Half-baked budget critique provides no better alternative

While it’s quite fair to point out the hazard behind the concept of using one-off revenues to fund an operating commitment, at the same time it’s incumbent on those doing the criticizing to come up with responsible alternatives to deal with any ensuing revenue adjustment – especially when they haven’t quite characterized the source of their complaint fairly.

That’s the trap state Reps. Thomas Carmody, Cameron Henry, and John Schroder have fallen into extending from their critique about one aspect of Gov. Bobby Jindal’s proposed budget. It concerns two presumed bonuses the state will collect with their proceeds going to fund higher education.

The state will take advantage of artificially-low interest rates to refinance indebtedness to pay off advancement of the tobacco settlement in 2001. Instead of taking some annuitized payments, the state arranged to take 60 percent of the money up front, or $1.202 billion, three-quarters socked it away in a fund, the Millennium Trust Fund, and promised to make periodic payments to lenders for getting it earlier. Refinancing of the bonds to help pay for that will save $85 million, available within the upcoming fiscal year.

Legislature fiddles while passing on burning budget items

Both efforts ended up the same way. That one did as it did and the other was pursued at all tells us all we need to know about the courage and priorities of the Louisiana Legislature.

Yesterday, the Legislature’s Revenue Study Commission issued its final report, which boldly stated that not all of the hundreds of tax exemptions on the books might be worthwhile, but that more data were needed to know that, and that they should be collected when they aren’t (even though common sense might have indicated creating such evaluative mechanisms each and every time another one of these was carved out), and maybe the Legislature ought to do something about this and a bunch of these exemptions. Meanwhile, dog bites man.

The same day these scintillating conclusions got broached to the wider world, another legislative panel spent 270 minutes tackling, with arguments about sequester effects, budget gimmickry accusations, and tax reform agendas swirling about competing as subjects of legislative investigation, the all-important, if not the most pressing issue of the millennia – whether the Louisiana High School Athletic Association should do as Texas has done for decades, creating separate championship classifications for public and non-public schools. At the conclusion, its members decisively moved to do nothing about what apparently legally they could do nothing about anyway.

GOP Jindal successor hopefuls differ in early strategies

So you looked at a calendar and thought it was 2013? Guess again; it’s really 2015, you would derive from statements being made by individuals believed to have great interest in succeeding Gov. Bobby Jindal. Statements, in fact, that reveal an early strategy of building desired campaign success on criticizing their party’s incumbent governor – or not.

Lt. Gov. Jay Dardenne is no stranger to whining about how the area over which the Constitution assigns him authority, culture, recreation, and tourism, has faces disproportionate reductions in discretional provision of services – not as much because of revenue reductions, as a large majority of the money this department in state government receives comes from dedicated sources, but because of revenue redirections permitted under law that take away his ability to spend money as he pleases. Now he’s found more reason to complain on this score.

This time, it’s because state law allows for money dedicated into a fund often used for maintenance of parks also to be used for their continuing operations, which is what Jindal proposed and the Legislature passed last year, and what Jindal has proposed that most of the money his administration forecasts will go into it does again. Dardenne moaned about how repairs need to be made to park infrastructure as a result of last year’s Hurricane Isaac, and how the redirection was cramping his style in this regard. He argued the state could make money off of the repaired facilities, which feeds back into the fund which may be needed to support operational activities, as budgeted.

Bills to privilege state laid off employees unjustifiable

Mondays are slow news days, so today the Baton Rouge Advocate took out of the can a piece about a bill introduced the week before last that makes one wonder just how much the legislation’s author knows about state retirement regulations and/or the free market.

State Rep. Regina Barrow has introduced bills that would create exceptional treatment for long-time employees of the state hospital system. According to the budget to be considered this year, about 95 percent of them will lose state jobs as eight of 10 charity hospitals will be administered by nongovernment entities by Jul. 1. (Number seem to differ – the budget reports about 8,200 positions will evaporate, while retirement system official indicate at least 8,400 employees are covered. Neither have layoff plans yet been presented to the Department of State Civil Service.) However, it is anticipated that the contractors will rehire around 90 percent of those laid off.

Essentially, HB 34 would allow those laid off to transfer their retirement contributions and those put in by the state to another retirement plan, and HB 35 would allow the early drawing of retirement benefits by those eligible in years served. This preferential treatment that almost certainly would increase costs to the state (final calculations have yet to be completed) Barrow justifies by saying “I don’t want employees to have to suffer because of decisions of the state. They did not choose to retire.”

Excess funds tussle exemplifies need for genuine reform

Reshuffling $120 million from a special district into state spending points out the absurdity of the present fiscal rules for Louisiana that create a counterproductive straitjacket, causing misallocation of revenues and complicating needlessly the budgeting process, as well as providing more posturing opportunities for politicians.

For this current year’s budget, $20 million of expenditures are to be drawn from the Ernest N. Morial New Orleans Exhibition Hall Authority. Next year, $100 million is budgeted to come from this source. This body was created in 1978, to oversee the operation of what is now New Orleans’ Ernest N. Morial Convention Center, as a special district government.

The state wants use of the money in order to fund activities in higher education, saying it will borrow them and then replenish them in kind over several years, treating the funds as unused capital outlay monies that eventually will go into some kind of construction, meaning future unused dollars for state capital outlay can go to paying them off. This upsets some Orleans legislators, such as state Rep. Jared Brossett whom calls this a “raid” and state Rep. Cameron Henry who says it’s “taking someone’s operating budget.”

Promising college funding plan may lack effectiveness

Increasing bang for the buck in higher education has become a mission for many in the Louisiana Legislature in the past few years, and the latest idea to do so holds both promise and peril to accomplish it.

State Sen. Conrad Appel and state Rep. Steve Carter, heads of their respective chambers’ committee on education, have given notice they plan to file legislation to tie some funding to higher education to performance of schools. Institutions would be divided into five tiers depending on mission, then evaluated and compared to regional peer institutions on a metric such as graduation rate, with funding decisions based upon relative performance. Carter asserts the necessity of this addition due to the GRAD Act standards, which are a series of institution-set goals that must be met to allow an increase of up to 10 percent in tuition without legislative approval, are too easy manipulable by colleges.

To increase flexibility and incentives, the proposed legislation would remove that necessity of Legislative tuition increase approval. Louisiana is the only state where its legislature must otherwise give approval for tuition increases, and by a two-thirds vote of the body no less. This and other restrictions on tuition autonomy exercised by universities have created some perverse incentives to dampen efficiency efforts, but the thinking to date has been against giving universities free hand with tuition without assurances of accountability. The intent behind this legislation signals with this additional accountability measure that there is legislator comfort with giving up its stranglehold.

Misinformed Landrieu bullies to serve party, save job

The remarks were as much about Sen. Mary Landrieu trying to save her job as it was her being a knight in the service of evisceration.

Louisiana’s only Democrat officeholder elected statewide accused Republican Gov. Bobby Jindal of deciding not to commit the state to expansion of Medicaid, the cornerstone of the Patient Protection and Critical Care Act (“Obamacare”) for which Landrieu cast the decisive vote, because it would detract from his credentials to win a putative GOP nomination for president in 2016. A majority of Republican governors have like Jindal refused to go along with this or have remained noncommittal.

And for good reason, for the medical economics of the situation continue to demonstrate in general this was a lose-lose proposition for the state – it would result in poorer outcomes with the state picking up proportionately more of the tab. This is because those who would qualify already with private insurance would bail out of that for cheaper Medicaid, Louisiana would have to pay for administrative expenses to increase program capacity, and in a few years will have to pick up 10 percent of the tab with the possibility that proportion will increase over time.

Alternative hospital plan expands govt, not care dollars

Journalists’ knowledge about public policy typically is like farm land during the Dust Bowl era – acres in coverage area but not even an inch deep. So it comes as no surprise when a gaggle of them showed up to hear state Rep. Stephen Ortego pitch an alternative, government-centric plan for provision of indigent and uninsured health care to that outlined in Gov. Bobby Jindal’s recently-submitted budget that they seemed unable to probe deeper to uncover the practical and theoretical problems with it that make it a poor substitute.

Ortego addressed the Baton Rouge Press Club, claiming the budget assumptions are untenable. Jindal’s plan, already implemented with negotiations among providers, is to contract out management of eight of the 10 state-owned charity hospitals to nongovernment providers, who make lease payments. They submit to the state for regular Medicaid reimbursement those people covered under it. The state, using its own money (about a third under the current formulaic calculation) and a federal government match (the remaining two-thirds or so), reimburses at a set rate. But since the rate is low, in order not to discourage providers from servicing this clientele, money up to a cap provided by the higher Medicare rate additionally can be provided through a different program known as the Upper Payment Limit where a similar matching strategy occurs. The lease payments will be used as the state match. The Jindal Administration calculates that this arrangement will save money as opposed to the current system which shovels the UPL money directly to charity hospitals without the benefit of a managed care approach that avoids reliance upon the open-ended fee-for-service model.

Instead, Ortego’s idea would be to fold the ten institutions into existing hospital service districts, which would run them independently. This would expand their present duties of coordinating regional psychiatric care. They may also acquire a portion of tax revenue streams, such as from the proposed increased tobacco tax. This could be integrating into providing money to the state, which by law must provide at least 40 percent of the match, to get UPL funds.

Shreveport, Caddo show risks of govt-managed development

Government as economic developer is a risky tool – just look at the fiscal disasters Bossier City has heaped upon its citizenry with its footing for a money-losing high-tech office building known as the Cyber Innovation Center (culpability here also including Bossier Parish), a parking garage for the busted Louisiana Boardwalk, and the CenturyLink Arena which can’t hold an anchor tenant or make money. Or Shreveport’s Red River Entertainment District, which has sucked millions from the city in unwise loan backing. But in circumscribed doses it might prove helpful, and the Caddo Parish demonstrates the limits of this.

Shreveport is trying to get it together again with a new plan for the RRED, with the latest plan getting it donated from its past owner El Dorado and its management contracted out. With space of 14 properties, only two commercial ones occupy it now, local establishments in a departure from the chain-heavy emphasis that began the RRED’s life a decade ago (not that a few local operations haven’t failed there as well.)

Then, nightlife, food, and entertainment were featured. This was a workable formula, given the nearby presence of other such establishments and the casinos. But it was executed poorly. Parking was a problem with little in the way of non-casino-controlled spaces but this did not discourage youths who preferred hanging out more than engaging in commerce from congregating there on weekend nights, for awhile making the area look like a confined cruising version of the intersection of Greenwood Rd. and Jewella Ave.

Jindal continues challenging culture with privatizing budget

If anybody had any doubts that Gov. Bobby Jindal seeks to change Louisiana’s political culture, his latest budget should dispel those, but his administration must act fast to make it work.

Even as anticipated state-based revenues, a little from the general fund but most of it coming from dedicated sources, increase somewhat, the drop in federal funds, courtesy of the changing of the Medicaid disbursement formula, totals even more meaning a budget about a billion bucks smaller, or roughly 4 percent reduction. Naturally, the two areas seeing the most dramatic changes are those whose funding makes up the vast majority of discretionary general fund spending, health care and higher education – but in very different ways.

Higher education sees a stunning over 70 percent drop in general fund revenue, although when all means of financing are included it’s only about 7 percent (year-to-year; most of that already has been cut). Still, this represents a tectonic movement in the philosophy behind funding, for it represents the first overall drop in years – at $2.7 billion total funding is about the same as it was in the last year of Gov. Kathleen Blanco’s administration – with a massive shift in state sources. In Blanco’s last year, the general fund contributed $1 billion more than now, and self-generated funding (mainly tuition) and statutory dedication (some revenue from funds dedicated to higher education but mostly fund sweeps from funds unrelated to higher education) have added back in half of that each. From general fund money comprising nearly half of all spending on higher education six years ago, it’s now only about a tenth. As a point of reference, this means using as an example my home institution, Louisiana State University Shreveport will be asked to derive about 70 percent of its revenue from tuition and fees.