State Rep. James R. “Jim” Fannin (D-Jonesboro) says he is opposed to Gov. Bobby Jindal’s proposal to sell state buildings as a means of raising needed one-time revenue in an attempt to offset a projected $1.6 billion state budget deficit this year.
At the same time, Fannin, chairman of the House Appropriations Committee said he is not averse to some other plans floated by Jindal, among them the sale of two state prison facilities in Winn and Allen parishes. Both facilities are state-owned but are privately managed by Corrections Corp. of America (CCA) of Nashville, TN., and the GEO Group of Boca Raton, Florida, respectively.
“I am willing to discuss the selling of the two prisons because they have been operating of a cost of $8 million to $9 million less than what it would cost the state to run them,” Fannin said. He added that if similar cost savings could be duplicated, he would be willing to consider similar actions with other state prison facilities.
He said selling state buildings would amount to the state’s having to pay for them twice. “We would have to pay off the bonded indebtedness on the buildings and the tenants, state agencies, would have to continue paying rent to the new owners,” he said. “That would put the state in the position of paying for the buildings twice for the benefit of receiving one-time money.”
Jindal has estimated the sale of the buildings, all built during former Gov. Mike Foster’s administration, would bring the stat approximately $400 million in one-time revenue.
Fannin also serves as Chairman of the Joint Legislative Committee on the Budget and is a member of the House Executive Committee, the Joint Legislative Committee on Capital Outlay, the Legislative Budgetary Control Council, and the State Bond Commission.
A resident of Jonesboro, his district includes all or parts of the parishes of Jackson, Bienville, Winn, and Ouachita.
Other proposals that he said he is willing to consider include privatizing the state’s PPO health care plan and borrowing from future proceeds (securitization) of the state lottery. He said news accounts that quoted him as saying he would support the use of $100 million of one-time money to help plug the anticipated budget deficit were inaccurate. “I am willing to use as much one-time revenue as the Revenue Estimating Committee sees in growth for Fiscal Year 2012-13,” he said.
“The state is projected to have $400 million in growth this year,” he said. “Even with a budget deficit, there is projected growth but that’s a far cry from making up a $1.6 billion deficit. The state has just come through what we call in business a flat year. But in business, when you have a flat year, you don’t simply close the business, you adjust. I wish we didn’t have to be where we are but the process (economy) has brought us to this point. I hope there will continue to be future growth so that we won’t have to keep kicking this can down the road.”
Fannin said Louisiana has been compared to Alabama because of the similarity in population. “Alabama has far fewer state employees than Louisiana,” he said. While acknowledging that Louisiana has a state-run charity hospital system and Alabama does not and many of Louisiana’s state workers are employed by that system, he said, “Maybe Alabama has managed to address its health-care needs without the necessity of a charity hospital system.”
He said one of his biggest concerns is in the area of professional contracts awarded by the state, particularly by the Department of Education. “It’s absurd to have so many professional service contracts out there,” he said. “Kennedy (Treasury Secretary John Kennedy) has been raising this as an issue. Many agencies get around the requirement to obtain approval of contracts of $50,000 or more by awarding a lot of contracts for just under the required reporting level. There’s a tremendous amount of waste in those contracts. I understand (Sen. Ben) Nevers (D-Bogalusa) has been critical of state contracts, too,” he said.
The Department of Education, meanwhile, has responded to recent articles about contracts awarded by that agency.
Education Department spokesperson Rene’ Greer said the printout of department contracts provided by Kennedy was misleading because many of the contracts were multi-year contracts. One, for example was a five-year contract for $193,000 for a warehouse lease but when listed it appeared to be the amount for a single year instead of being spread over five years.
Moreover, she explained, many of the contracts were federal dollars and were contracts required by the federal government. Others were paid with moneys that went to local school districts and were not direct expenditures of the department. Still others, she said, were inter-agency transfers. “By the time you calculate salaries, expenditures for the Recovery School District, and other mandated expenditures, there was really very little left in the way of discretionary funds for the department to spend,” she said.
Louisiana Voice 
1. Education Contracts: The days of getting by with saying “this is federal money” were over at least 20 years ago. We all pay federal taxes, too. Some of the mandated expenditures are for monitoring discretionary grant activities, setting up a circular equation from which the only escape is not taking the grant to begin with.
2. Fannin: He says some good things, but to say this is just a “flat” period in the business cycle is to ignore Louisiana’s structural budget problem that has existed for the last 30 years. Even if we limited one-time revenue use to the projected year-to-year increase, what would we do the next year when normal growth would be at least 2%? Selling any kind of revenue anticipation instruments (like one based on future lottery receipts) for other than very short-term cash flow needs is a gamble not worth taking.
3. The use of any one-time money in simple hope of a brighter future or some serendipitous windfall is just stupid.
4. Proposing to sell buildings that were built expressly to save rent and then rent them back is an insult to the intelligence of most 5th graders.