steve Myers, whose livelihood involves brokering and renting houses in Baton Rouge, has challenged the ability of the local planning authority to prevent multi-family residences in single dwellings in certain parts of town. Even if there is a certain deprivation of property rights inherent to the idea, it’s a battle he’s unlikely to win.

Myers, who most recently ran and finished dismally in the 2012 mayor-president’s election, argues that the city-parish’s unified code is unconstitutional because it prohibits people unrelated to each other by birth, marriage, or legally (specified as through adoption) in one dwelling, excepting the provision mandated in the federal Fair Housing Act that allows this for up to four additional unrelated individuals if one is the owner. The city-parish has sued him at least three times for violations, and he counter-sued with this claim.

He asserts that the zoning law violated the Act and suggested that “family” be redefined to include people unrelated by birth, marriage, or legally. But while the Act says “family includes a single individual,” it defines it in no other way and does not speak to any other comprehensive definition. Further, it does not define as discrimination choices to rent on the basis of “family.”

Good budget reform attempt emerges, but with fatal flaw

We can stop holding our collective breath in anticipation as a result of the Pythian pronouncement by state Rep. Brett Geymann on behalf of the Louisiana Budget Reform Coalition that they have seen the future of budgeting in state government. While it’s high on drama and low on substance, it’s better than nothing – in which lies perhaps its fatal flaw.
  
Geymann, who went into legislative cloister to summon the final product, announced the vision as a series of bills ready for pre-filing for the legislative session. The package includes a constitutional amendment to explicate in the budget produced by the governor items funded in the general fund using both discretionary and non-discretionary dollars under times of assumed reductions in spending on health care or higher education, separating them into two bills; expanding the function of the Revenue Estimating Conference to declare all funding sources as recurring or nonrecurring instead of only when surpluses are declared and then prohibit the use of nonrecurring funds for operating expenses; and increasing time for legislator review of the budget including a provision that gives each chamber time to review the others work and that the budget be passed no later than 16 days prior to the end of the session.

While at first glance these might appear impressive, in fact with one exception they comprise very little that must change substantially or substantively. Starting with the multiple operating budget bill, the capacity presently exists to produce a budget bill with monies for every single line item apportioned out by discretionary status. It’s done already in aggregate form in the budget documents presented to the Legislature, which breaks down this money in broad categories. The only difference in presentation would be doing this separating on a line item basis.