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There is more damage control awaiting the most ethical administration in Louisiana history and just as with the Bruce Greenstein saga, the Department of Health and Hospitals (DHH) is front and center.

The Louisiana Board of Ethics last Thursday (Feb. 19) voted to file ethics charges against Galen Schum, DHH Secretary Kathy Kliebert’s brother-in-law, because of his failure to comply with state law requiring him to report income he received from a company under contract to DHH. ETHICS CHARGES

On Nov. 17, 2011, while Schum was serving as Director of Regional Operations for the Office of Behavioral Health (OBH), Magellan Health Services signed a two-year contract with OBH to administer behavioral health managed care services for children and adults.

That contract, approved on Jan. 23, 2012, and which went into effect on Mar. 1, 2012, was originally in the amount of $354 million for two years, but was amended to a three-year contract for $547.78 million and is scheduled to expire on Saturday.

On Feb. 13, 2012, just three weeks after the contract was approved and just over two weeks before it went into effect, Schum submitted a job application to Magellan and was hired on Feb. 27, only two days before the contract took effect.

He resigned from Magellan on Jan. 31, 2014 but during the time he was employed there, he earned more than $146,000 in salary, according to documents obtained by LouisianaVoice.

Kliebert was serving as Deputy Secretary of DHH when the Magellan contract was approved on Nov. 17, 2011, and remained in that capacity until April 1, 2013, when she was elevated to her current position of Secretary.

State law (R.S. 42:1114) provides with respect to the filing of financial disclosure statements, “…that each public servant and each member of his immediate family who derives anything of economic value, directly, through any transaction involving the agency of such public servant or who derives anything of economic value of which he may be reasonably expected to know through a person which (1) is regulated by the agency of such public servant, or (2) has bid on or entered into or is in any way financially interested in any contract, subcontract, or any transaction under the supervision or jurisdiction of the agency of such public servant shall disclose the following:

  • The amount of income or value of any thing of economic value derived;
  • The nature of the business activity;
  • Name and address, and relationship to the public servant, if applicable, and
  • The name and business address of the legal entity, if applicable.

The disclosure statement is required to be filed each year by May 1 and shall include such information for the previous calendar year.

R.S. 42:1102 defines “immediate family” as the children of the public servant, spouses of his children, his siblings and their spouses, his parents, spouse and the spouse’s parents.

“Galen Schum violated …the Code of Governmental Ethics by failing to file a financial disclosure statement on or before May 1, 2013, disclosing income received during 2012 from Magellan Health Services, Inc., and on or before May 1, 2014…at a time when Magellan Health Services, Inc. had a contract with the Louisiana Department of Health and Hospitals—Office of Behavioral Health and while his sister-in-law, Kathy Kliebert, served as the Deputy Secretary and Secretary of the Department of Health and Hospitals,” the Board of Ethics document says.

The board issued a formal request that the Ethics Adjudicatory Board:

  • Conduct a hearing on the foregoing charges;
  • Determine that Galen Schum has violated (state law) with respect to the foregoing counts, and
  • Assess an appropriate penalty in accordance with the recommendation of the Louisiana Board of Ethics to be submitted at the hearing.

Other documents obtained by LouisianaVoice indicate that Schum, on Jan. 18, 2011, in his capacity as Director of Regional Operations for OBH, presented a report to the Louisiana Commission on Addictive Disorders on the status of OBH’s ongoing privatization efforts—efforts which led directly to the awarding of the Magellan contract.

It was at that same Jan. 18 meeting that Kliebert announced to the commission that she had been selected as the new DHH Deputy Secretary and would be leaving her position at OBH.

Schum also participated in a commission meeting on Oct. 11, 2011, at which time he gave the commission “a brief update on the Louisiana Behavioral Health Partnership,” according to commission minutes of that meeting.

Schum said that the selection of the Statewide Management Organization (SMO) had been completed and that Magellan Health Services “was the vendor selected to be the Louisiana SMO, and that the Office of Behavioral Health was currently involved in the contract negotiation process with Magellan.”

Finally, the minutes of a Magellan Governance Board meeting of June 20, 2012, indicate that Schum was employed as a Reporting Analyst for the company.

Magellan had come under sharp criticism from the Legislative Auditor’s office in August of 2013 in a report that said the administration’s privatization of mental health and addictive disorder treatment programs had created confusion and added costs for local human services district that provide the care. http://www.nola.com/politics/index.ssf/2013/08/audit_shows_privatization_of_m.html

That audit report, which examined privatization results at human services districts in Baton Rouge, Houma, New Orleans and Amite, said privatization had caused problems with claims payments which increased costs for the districts and made it more difficult for the districts to receive reimbursement for services. The report also said the districts lost money under a requirement that they use Magellan’s electronic health records system.

The Capital Area Human Services District in Baton Rouge, for example, told auditors that its administrative costs for billing claims had increased $270,000 a year since the privatization took effect. That cost was attributed to problems with claims reconciliation and collection, the audit said.

Meanwhile, the report said, DHH failed to ensure that Magellan processed claims in a timely manner, often taking weeks or months to process claims. The report also said DHH failed to penalize the company when it did not meet planning and technical benchmarks. “No sanctions have been imposed on Magellan for not meeting all required contract provisions,” it said.

Just another Jindaled state agency headed for yet another privatized train wreck.

But don’t say we never warned you.

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           As 2014 winds down, we decided that everyone else does a year-end wrap-up of the year’s significant events, so why not us?

            Accordingly, here is our review of the first six months of LouisianaVoice installments. The last six months will appear on Wednesday (Dec. 31).

JANUARY

IT Contractor linked to Obamacare, other problems:

A company holding two contracts with the State of Louisiana worth $32.8 million was the lead IT contractor of the ill-fated Affordable Health Care enrollment web page rolled out late last year.

CGI Technologies and Solutions, headquartered in Quebec, has experienced problems with other contracts in Canada and the U.S. even before the Obamacare debacle.

CGI Technologies and Solutions was awarded a $32.5 million contract with the Office of Community Development’s (OCD) Disaster Recovery Unit (DRU) on March 2, 2012 to provide computer software hosting, support and training for OCD’s Hazard Mitigation Grant Program (HMGP), small rental programs.

That contract is scheduled to run out on March 1, 2015.

CGI executives have been involved with at least 20 other troubled government IT projects, including one contract to automate retirements for millions of federal employees that went $60 million over budget and despite $2.3 billion in contracts with two dozen federal agencies, the company was rejected by the Center for Medicare and Medicaid Services (CMS) because of “performance issues” in carrying out an earlier contract.

HGI ties to Jindal, Christie:

MSNBC and the Wall Street Journal have begun focusing attention on a Louisiana firm with more than $200 million in contracts with both the Chris Christie and Jindal administrations for federally-funded relief to hurricane victims.

Hammerman & Gainer, Inc., or HGI, of Lutcher, was awarded a $68 million contract in May of 2013 to oversee two programs distributing $780 million in federal money to Sandy victims. That contract was cancelled only six months later, on Dec. 6, 2013, because of mounting complaints about delays in processing claims.

New Jersey homeowners say they have been unable to get answers, paperwork has been misplaced and HGI employees, most of whom are temporary employees, could not be reached by phone and that the company’s recovery centers change rules midstream and that no reconstruction program grants to thousands of applicants already approved have yet been awarded.

HGI also just happens to hold a $60 million contract with the Louisiana Office of Community Development’s Disaster Recovery Unit to administer the state’s Road Home Program. That contract began on March 20, 2012, and ends on March 19, 2015. Prior to that contract, HGI had a similar contract for $83.3 million which ran from March 20, 2009 to March 19, 2012. The $83.3 million contract replaced a $912 million contract with ICF Emergency Management Services of Baton Rouge.

In New Jersey, HGI hired Glenn Paulsen, former chief of the Burlington County Republicans, as its legal counsel when it submitted its bid to run the two Sandy relief programs. Paulsen’s law firm Capehart Scatchard, made a $25,000 contribution to the Republican Governors Association which Christie now heads.

HGI contributed $15,000 to Jindal in three equal contributions in 2007, 2008 and 2009. The company also gave $7,500 to Robert Wooley ($2,500 in 2003 and $5,000 in 2002), $5,000 to the Republican Party of Louisiana, $5,000 in 2011, to New Orleans mayor Ray Nagin in March of 2006, only months after Hurricane Katrina, and $7,500 to his successor Mitch Landrieu in equal contributions of $2,500 in 2010, 2011 and 2012. In addition, HGI President Larry Oney gave $5,000 to Jindal’s campaign in 2008.

Alvarez & Marsal gets fat at state trough:

Jindal also awarded a four-month contract to Alvarez & Marsal for a tad more than $5 million that called for the firm to deliver $500 million in savings to the state.

A & M’s cozy if disastrous relationship with state government goes back further than Jindal. In December of 2005, the Orleans Parish School Board adopted Resolution 59-05 on the advice of the consulting firm.

The resolution, passed in the aftermath of disastrous Hurricane Katrina was specifically cited in the ruling earlier this week by the 4th Circuit Court of Appeal that upheld a lower court decision the school board was wrong to fire 7,500 teachers, effective Jan. 31, 2006.

Then-State Superintendent of Education Cecil Picard chose Alvarez & Marsal to prevail upon the school board to replace acting parish Superintendent Ora Watson with an Alvarez & Marsal consultant.

So, Watson was replaced, 7,500 teachers were fired, the teachers sued and won, leaving the Orleans School Board and the state liable for a billion-five and the firm that started it all is hired by Jindal to find a $500,000 savings.

Alvarez & Marsal is specifically cited—by name—no fewer than six times in the first 51 pages of a 2009 report calling for the privatizing the state’s charity hospital system. Alvarez & Marsal performed that bit of work under a $1.7 million contract that ran for nine months in 2009, from Jan. 5 to Sept. 30.

The firm also received a $250,000, contract of a much shorter duration (10 days) from Jindal on April 9, 2013, to develop Jindal’s proposal to eliminate the state income taxes in favor of other tax increases. That plan was dead on arrival during the legislative session and Jindal quickly punted before a single legislative vote could be taken.

The obvious next step for Jindal was to

Problems continue at OGB:

Charles Calvi and Patrick Powers are out at the Office of Group Benefits (OGB) and Susan West, late of the Office of Risk Management has been named Interim CEO—the fourth person to head OGB in less than three years.

Meanwhile, that $540 million reserve fund balance OGB had on hand to pay benefits at the time of Gov. Bobby Jindal’s infamous raping of the agency now sit at $240 million and is dwindling at a rate of $20 million per month, no doubt the result of Jindal’s 7 percent premium reduction six months before the January 2013 takeover of OGB by Blue Cross Blue Shield (BCBS) of Louisiana.

FEBRUARY

Adley’s not-so-hidden agenda:

State Sen. Robert Adley (R-Benton) filed Senate Bill 79 which was designed to give Jindal even more power by giving him greater freedom in appointing members of a levee board, specifically the Southeast Louisiana Flood Protection Authorities of both the east and west banks.

The bill was a counteroffensive to attempts by the east bank authority to push for a historic lawsuit that would hold oil and gas companies responsible for damages to coastal wetlands.

The Southeast Louisiana Flood Protection Authority East (SLFPAE) was attempting to force the oil and gas companies to pay for the state’s coastal restoration efforts.

The lawsuit claimed that the companies destroyed the state’s coastal wetlands by dredging canals that contributed to erosion. The marshes had served as a natural buffer that mitigated storm surge. The suit, if successful, could cost the companies billions of dollars.

Adley’s bill should come as no surprise, given his opposition to the lawsuit but some might question why Adley would oppose the legal action against the companies in the first place.

One consideration could be that he has owned pelican Gas Management Co. since 1993, was president of ABCO Petroleum from 1972 to 1993, is affiliated with the Louisiana Oil and Gas Association, and has been the recipient of more than $150,000 in campaign contributions over the years from companies, political action committees, and individuals affiliated with or controlled by oil and gas interests.

Adley’s bill was assigned to the Senate Transportation, Highways & Public Works Committee. The chairman of Transportation, Highways & Public Works?

Robert Adley.

Jindal tantrum goes national:

Jindal’s outburst upon exiting a meeting between the nation’s governors and President Barack Obama Monday was a petulant display of immaturity that only served to underscore his disgraceful scorn for Louisiana’s working poor in favor of pandering to the mega-rich Koch brothers in the apparent hope that some of their Americans for Prosperity (AFP) money might find its way into his campaign coffers.

His shameless promotion of the proposed Keystone XL pipeline project coupled with his criticism of Obama’s push for a minimum wage increase comes on the heels of word that Jindal is literally stealing from the blind in drawing down more than half of a trust fund established to assist blind vendors in state buildings to purchase equipment, to pay for repairs and to pay medical bills.

That trust fund shrank from $1.6 million to about $700,000, apparently because of yet another lawsuit the administration found itself embroiled in over the delivery of food services at Fort Polk in Leesville that sucked up $365,000 just for the state’s 21 percent share of attorney fees.

Jindal said of Obama’s push for an increase in the minimum wage that the president “seems to be waving the white flag of surrender” and that Obama’s economy “is now the minimum wage economy.”

CIA kidnap accomplice locates in Bossier City

A photo in the Shreveport Times shows a grinning Gov. Bobby Jindal shaking hands with David Zolet, executive vice president and general manager of the North American Sector of Computer Sciences Corp. (CSC) as the two jointly announced that the company plans to open a technology center at CSC’s national Cyber Research Park in Bossier City.

CSC will be the anchor tenant of the research park and will partner with Louisiana Tech University to account for 1,600 new jobs over the next four years, thanks in part to $14 million in state funding over the next decade to expand higher education programs to increase the number of computer science graduates per year.

CSC customers, meanwhile, were being urged to boycott the company over allegations that it took part in illegal CIA rendition flights in the U.S. “war on terror.”

Court documents have linked CSC to the rendition of German citizen Khaled El-Masri who was abducted on Dec. 31, 2003, after being mistaken for a known terrorist by the CIA.

El-Masri was blindfolded, beaten, imprisoned for 23 days, stripped, sodomized, chained, drugged, flown to Afghanistan where he was again beaten and imprisoned for another four months, interrogated, threatened, denied legal representation, force fed and finally flown in a CSC-chartered plane to Albania, where he was left on a remote road in the middle of the night some 1500 kilometers from his home.

CSC was contracted for the flight as well as for other illegal CIA renditions, according to human rights charity Reprieve. CSC has so far refused a request by Reprieve to sign a pledge of “zero tolerance to torture,” and has also declined to respond to questions from Computer Weekly about the allegations.

Germany has paid the company some $405 million since 1990 and over the past five years, the country has awarded more than 100 contracts to CSC and its subsidiaries.

The story said it is “no coincidence” that the company’s various German offices are often located near U.S. military bases.

Barksdale AFB, home of the U.S. Air Force’s 2nd Bomb Wing and Global Strike Command, and Cyber Research Park are nearly adjacent in their proximity to each other, with the proposed CSC facility and Barksdale separated only by I-20.

MARCH

Jindal contributor benefits from state road work

The controversy over that 55,000 hunting lodge that straddles three central Louisiana parishes has taken a new and curious twist as the result of a $1.7 million highway resurfacing project that conveniently runs right past the entrance to the lodge that is owned by a major contributor to Gov. Bobby Jindal and to unsuccessful congressional candidate State Sen. Neil Riser.

The overlay of LA. 127, also known locally as the Olla-Sikes Highway, started on Feb. 20 at the Caldwell Parish line and run 5.5 miles east in Winn Parish to LA. 1238, according to an announcement by the Louisiana Department of Transportation and Development (DOTD).

The LA. 127 project ends at the camp entrance and at the property of TV reality show Swamp People star Troy “Choot ‘em” Landry, whose campsite is located within the hunting camp.

A search of political campaign contributions show that camp owner Bill Busbice and his wife, Beth each contributed the maximum allowable $2,600 ($5,200 total) to State Sen. Neil Riser’s campaign for the 5th Congressional District seat won by Vance McAllister.

Jindal also picked up $20,000 from Busbice and Alfred Lippman of Morgan City, the registered agent for Olla Productions, LLC., one of Busbice’s may business entities.

Busbice contributed $5,000 to Jindal in April of 2009 and Beth Busbice gave another $5,000 in December of that same year, while Lippman contributed $5,000 in October of 2003, $3,500 in April of 2009 and his firm, Lippman, Malfouz, Tranchina & Thorguson of Morgan City gave another $1,500 in September of 2010.

Additionally, one of Lippman’s law partners, David Thorguson and his wife contributed $1,300 to Jindal, Jindal campaign records show.

Appel’s shrewd investments:

State Sen. Conrad Appel (R-Metairie) purchased Discovery Communications stock in 2010 a week before a major announcement of a partnership between Discovery Education and the Louisiana Board of Elementary and Secondary Education, Capitol News Service has learned.

On Dec. 7, 2010, Discovery Education, a division of Discovery Communications, announced that Louisiana and Indiana had joined Oregon in adopting the Discovery Education Science Techbook as a digital core instructional resource for elementary and middle school science instruction.

Appel is Chairman of the Senate Education Committee and was in a unique position to know not only of the pending deal between Discovery Education and the Louisiana Board of Elementary and Secondary Education (BESE) but also of the company’s recent agreement with Indiana and Oregon, as well as Texas and Florida.

Appel’s financial disclosure form obtained from the State Board of Ethics indicates his Discovery Communications stock purchase was for “between $5,000 and $24,999.”

Discovery Communications is traded on NASDAQ and on the date of Appel’s purchase, the company’s shares opened at $40.96 and closed at $40.78.

And while there was no significant movement in the stock’s prices on the date of and on the day’s following Discovery’s announcement of the agreement with BESE, the stock hit a high of $90.21 per share on Jan. 2 of this year, meaning Appel’s on-paper profit after a little more than three years was in excess of 100 percent. The stock closed on March 27 at $75.72, still an 85 percent gain for Appel.

Appel’s 2012 financial report reveals that he also purchased between $5,000 and $24,999 of Microsoft stock on June 4, 2012, the same date that the Louisiana Legislature adjourned its 85-day session.

Ten days earlier, on May 25, the Louisiana Legislature approved the implementation of Common Core in Louisiana after a major push by the Bill and Melinda Gates Foundation which poured more than $200 million to develop, review, evaluate, promote and implement Common Core.

APRIL

Deputy Sheriff dabbles in private background checks:

A former DeSoto Parish sheriff’s deputy may have violated state law by using his office to run background checks for a company in which he owned a major interest, according to a report by the Legislative Auditor’s office in Baton Rouge.

Lagniappe and Castillo Research and Investigations ran 41,574 background checks through the sheriff’s office during an 11-month period between April 1, 2012, and February 28, 2013, the report says. Robert Davidson, retired chief investigator for the DeSoto Parish Sheriff’s Office, is 50 percent owner of Lagniappe and Castillo. He was employed by DPSO from 1980 until his retirement in May of 2013.

The report, released on Monday, also noted that three DeSoto Parish Sheriff’s Office (DPSO) employees were paid nearly $2,000 by Lagniappe and Castillo Research and Investigations for running the background checks between January 2011 and May 2013, duties they would normally perform as part of their jobs with the sheriff’s office.

The company charged its customers $12 for each background report and paid the sheriff’s office $3 for each report. That represents an income of more than $374,000 and a profit of more than $372,000 for owners Robert Davidson and Allan Neal Castillo.

Extortion claimed on state highway project:

A six and one-half-year-old lawsuit took a dramatic turn following a Mangham contractor’s claim that the Louisiana Department of Transportation and Development (DOTD) denied payments for work performed by his company because he resisted shake-down efforts by a DOTD inspector.

Jeff Mercer owner of the now-defunct construction company that bears his name, worked as a subcontractor to several prime contractors on six different projects for which he has not been paid. He first filed his lawsuit against DOTD on Sept. 7, 2007, in state district court in Monroe, claiming that the state owes him nearly $9 million for actual work done for which he was never paid, plus interest and delay costs which bring the total to more than $11.6 million.

The $500 million savings report by Alvarez & Marsal (A&M) was finally released on Monday only minutes before adjournment of the 2014 legislative session.

The 425-page report, produced under a $5 million contract, while projecting a savings of $2.7 billion over five years (an average of $540 million a year).

Most of the projected cost savings were based on assumptions for which A&M offered little or no supporting data other than arbitrary estimates and suppositions that could have been produced at a fraction of the report’s $11,760 per-page cost.

MAY

It pays to play I:

If there are any lingering doubts that politicians are beholden to the special interest who bankroll their campaigns, consider the money that has been spread among our state lawmakers—just from the oil and gas interests:

  • The 144 incumbent legislators have received more than $5.8 million in campaign contributions by a single special interest group—oil and gas. That comes to an average of $40,357 per legislator.
  • For the 39 current members of the Louisiana Senate, the aggregate is a little north of $2.8 million, or $51,100 each.
  • A total of $2.99 million was distributed among the 105 House members—an average of $40350 each, the figures show.

So, by obtaining a dismissal of litigation that could conceivably cost oil companies several hundred million dollars—before it ever goes to trial or even to the discovery stage—by spreading $5.8 million around represents a nice return on investment.

And make no mistake about it: campaign contributions are just that—investments.

It pays to play II:

The Senate Finance Committee on Sunday (Sen. Dan Claitor discarded their oaths of office—their sworn duty to protect the interests of the people of Louisiana—in favor of political expedience of the very lowest sort by ripping $4.5 million from the budget for Louisiana’s developmentally disabled and allocating the money for a Verizon IndyCar Series race at the NOLA Motorsports Park in Jefferson Parish.

LouisianaVoice conducted a search of the Secretary of State’s web page to learn the identities of the NOLA Motor Club corporate officers and whose name should pop up as one of the principals? Laney Chouest, that’s who.

So, who is Laney Chouest, you ask?

Well, he also showed up as an officer in a few other corporations run by the politically active Chouest family of Galliano. Their main business is in shipbuilding and Laney Chouest was listed as an officer in Edison Chouest Offshore, Inc., Alpha Marine Service Holdings, LLC. and Beta Marine Services, LLC., to name only three.

So, armed with that information we did a campaign contribution search of only the last name of Chouest and we hit the mother lode.

Between 2007 and 2010, members of the Chouest family and their various businesses contributed $106,500 to Jindal.

JUNE

Legislator’s firm cited for environmental infractions:

A citation and a cease order issued to Dual Trucking Co. by the Montana Department of Environmental Equality for dumping oilfield radioactive waste from the nearby Bakken Oilfield, it turns out, is not the only problem State Rep. Gordon Dove (R-Houma) has experienced with environmental authorities, Capitol News Service has learned.

Vacco Marine, Inc., a company owned by Dove, who chairs the House Committee on Natural Resources and Environment, has been the subject of several investigations, negative reports, citations, and compliance orders by and from the Louisiana Department of Environmental Quality (DEQ) over a period of several years, records show.

Last week, while presiding over a meeting of the Natural Resources Committee, he joined 12 other members in passing an amendment to SB 469 that made the prohibition against suing oil companies for damages to the state’s wetlands and marshes retroactive.

Dove also serves as a member of the Louisiana Coastal Protection and Restoration Authority.

Lobbyists swarm to protect BP:

By now, most people who have followed the bill authored by Sen. Bret Allain (R-Franklin) but inspired by Sen. Robert Adley (R-Benton) know that big oil poured money and thousands of lobbying man hours into efforts to pass the bill with it accompanying amendment that makes the prohibition against such lawsuits retroactive to ensure that the SLPFA-E effort was thwarted.

Most followers of the legislature and of the lawsuit also know that up to 70 legal scholars, along with Attorney General Buddy Caldwell, strongly advised Jindal to veto the law because of the threat to the pending BP litigation.

Altogether, the 144 current legislators received more than $5 million and Jindal himself received more than $1 million from oil and gas interests. Allain received $30,000 from the oil lobby and Adley an eye-popping $600,000.

So, when BP lobbyists began swarming around the Capitol like so many blow flies around a bloated carcass, the assumption was that BP somehow had a stake in the passage of SB 469 and that infamous amendment making the bill retroactive.

John Barry, a former SLFPA-E who was given the Jindal Teague Treatment but who stuck around to pursue the lawsuit, said, “During the last few days of the session, we were very well aware that the BP lobbyists were extraordinarily active. They were all over the place. We all assumed there was definitely something it in for them.”

Something in it for them indeed.

Blogger Lamar White, Jr. observed that former Gov. Edwin Edwards spent eight years in a federal prison for accepting payments from hopeful casino operators for his assistance in obtaining licenses—all after he left office. New Orleans Mayor Ray Nagin was similarly convicted of using his position to steer business to a family-owned company and taking free vacations meals and cell phones from people attempting to score contracts or incentives from the city.

So what is the difference between what they did and the ton of contributions received by Adley and Jindal? To paraphrase my favorite playwright Billy Wayne Shakespeare, a payoff by any other name smells just as rank.

And while big oil money flowed like liquor at the State Capitol (figuratively of course; it’s illegal to make or accept campaign contributions during the legislative session), what many may not know is that Jindal may have had an ulterior motive in going against sound legal advice to sign the bill into law, thus protecting the interests of big oil over the welfare of Louisiana citizens who have seen frightening erosion of the state’s shoreline and freshwater marshes.

The Washington, D.C., law firm Gibson, Dunn & Crutcher is one of the firms that represented BP in negotiating a $4.5 billion settlement that ended criminal charges against the company. Included in that settlement amount was a $1.26 billion criminal fine to be paid over five years.

An associate of Gibson, Dunn & Crutcher who has defended clients in government audit cases and in several whistleblower cases is one Nikesh Jindal.

He also is assigned to the division handling the BP case.

Nikesh Jindal is the younger brother of Gov. Piyush, aka Bobby Jindal.

Suddenly, John Barry’s words take on a little more significance: “We all assumed there was definitely something it in for them.”

Something in it for them indeed.

By now, most people who have followed the bill authored by Sen. Bret Allain (R-Franklin) but inspired by Sen. Robert Adley (R-Benton) know that big oil poured money and thousands of lobbying man hours into efforts to pass the bill with it accompanying amendment that makes the prohibition against such lawsuits retroactive to ensure that the SLPFA-E effort was thwarted.

Most followers of the legislature and of the lawsuit also know that up to 70 legal scholars, along with Attorney General Buddy Caldwell, strongly advised Jindal to veto the law because of the threat to the pending BP litigation.

Altogether, the 144 current legislators received more than $5 million and Jindal himself received more than $1 million from oil and gas interests. Allain received $30,000 from the oil lobby and Adley an eye-popping $600,000.

So, when BP lobbyists began swarming around the Capitol like so many blow flies around a bloated carcass, the assumption was that BP somehow had a stake in the passage of SB 469 and that infamous amendment making the bill retroactive.

John Barry, a former SLFPA-E who was given the Jindal Teague Treatment but who stuck around to pursue the lawsuit, said, “During the last few days of the session, we were very well aware that the BP lobbyists were extraordinarily active. They were all over the place. We all assumed there was definitely something it in for them.”

Something in it for them indeed.

 

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If ever there was an appropriate analogy to the old expression rearranging the deck chairs on the Titanic, Gov. Bobby Jindal’s methods of dealing with successive years of budgetary shortfalls (read: deficits) would have to be it.

The Louisiana Public Service Commission (PSC) now has openly defied him (each member, even down to former Jindal cabinet appointee Scott Angelle) on his order for the commission to render unto Caesar Jindal 13 PSC vehicles to be included with about 700 other vehicles to be auctioned early next year in an effort to raise some $1.4 million ($2,000 per vehicle).

That is significant because unless we missed something somewhere along the way, that is the very first time any state agency, the legislature included, has stood up to this little bantam rooster. Tommy Teague did and was fired but the agency he headed, the Office of Group Benefits, went quietly to the slaughter like so many sheep.

Legislators, fearing capital outlay cuts in their districts or demotion from plum committee assignments, have likewise been strangely quiet as a group with only the occasional individual protests.

That move of selling off vehicles is more like the analogy of robbing your kid’s piggy bank to meet the mortgage payment than any real solution to a much larger problem and raises the logical question: what will the administration do next to scrape together a few dollars?

And the news only gets worse for Jindal’s fading presidential aspirations (hopes that themselves are a joke because something that doesn’t exist already can’t very well fade.

Even more ominous than ripping vehicles from state agencies, is the looming certainty of more mid-year cuts and employee layoffs in the wake of growing budgetary ills. Those fortunate enough to avert the layoffs will see no merit increases for FY-16 and contract reductions are expected to continue—except for certain favored contractors favored by our transparent governor. No agency head in his right mind would cut funds for a contractor with a close Jindal connections (read: campaign contributions).

In the meantime, we will also be curious to see if any of those six-figure Jindal appointees are among those being laid off. You can most likely check that box “No.”

Jindal, of course (along with most legislators) has been blaming the state’s worsening fiscal condition on the precipitous drop in crude oil prices.

Not so, says long-time state government observer and chief curmudgeon and former legislative assistant C.B. Forgotston.

Here’s the way he explains it:

            If one merely looks the “spot” prices regularly reported in the media it seems like much bigger issue. It’s nothing like the “oil bust” of the 1980s. At that time a majority of the state revenues were from oil severance taxes. That is no longer the case.

            Additionally, the state’s severance tax revenues are based on the contract price, not the “spot” price that is regularly reported in the media. For example, some of the companies currently drilling in the Tuscaloosa Marine Shale have pre-sold their potential finds at $96 per barrel. That is the price on which the taxes will be paid. The consensus in the oil industry is the current downturn in oil prices is temporary. It may last 6 months or it may last a year; it is not a forever thing.

            Also reducing the impact on state revenues, as pointed out by Legislative Fiscal Office economist Greg Albrecht, low oil prices means savings for consumers. Their spending shifts to other items on which sales taxes are collected. For businesses, especially small businesses, it means more profit which means higher income taxes.

The major problem in the current budget and creating the $1.4B shortfall projected for next year’s budget is not a reduction in revenues, but overspending. Overall revenues have grown every year that Jindal has been governor. However, he and the legislators have consistently spent not only one-time revenues on recurring expenses, but imagined revenues under the guise of “efficiencies” which cannot be measured.

            Blaming oil prices is merely a scapegoat for passing fiscally-irresponsible budgets for the last 7 years.  Don’t let those responsible avoid the blame. It’s time to hold Jindal and the legislators’ feet to the fire by telling them to set better priorities based on real, as opposed to imagined, revenues and amorphous efficiencies.

They’ve got one more time to get it right in the 2015 Regular Session. If they don’t the first order of business for the new governor and new legislators in early 2016 will be to hold a special session to raise taxes and reduce services to balance the final Jindal budget.

And lest anyone might be foolish enough to write Forgotston off because he retired and no longer involved in day to day state matters, that would be a serious mistake. But even discounting Forgotston, we have Greg Albrecht, chief economist for the Legislative Fiscal Office, weighing in on the subject. And he is very much involved in the day to day operations of the state.

Albrecht takes a different tact in explaining how we got where we are. http://theadvocate.com/news/11102302-123/economist-greg-albrecht-louisiana-tax

Albrecht says that priorities for spending state revenue on such pesky items as education, infrastructure and social services are set only after we first dole out billions of dollars in tax credits, rebates and exemptions that place a terrific drain on state financial resources.

Here’s one that he didn’t mention but which we feel is worth pointing out: if the NFL awards a Super Bowl to New Orleans, Saints owner Tom Benson gets a cool million dollars from the state. That has already happened once since that condition was included in a generous incentive package negotiated to keep the Saints in New Orleans.

Another practice that has since terminated but which cost the state millions: when a visiting NFL team such as Atlanta, Tampa Bay, etc., played in New Orleans, every traveling member of that team—players, coaches, support personnel, etc.—was required to pay state income tax on 1/16th of his income. That individual, after all, received 1/16th of his salary in Louisiana. As soon as the Louisiana Department of Revenue received a check for those taxes, the state cut a check for an identical amount to Benson.

Albrecht said many of the tax breaks are “open-ended spending” and unappropriated. “It’s on autopilot” and the spending “is the priority” of state government because all other spending is secondary.

He said attempts to curtail the programs have run into resistance in the form of screams of protest from business interests who would be impacted. They consistently deflect talk of costs to the state by parroting the old line about the economic benefits of the programs designed to attract certain businesses or to assist certain segments of the citizenry.

But when Enterprise Zone exemptions are used to build Wal-Mart stores in affluent communities like St. Tammany Parish (where two have been built using the program), one must wonder at the benefits derived from a program designed to uplift pockets of high unemployment.

Companies pay about $500 million to local governments in property taxes on inventory that is considered property and the state simply reimburses those companies dollar for dollar. “We’re on the hook for whatever the local assessor puts down,” Albrecht said. http://www.thenewsstar.com/story/news/local/louisiana/2014/12/15/state-gives-away-billion-tax-breaks/20460681/

He said legislators have asked that he examine the various tax breaks for possible cutbacks and while Rep. Joel Robideaux (R-Lafayette), chairman of the House Ways and Means Committee which deals with taxes, feels legislation will be filed to alter some of the tax credits, he is realistic in the knowledge that any attempt to amend or eliminate the breaks could be vetoed by this corporate welfare-happy governor.

“The veto pen will determine what passes or not,” Robideaux said. “The question is, ‘Can we craft legislation that will avoid the veto pen?’”

Earlier this year, Sen. Jack Donahue (R-Mandeville) managed to get overwhelming passage of a bill that called for more oversight of the tax break programs by the state’s income-forecasting panel.

But Jindal, who never met a tax break he didn’t like, promptly vetoed the bill, saying it could effectively force a tax increase on businesses by limiting spending for the incentive programs.

You gotta give Jindal credit for creativity, though. Only he could twist the definition of removal of a tax break for business into a tax increase even while ignoring the fact that removal of those tax breaks could—and would—mean long-term relief for Louisiana citizens who are the ones shouldering the load. And for him to willingly ignore that fact borders on malfeasance.

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A confrontation reminiscent of the one nearly 50 years ago between the managing editor (yours truly) and the family news editor at the Ruston Daily Leader has arisen between Gov. Bobby Jindal and the Louisiana Public Service Commission (PSC) and if the late Wiley Hilburn were alive today, he might well find the latest one just as amusing.

Hilburn was on hand when I needed a camera to cover a breaking news story. The only problem was, the news camera was broken and the only one available was a cheap one Publisher Tom Kelly had purchased for use by family news editor Virginia Kavanaugh for her section. “Give me your camera,” I said as I hung up the telephone and stood from my chair across from her. “I have to get a picture of a wreck on I-20.”

“No,” said Mrs. Kavanaugh. “You can’t have it. It’s for my use.”

In complete exasperation and more than a little frustrated at this unexpected lesson in humility, I looked over at Hilburn who had just walked in with a news release from Louisiana Tech University. The look I got in return told me I was on my own. “But I’m the managing editor!” I finally blurted. It was the only thing that came to mind in response to her unexpected insubordination. As I write this, I swear I can still hear Hilburn laughing at the absurdity of the scene that unfolded before his eyes. He would repeat that story for my benefit for years to come, laughing just as hard as he did that morning at the very audacity of my naïve belief that in some parallel universe, my managing editor badge trumped her title as family news editor.

And I never got that camera.

Now the PSC has ripped a page from Mrs. Kavanaugh’s playbook and it’s just as funny.

Jindal, in a desperate attempt to scrape together a few pennies to cover what at last estimate was a deficit of about $141 million, is conducting a fire sale of what state assets still remain after he disposed of state buildings and parking garages in years past to patch similar budget holes.

The administration wants to sell some 700 state vehicles, including 13 assigned to the PSC but commissioners voted unanimously Wednesday (Dec. 17) to direct the PSC staff not to relinquish the vehicles because, the commission lacks funds with which to rent cars and to sell them would hinder its work.

Jindal planned to confiscate the vehicles to be sold with the others early next year in yet another cost-cutting move. The administration says the PSC vehicles aren’t used enough to justify their upkeep.

(The same might be said for some of the governor’s highly-paid appointees. And let’s not even discuss the cost of overtime, lodging, travel and meals for state police security details that accompany the governor on all of those trips to Iowa, New Hampshire and Washington.)

It should be noted that the $141 million shortfall was before the latest plunge in oil prices which Jindal conveniently blames for the fiscal mess in which the state finds itself—again. Legislative Auditor Daryl Purpera is scheduled to give a presentation tomorrow (Thursday, Dec. 18) to the Joint Legislative Committee on the Budget and early indications are the governor’s office and Commissioner of Administration Kristy Nichols aren’t going to be very happy.

The $1.4 million anticipated from the sale of the vehicles represents a shade less than 1 percent of the $141 million deficit (which may be even more after the legislative auditor’s report) and is only a tiny fraction of the $25 billion state budget.

“Of the 13 state vehicles at the Public Service Commission, 11 of them are driven less than 15,000 miles a year,” said Jan Cassidy, Assistant Commissioner of Administration for Procurement. “The cost of maintaining underutilized vehicles is greater than the cost of reimbursing employees for travel when it’s necessary,” she said.

The $1.4 million anticipated from the sale of the vehicles would not be net since the state would be required to either pay employees for use of personal vehicles or pay for rental of cars through a contract the state has with Enterprise Car Rentals.

The administration put agencies on notice about the planned sale last week, giving them two weeks to turn over vehicles designated for auction.

“Reducing state expenses requires all state agencies to review their priorities and ensure they are spending taxpayer dollars appropriately,” Cassidy said.

One of those voting to defy the governor was Scott Angelle who once served in Jindal’s cabinet. A dispute between the PSC and the governor’s office has been simmering and the vehicle flap is only the latest issue as things have reached a boiling point.

The PSC has been critical of a recent practice by the administration and the legislature to take over funds paid to the PSC as fees by regulated companies. Members say the action amounts to an unconstitutional tax levy while the governor and legislator argue for the right to use the fees as part of the state budget. That outcome of that argument is now pending in court.

We can only assume that state police vehicles were exempt from the fire sale order. But with this administration, who knows?

Nor was there was any immediate word on whether or not the administration would attempt to seize the PSC vehicles, which would just be another log on that smoldering fire.

But somewhere within the walls of the Governor’s mansion (he’s rarely on the fourth floor of the State Capitol, we’re told), Bobby Jindal must be incredulous as he exclaims perhaps to wife Supriya or, to a curious butler, “But I’m the governor!

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“I’ll meet you over at confession on Saturday, if you want.”

—Public Service Commission Chairman Eric Skrmetta, to Louisiana Conference of Catholic Bishops Associate Director Robert Tasman, apparently implying that Tasman was being untruthful in his testimony that the conference desired a reduction of rates charged inmates for telephone calls.

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