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Curmudgeon C.B. Forgotston must be having fun tweaking legislators who would rather be left alone by constituents

Posted in Attorney General, Audit Reports, Boards, Campaign Contributions, Civil Service, Contract, Contracts, Corruption, DOA, Ethics, Exemptions, GOHSEP, Governor's Office, House, Incentives, Legislators, Legislature, Politicians, Public Records, Retirement, Senate, Taxes on February 16, 2015| 7 Comments »

Senator Daniel R. Martiny's Picture

STATE SEN. DAN MARTINY

C.B. Forgotston may have opened a can of worms…with the unwitting help of State Sen. Dan Martiny (R-Metairie)—and much to Martiny’s chagrin.

Forgotston, you see, is an independent old cuss who used to work for the legislature and he has been serving for a number of years now as an unofficial overseer of all things state government and few events escape his skeptical critique of the actions and motives of elected officials, particularly legislators, or as he calls them, leges.

Called “King of Subversive Bloggers” by no less an expert on cynicism than Baton Rouge Advocate columnist James Gill, Forgotston is beholden to no one and any leges who crosses swords with him does so at his own peril.

Martiny may have found out the hard way when he sent this email to Forgotston Sunday around 4:16 p.m. informing C.B. that his emails to the good senator were no longer welcomed:

From: “Martiny, Sen. (Chamber Laptop)” <dmartiny@legis.la.gov>

To: “C.B. Forgotston” Date: Sun, 15 Feb 2015 16:16:34 -0600 Subject:

Re: Where’s Buddy?

Take me off your list until u do something positive about anyone.

Martiny was responding to Forgotston’s “Where’s Buddy” post in which he took Attorney General Buddy Caldwell to task for the AG’s reluctance to do his job in telling the Caddo Parish Commissioners they are in violation of the Louisiana State Constitution by virtue of their illegal participation in the Caddo Parish retirement system.

Forgotston noted that Legislative Auditor Daryl Purpera has done his job in saying commissioners’ participation in the retirement system is illegal but Caldwell, as has been his M.O. since taking office, has been strangely quiet on public corruption.

And while there is certainly nothing wrong in going after free-lance pharmaceutical salesmen (drug dealers), child pornographers and the like, Caldwell has displayed an obvious dislike for making waves in the political waters and has steadfastly run from public corruption cases.

And we know that while the 1974 State Constitution took much of the prosecutorial duties from the attorney general, the AG is still the legal adviser for all state agencies and if nothing else, Caldwell should step forward and whisper in officials’ ears when they are seen skirting the edge of the law. (Commissioner of Administration Kristy Nichols’ open violation of the state’s public records law comes immediately to mind. So does Auctioneer Board attorney Larry Bankston’s advice to the board to actually refuse to release public records.)

But we digress.

If you notice, Martiny’s message for C.B. to delete future mailings to him was written on his Senate chamber laptop, which some might interpret as an unwillingness on his part to hear from citizens on matters that concern them.

“My periodic mailings address issues of concern to me primarily about state and local government,” Forgotston said on Monday.

“The mailings are sent to each lege via a public server owned by taxpayers. The address to which it is sent is also provided by the taxpayers.”

Forgotston said that after a “gentle reminder,” Martiny, an attorney, relented and acknowledged the provisions of the First Amendment to the U.S. Constitution.

“Other leges may not be as familiar with the First Amendment as is Martiny,” he said. “As a public service, here is some background on the First Amendment which leges might find useful in dealing with members of the public.

“The First Amendment states, ‘Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.’” (Emphasis Forgotston’s)

The right to freedom of speech, he says, “allows individuals to express themselves without interference or constraint by the government. (Emphasis Forgotston’s)

“The right to petition the government for a redress of grievances guarantees people the right to ask the government to provide relief for a wrong through the courts (litigation) or other governmental action. (Emphasis Forgotston’s)

“Not only do we have a right to contact the leges regarding matters of government, they are prohibited from interfering with our exercise of that right,” Forgotston said. “That includes the blocking of emails as some leges have done in the past.

“Any lege not wishing to receive my communications, please forward me a copy of your letter of resignation from the lege and you will be promptly removed from all future mailings.”

Now, just to give you a little background on Sen. Martiny, who:

  • Fought a bill by State Sen. Dan Claitor (R-Baton Rouge) which would have prevent legislators from leaving the House or Senate and taking six-figure jobs in order to boost their state retirement. It’s worth noting that several legislators had been appointed to cushy state jobs by the Gov. Bobby administration. Noble Ellington of Winnsboro was named second in command at the Louisiana State Department of Insurance at $150,000 per year; Jane Smith of Bossier City was appointed Deputy Secretary of the Department of Revenue ($107,500), though she admitted she knew nothing about taxes or revenue; Troy Hebert of Jeanerette was named Commissioner of the Louisiana Alcohol and Tobacco Control Board ($107,500); Kay Katz of Monroe, named to the Louisiana Tax Commission ($56,000); former St. Tammany Parish President Kevin Davis named Director of Governor’s Office of Homeland Security and Emergency Preparedness ($165,000), and former St. Bernard Parish President Craig Taffaro was appointed Director of Hazard Mitigation and Recovery ($150,000).
  • Pushed through an amendment that gutted Senate Bill 84 by Sen. Ben Nevers (D-Bogalusa), a bill originally designed to protect vulnerable borrowers from predatory payday lenders. Nevers sought to cap payday loan annual interest rates at 36 percent which was an effective way to rein in those lenders who were charging annual percentage rates of up to 700 percent. Martiny’s amendment removed the APR cap and instead simply limited borrowers to 10 short-term loans each year.
  • Pushed through a bill that was subsequently signed by Gov. Bobby which prohibited state contractors from entering into agreements with labor unions, prohibited public entities from remaining neutral toward any labor organization, and prohibited the payment of predetermined or prevailing wages.
  • Introduced a bill that was subsequently signed by Gov. Bobby which re-created 17 state boards, offices and commissions. Louisiana already has far more boards and commissions than any other state but apparently no one saw a need for reducing the number.
  • Introduced a bill subsequently signed into law by Gov. Bobby that gave judges on state district courts, courts of appeal and the Louisiana Supreme court pay raises ranging from 3.7 percent to 5.5 percent—even as Louisiana civil service employees were forced to go without a pay raise for the third straight year.
  • Introduced but later withdrew a bill that would have allowed the Louisiana Department of Economic Development (DED) the authority to offer air carriers a rebate of up to $500 annually for each incremental international passenger flying to or from a state airport for a period of up to five years.
  • Introduced a bill allowing DED to offer tax credits refundable against corporate income and corporate franchise taxes for businesses agreeing to undertake activities to increase the number of visitors to the state by at least 100,000 per year. (We’re beginning to see the problem with the state’s economic incentive tax breaks here).
  • Introduced a bill to provide tax credits for solar energy systems of up to 50 percent of all costs.
  • Introduced a bill that would have allowed the Commissioner of Insurance to fire the Deputy Commissioner of Consumer Advocacy without cause.

Let’s examine that very last one again. Louisiana law provides for the appointment of a deputy commissioner of consumer advocacy by the Commissioner of Insurance.

This is important, provided that person is wholly independent of Commissioner of Insurance Jim Donelon who gets the bulk of his campaign finances from insurance companies he is supposed to regulate.

Donelon, obviously, cannot be expected to ride herd over his benefactors. That’s just not the way politics works in Louisiana. So a consumer advocate in the department is critical—especially after all those stories about Allstate and State Farm denying legitimate claims from Hurricane Katrina and other tactics such as the Delay, Deny, Defend strategy as taught the insurance companies by Gov. Bobby’s former employer, McKinsey & Co.

The law provides that the consumer advocate may be terminated only for cause.

But Martiny wanted to change that and though the bill did not pass, one has to wonder about his motives.

To learn that, you’d probably have to email him at dmartiny@legis.la.gov

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Two major investment rating firms threaten Louisiana with downgrade; state is now officially at the financial end game

Posted in Campaign Contributions, Corruption, Earl Long, Economy, Ethics, Exemptions, Finances, Fraud, Governor's Office, Grant, Grants, Health Care, Higher Education, House, Incentives, Jobs, Legislators, Legislature, Lobbyist, Media, Office of Group Benefits, OGB, PACs, Politicians, Revenue, Senate, Taxes on February 14, 2015| 29 Comments »

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“That clanking sound you heard,” says blogger C. B. Forgotston, “was Louisiana’s proverbial fiscal can hitting the end of the road.” And he has been around state government long enough to know the signs.

“Like a kid behaving badly, we’ve been placed on probation,” added State Treasurer John Kennedy.

Both men’s assessments were in response to the double whammy of two investor rating services’—Moody’s and Standard & Poor’s—action to move Louisiana’s credit outlook from stable to negative on Friday and to threaten the more severe action of a downgrade.

“This should be a wake-up call that we need to stop spending more than we take in,” Kennedy said.  “We’ve drained our trust funds, we’ve relied on nonrecurring money and we’ve had to cut the budget in the middle of the fiscal year for too many years now.  Many have been warning that this day would arrive, and it has.”

The dual action by the two ratings services impacts $2.7 billion in outstanding general obligation debt and $1.25 billion in related debt.

Moody’s warned that continued structural imbalances, steep growth in pension costs, deterioration in financial liquidity and failure to contain costs in the state’s Medicaid system will result in a credit rating downgrade, making it more costly for the state to borrow money.

S & P added a warning that “Should budget adjustments fail to focus on recurring solutions or if the structural gap grows with continued declines in revenue or material reductions in federal program funding to the state, we could lower the rating” even further.

Gov. Bobby immediately attempted to put a positive spin on the bad news (or as Forgotston described it, tried to pour perfume on the manure pile to change the smell but not the content) by saying that the agencies didn’t lower the ratings on the existing outstanding General Obligation bonds.

But what Gov. Bobby did not say, according to Forgotston, was that the rating on those bonds was not lowered because the Louisiana State Constitution gives those bonds first call, even before employee retirement benefits, on all the money in the state treasury. “In other words, if the state goes bankrupt, those bonds will be paid,” he said, adding that future state borrowing will also cost more.

It could also mean that in the event of default, retirees won’t be getting their pension checks, something that should get the gray panthers up in arms.

At this point, we feel it important to point out—just in case anyone still needs reminding—that Gov. Bobby has been traveling all over the country (well, mainly to Iowa and Washington, D.C.) spewing his rhetoric about how he has cut the number of state employees, how Louisiana’s economy is out-performing other states, how new industry is locating to Louisiana, and how little it costs to attend LSU.

Except it’s all part of his big lie—except, of course, the part about hauling state workers out to the curb.

But if he is so hell-bent on claiming and then taking credit for all these wonderful events and trends (of course he never mentions the state’s high poverty rate, poor health care availability, our second lowest median household income, the eighth lowest percentage of citizens with a bachelor’s degree or higher, or our fifth highest violent crime rate), then he must shoulder the blame for the bad news as well.

Any coach will tell you that’s the way the game is played; if you take credit for the wins, you have to take the blame for the losses.

And of course, he never, never does that. Everything out of his mouth is about all the great accomplishments of his administration, and always spouted off in such rapid-fire fashion as to give little chance for argument from dissenters. It’s his style to overwhelm with statistics quoted by rote in his boring staccato delivery.

Well, Bobby, your rhetoric—and for that matter, you as well—are wearing a little thin.

The doubt began creeping in here in Louisiana midway of your first term and has continued to build until now the national media have caught on. Only last week, three or four national stories revealed the pitiful shape you are leaving our state in for your unfortunate successor to attempt to clean up.

Unfortunately, whoever follows you will most likely be a one-term governor because no one can clean up your mess in a single term and the voters are likely to grow weary of whoever is unfortunate enough to follow you and turn him or her out of office after four years in a desperate attempt to find a quick solution that in reality may take decades. You have set this state back that far (Thank you, Gov. Mike Foster for inflicting this plague upon us).

And, Gov. Bobby, you can just mothball your national political ambitions. Being President is a far distant fantasy by now and any prospects of a cabinet position are just as surely disappearing like so much sand through your fingers. You can now only accept that you will go down as one of, if not the most vilified governor in the history of this state. You have succeeded, by comparison, in making Earl Long appear to have been in full control of his mental faculties back in 1959.

And lest anyone think we are giving the legislature a free pass on this situation, think again. With only a handful of exceptions, those of you in the House and Senate have been complicit in this charade of governance. You have aided and abetted this pitiful excuse of a chief executive who, while pandering repeatedly that he had the job he wanted, nevertheless plunged full speed ahead toward his fool’s errand of seeking the Republican presidential nomination. Why, his own family was talking openly of his becoming President—at his first inauguration way back in 2008!

Moody’s and S &P were each quite thorough in laying out the reasoning for their simultaneous actions on Friday.

Moody’s said its action reflects a $1.6 billion structural deficit, continued budget gaps, the state’s large Medicaid caseload, job growth below the national average and significant unfunded pension liabilities.  “The negative outlook reflects the state’s growing structural budget imbalance, projected at $1.6 billion for fiscal 2016, or about 18% of the $8.7 billion general fund even after significant budget cuts of recent years,” Moody’s said. “The state has options for reducing the imbalance, including scaling back various tax credit programs, but the overall scale of balancing measures needed may further deplete resources and reduce the state’s liquidity, which has been one of its strengths.”

S & P was no kinder, citing Gov. Bobby’s reliance on non-recurring revenue which it said only served to increase future budgetary pressures. “In our view, the state’s focus on structural solutions to its general fund budget challenges will be a key determinant of its future credit stability.

“We could consider revising the outlook back to stable if revenue trends stabilize and if Louisiana makes material progress in aligning its recurring revenues and expenditures on a timely basis with a focus on recurring solutions. Should budget adjustments fail to focus on recurring solutions or if the structural gap grows with continued declines in revenue or material reductions in federal program funding to the state, we could lower the rating,” S & P said.

Forgotston, in his own unique way, tells us what Moody’s and S & P were really telling us: “Bobby, you and the legislators have made a big ‘number-two’ mess in your fiscal pants and we have no faith in your ability to clean it up. Folks, don’t let the legislators try to fool you; this is very bad news for us taxpayers and the legislators are the reason for it.”

Yes, it’s easy to blame Gov. Bobby because he has in his seven years initiated every Ponzi scheme one could imagine from giving away something like $11 billion in tax incentives (according to one recent story), to giving away the state’s charity hospitals, to robbing the Office of Group Benefits reserve fund, to attempting to rob the state’s retirement system, to refusing federal grants for needed projects, to rejecting Medicaid expansion and thus depriving the state’s indigent population access to decent health care which in turn led directly to the announced closure of the emergency room of a major Baton Rouge hospital. The list goes on.

But, as Gov. Bobby is so fond of saying, at the end of the day, it was the legislature, through the “leadership” of Senate President John Alario, House Speaker Chuck Kleckley and Appropriations Committee Chairman Jim Fannin that allowed him to do it by refusing to grow a collective set and stand up to this vindictive little amateur dictator.

This is an election year and Louisiana voters—particularly state employees, former state employees who have lost their jobs because of Gov. Bobby, teachers, retirees and the state’s working poor would do well to remember what this governor has done to them and which legislators voted to support the administration’s carnage inflicted upon this state.

There are those few in the House and Senate who have spoken up and tried to be the voices of reason but those voices have been drowned out by Gov. Bobby’s spinmeisters.

So when you vote for governor next fall, you would do well to ignore the TV commercials bought by those who want only to continue down this same path of economic destruction and growing income disparity and consider who you believe really has the best interest of the state, and not the special interests, at heart. In other words, think for yourselves instead of letting some ad agency do your thinking for you.

If you don’t get your collective heads out of the sand and in the most emphatic manner you can muster, tell your neighbors, your friends, your family, the clerk at the store where you shop for food and clothing, the cashier at the restaurant where you eat what this governor and this legislature have done to you and to them, then come next fall, you have no one to blame but yourselves.

The time for joking about Gov. Bobby is over. We’re at the end game now.

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A few numbers, a couple of quotes and a recap of why a desperate political quest may at long last be laid to rest

Posted in Contracts, DEQ, DHH, Economy, Elections, Exemptions, Finances, Governor's Office, Health Care, Higher Education, Incentives, Office of Group Benefits, OGB, Politicians, Privatization, Revenue, State Agencies, Teague on February 7, 2015| 35 Comments »

  • 676,484: the number of votes received by candidate Bobby Jindal in the 2003 runoff with Kathleen Blanco for the office of Governor. I was one of the 676,484. Jindal lost.
  • 699,275: the number of votes received by Congressman Bobby Jindal in the 2007 primary election for Governor of Louisiana. I was one of the 699,275. Jindal won.
  • 673,239: the number of votes received by incumbent Gov. Bobby Jindal in his successful bid for re-election in the 2011 primary election. I was not one of the 673,239. Jindal won.
  • Betray: bə·trā/ v. to fail or desert especially in time of need; to disappoint the hopes or expectations of; be disloyal to; to be unfaithful in guarding, maintaining, or fulfilling, as in Gov. Bobby Jindal’s refusal to perform the job to which he was elected.
  • Betrayal: be·tray′al n. to abandon or desert; to turn one’s back on another; to delude or take advantage of; One who abandons his convictions or affiliations—as in Gov. Bobby Jindal’s betrayal of the 4.5 million residents of Louisiana.
  • Epitaph: ˈepə·taf/ n. a commemorative inscription on a tomb or mortuary monument about the person buried at that site; a brief statement commemorating or epitomizing a deceased person campaign or something past—as in the political ambitions of Gov. Bobby Jindal.

Some may think it’s too early to bury Jindal’s presidential ambitions just yet, but it is our humble opinion that Roy Orbison summed it up more than 50 years ago with his 1964 hit It’s Over.

What little spark that still burned in his fading presidential hopes has been snuffed out by a fast-paced series of events beginning with his incredibly idiotic rant about the Islamic no-go zones in Europe which then morphed into a tirade by Jindal shill Kyle Plotkin over the tint or lack of, in Jindal’s “official” portrait hanging in the reception area of the governor’s office on the fourth floor of the State Capitol.

Whether or not blogger Lamar White’s comment about Jindal’s “white-out” of his portrait which (a) makes him appear almost anemic or (b) makes him appear as if the anemic version caught a little too much sun at Gulf Shores (depending on which is the “official” portrait), the entire episode quickly descended to the level of ridiculous political theater.

And when the dialogue is reduced to arguments over the shade of color in a portrait Jindal has run out of issues for serious public debate and can no longer be taken seriously.

As a great singer, the late Roy Orbison, crooned back in 1964, It’s over.

And as our favorite writer, Billy Wayne Shakespeare from Denham on Amite would say (with certain literary license):

“Not that I loved Caesar Jindal less, but that I loved Rome Louisiana more. Had you rather Caesar lived Jindal were President and (we) die all slaves, than that Caesar were dead Jindal were forgotten, to live all free men?”

—Brutus Bob, from Julius Caesar, Act 3, Scene II.

“I have come here to bury Caesar Jindal, not to praise him. The evil that men do is remembered after their deaths, but the good is often buried with them difficult to find. It might as well be the same with Caesar Jindal. The noble Brutus Bob told you that Caesar Jindal was ambitious. If that’s true, it’s a serious fault, and Caesar Louisiana has paid seriously for it.”

—Marc “T-Boy” Antony, from Julius Caesar, Act 3, Scene II

If  there was any lingering doubt, that was erased late Friday (notice the timing) when he released a laundry list of yet another round of budget cuts. As has become his practice, all bad news is announced late on Fridays so the impact will be lessened because people tend not to follow the news on weekends.

Among those cuts:

  • Department of Environmental Quality: $2.5 million;
  • Department of Health and Hospitals: $13 million;
  • Department of Transportation and Development: $16.65 million.

Jindal also some miraculously came up with $42.8 by sweeping several agencies, including $9 million from the Medicaid Trust Fund for the Elderly.

The governor’s office was not spared, of course. Biting the bullet along with everyone else, Jindal’s plan included a reduction of $10,000 in travel expenses for his office.

That’s correct. Health care is taking a $13 million hit while Jindal is sacrificing roughly the cost of one trip to appear on Fox News or to Washington D.C. for something like his recent attack on Common Core at an event sponsored by someone like oh, say the American Principles Project.

He is pulling $9 million from the Medicaid Trust Fund for the Elderly but don’t worry, he will forego a trip to Iowa or New Hampshire.  Yeah, yeah, we know trips to Iowa and New Hampshire are paid out of his campaign fund. But when he takes those political trips, he takes along a detail of state police security personnel whose transportation, lodging, meals and overtime must be borne by the state treasury. It doesn’t take long for just one of those trips to eat through $10,000.

If Jindal is not acutely aware by now that any chance he had to be president has vanished into that $1.6 billion deficit projected for the coming year—a far cry from the $900 million surplus he inherited when he took office seven years ago.

If he does not know by now that his political credentials are shot, he can compare today’s 6.7 percent unemployment rate to the 3.8 percent unemployment when he took office in 2008. That wasn’t supposed to happen after industrial tax incentives increased from a couple hundred million a year to more than $1 billion a year over that same period.

If he is still wondering why his approval rating is lower than President Obama’s, he may want to direct his inquiry to the presidents of Louisiana’s colleges and universities who have seen their budgets cut by $673 million since taking office—and who are now anticipating another $300 million in cuts.

If he still doesn’t get it, he could ask the 250,000 low-income uninsured adults how they could possibly be upset at his decision not to expand Medicaid to cover their health care—all because of his philosophical criticism of the Affordable Care Act (ACA), aka Obamacare. And while he’s at it, he might wish to ask Baton Rouge’s low-income uninsured residents in the northern part of East Baton Rouge Parish how they’re going to make out after he closed Earl K. Long Hospital last year which forced those residents to seek emergency care at Baton Rouge General Medical Center-Mid City which announced this past week that it is closing its emergency room because of the financial losses incurred from that overflow from Earl K. Long.

Michael Hiltzik, writing for the Los Angeles Times on Friday (Feb. 6), to say, “Jindal has promoted his plan with a string of distortions about the ACA and the health insurance marketplace that suggest, at best, that he has no idea what he’s talking about.” http://www.latimes.com/business/hiltzik/la-fi-mh-the-lesson-of-louisiana-20150206-column.html

And if Jindal is still a bit hazy about why his chances of becoming president could make a possum optimistic about making it across a busy interstate highway, he might wish to review his glowing optimism over the privatization of the Office of Group Benefits (OGB) that preceded a drawdown of the agency’s reserve fund from a healthy $500 million built up by former OGB CEO Tommy Teague, whom Jindal fired, to less than half that amount.

After he’s done all that, then maybe he’ll finally understand why Louisiana’s middle income growth was sixth worst in the nation (-4.9 percent, as in a negative growth) in 2013. Maybe, just maybe, it will finally dawn on him that the widening income gap is not good news for the state’s poorest citizens. Perhaps someone will explain to him that the state’s poorest 20 percent of households averaged earning $8,851 in 2013 (that’s household income, not per capita). There may even be a chance that he can explain why the income share of 2.8 percent among the state’s 20 percent poorest was down from 3.2 percent share in 2009 while the wealthiest 20 percent held nearly 52 percent of the state’s income—a figure even higher than the national figure and a dramatic increase from 2009—even as the state’s poverty rate increased.

We’ve been beating this drum steadily for nearly five years now and just when we were beginning to believe no one was listening, no less than three national news organizations (the New York Times, the Los Angeles Times, and Politico) have jumped into the fray with witheringly harsh stories critical of Jindal and his train wreck of an administration in Louisiana.

And to think, it took an incredibly silly diatribe about Islam in London and a prayer meeting in Baton Rouge sponsored by a fundamentalist fringe element to get the attention of the national media that decided, at long last, it might be time to peel back the layers of righteousness and morality and take a long, hard look at the real Jindal and his actual record.

Funny, isn’t it, how often the big picture is overlooked until someone stumbles onto some little something that sets much bigger events into motion?

And now, at long last, we feel we can safely say it’s over. Done. Kaput. We have witnessed, in the incredibly short span of only a couple of weeks, the complete cratering of a political quest.

Cue Roy Orbison. https://www.youtube.com/watch?v=ufgrNRPFJn8&list=RDufgrNRPFJn8#t=0

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Russian firm spends $12M for state land for construction of fertilizer plant to be built on 2200 acres in Iberville Parish

Posted in Contract, Contracts, Economy, Exemptions, Finances, Fraud, Governor's Office, Grant, Grants, House, Incentives, Legislators, Legislature, Senate on February 5, 2015| 5 Comments »

What should Louisiana citizens know about a $12 million real estate deal in Iberville Parish between the Louisiana Department of Economic Development (LED) and a Russian Oligarch involving a proposed fertilizer plant on property surrounding a Louisiana National Guard facility?

Apparently nothing, if one judges from the status updates coming from the Jindal administration since the deal was made back in June of 2013.

Throw in a curious buy-back clause contained in the agreement between the state and EuroChem Louisiana LLC, an option for EuroChem to purchase a second tract in St. John the Baptist Parish, and talk about environmental emission credits that were supposedly promised to Eurochem but then appear to have evaporated into…well, thin air, and you have the makings of political intrigue with an international flavor.

Readers may remember our post last October 20 in which we revealed what appeared to be a sweetheart deal between the state and Vantage Health Plan whereby Vantage was allowed to purchase the former Virginia Hotel in Monroe for $881,000 without having to bother with a pesky public auction and sealed bids.

That transaction was made possible (even though there was another party interested in purchasing the building that had been serving as the State Office Building in Monroe) by Senate Bill 216 (SB 216) by Sens. Mike Walsworth (R-West Monroe), Rick Gallot (D-Ruston), Neil Riser (R-Columbia), and Francis Thompson (D-Delhi).

Well, it turns out there was considerably more to SB 216 (which became Act 127 upon the signature of Gov. Bobby Jindal). We saw the bill in its entirety at the time we wrote our story last October but did not understand the significance of a part of the bill entitled Section 3.

Until now.

Section 3 called for the sale of 2,150 acres of land within the town of St. Gabriel in Iberville Parish to a then unidentified “business entity that enters into a cooperative agreement” with the Department of Economic Development.

Not only was the prospective buyer not named in the bill (contrary to the other part of the bill that clearly identified Vantage Health and the purchase price of the Virginia Hotel), but the bill also contained no mention of a purchase price for the Iberville property. Neither the name EuroChem nor a purchase price is contained anywhere in the bill.

It is understandable that the buyer’s name might be left out of the bill, especially if the sale is still pending and nothing has been finalized. But when considering a proposal to dispose of a 2,150-acre tract of property for industrial purposes, one might be reasonably expected to ask how much money is involved before casting a vote on such a measure.

The bill passed the House by a 96-1 vote and by a 31-1 vote in the Senate. Voting against the bill in the House was Rep. Marcus Hunter (D-Monroe) while the lone dissenting vote in the Senate was cast by Sen. Dan Claitor (R-Baton Rouge). Seven senators and eight House members were absent or did not vote.

The Senate vote was on April 24, 2013, and the House approval followed on May 22. Gov. Bobby Jindal signed the bill on June 5 and the cooperative endeavor agreement was signed on June 14 by LED Deputy Secretary Steven Grissom—even though the bill did not become law until Aug. 1, 2013. PTDC3577

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The name of the Eurochem representative on the state documents obtained from LED was Ivan Vassilev Boasher, identified only as “Manager.”PTDC3576

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EuroChem, founded in 2001, is a Russian company owned jointly by Melnichenko (92.2 percent of shares) and CEO Dmitry Strezhnev, who owns the remaining 7.8 percent. It was Strezhnev, and not Melnichenko, who joined with Jindal in announcing plans for the $1.5 billion facility.

To secure the project, the state offered the company a competitive incentives package that includes a $6 million performance-based grant to offset the costs of site infrastructure improvements, the announcement said. In addition, EuroChem will receive the services of LED FastStart—the state’s workforce training program. “The company also is expected to utilize Louisiana’s Quality Jobs and Industrial Tax Exemption programs,” Jindal said in making the announcement on July 10, 2013.

“EuroChem is evaluating two final sites for its Louisiana plant,” he said. The Iberville Parish property had been on the market for more than two years through the Office of State Lands, and EuroChem deposited $12 million in an escrow account to buy the property. At the same time, EuroChem also secured an option to purchase a 900-acre, privately-owned tract in St. John the Baptist Parish. “Both Mississippi River sites are being evaluated for construction and logistics suitability, and the company will make a final site decision within the next year,” Jindal said. http://gov.louisiana.gov/index.cfm?md=newsroom&tmp=detail&articleID=4141&printer=1

Well, a year has come and gone and the option on the St. John property, identified by sources as the Goldmine Plantation in the Mississippi River’s east bank near the town of Edgard, which was for 330 days, has expired and was not renewed. No documents requesting permits have been filed with the parishes of St. John or Iberville, the town of St. Gabriel or the U.S. Army Corps of Engineers.

Meanwhile, during the 2014 legislative session—a year after approval of the sale of the Iberville Parish land to an unknown buyer for an undisclosed price—State Rep. John Bel Edwards apparently decided the deal was not a good one in light of the Ukraine crisis which erupted after approval of the cooperative endeavor agreement.

Edwards pushed through House Concurrent Resolution 209 (HCR 209) which requested that LED Secretary Stephen Moret “reevaluate and explore rescinding the cooperative endeavor agreement with the Russian-based company EuroChem.”

Of course the administration promptly ignored the resolution.

The 2,150 acre parcel in Iberville Parish is surrounded on three sides by the Mississippi River and the tract in turn surrounds the Carville Historic District that houses the National Hansen’s Disease Museum, the Gillis W. Long Military Center (Louisiana National Guard facility), and the U.S. Department of Labor’s Carville Job Corps Center. There are no exiting shipping terminals on the tract and the property is prone to flooding during times of high water.

One Iberville Parish official told our sources that he did not believe the project was going to move forward because of relations between the U.S. and Russia over the Ukraine crisis and because of current restrictions in Iberville on air emissions from existing plants which limits the amount of air emission credits available.

And it is those air emission, or carbon, credits that appear to be the key in the entire deal.

One person close to the St. John transaction, told our source that while the prospect of Eurochem’s building a plant in Louisiana is “still alive,” the purchase of the Iberville property “had to do with environmental credits.”

The credits, he said, were available from another company at the time they purchased the Iberville tract but are now gone. He refused to identify the company from whom credits were supposed to be available nor did he say what happened to those credits. “One was the deal (for construction) and one was about emission credits,” he said. “They purchased the Iberville land and continued to do business with us like it never happened.”

A spokesman for the Department of Environmental Quality explained that there are basically two geographic categories when considering air quality standards for permitting: attainment or nonattainment. When an area is considered to be in the nonattainment area, DEQ works with businesses to lower emissions to meet standards through “emissions credits.”

These “credits,” which are provided by the state, are gained by companies that make improvements to their current physical plants in order to reduce oxide and volatile organic compound (VOC) emissions. The credits can be bought and sold much like a commodity on the open market, he explained.

The credits also have to be acquired from companies within that particular designated geographic area that is considered in the nonattainment area.

Because Iberville Parish is within a nonattainment area, Eurochem would have to acquire the credits if planning to make an application for construction and would be required to demonstrate it had sufficient oxide and VOC credits to meet the application approval.

While no one is making any accusations, there is a flourishing international black market for emissions credits that has come under scrutiny by several investigative agencies, including Interpol, which calls carbon trading the “world’s fasting growing commodities market.” Guide to Carbon Trading Crime

http://www.interpol.int/en/News-and-media/News/2013/PR090/

Larry Lohmann, writing for New Scientist, says that the larger carbon markets are “poised on the edge of breakdown.” https://www.academia.edu/3152549/Regulation_as_Corruption_in_the_Carbon_Offset_Markets

Deloitte Forensic, Australia, calls carbon credit fraud “the white collar crime of the future.”

carbon_credit_fraud

Carbon credits also have become a favorite vehicle for money laundering schemes, according to investigative agencies. http://www.redd-monitor.org/2013/08/06/itv-series-fraud-squad-investigates-carbon-credit-criminals/

http://www.marymonson.co.uk/fraud-solicitors/carbon-credit-fraud/

There are too many unknowns about the Iberville Parish land sale, according to retired Gen. Russel Honoré, leader of the Louisiana Green Army coalition. “The state is broke and we’re making deals with foreign entities who are polluters in their own countries,” he said of the Iberville Parish land sale as well as a recent deal with a Chinese company that has had a poor environmental record.

“As much pollution problems and erosion problems as we have in this state, we don’t need to be bringing in these companies from other countries unless they have clean safety and environmental records,” Honoré said.

Still another unanswered question concerns that buy-back clause in the cooperative endeavor agreement between Eurochem and LED. The side of the ledger favoring EuroChem is the $6 million grant the state gave EuroChem, along with all the other tax incentives it is receiving—should the plant be built. But on the plus side for Louisiana is the clause that says if the fertilizer plant is not built, the state has the option of buying the land back at a reduced price or approving the buyer for re-sale.

 

 

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Generous corporate tax incentives bleed revenue from state treasury, provide little other than political bragging rights

Posted in Economy, Exemptions, Finances, Incentives, Jobs, Lawsuits, Louisiana Purchase, Taxes on February 2, 2015| 25 Comments »

The Baton Rouge Advocate last December ran an excellent eight-part series on Giving Away Louisiana in which the paper examined inventory tax rebates, movie tax credits, Enterprise Zone tax credits, solar energy subsidies, fracking incentives and the state’s 10-year property tax exemptions, all of which combine to gut the state treasury of billions of dollars in tax revenue.

We took a little different approach.

Sometimes all one has to do to illustrate the folly of Louisiana’s corporate tax exemptions and tax credits is do the math.

The theory in Baton Rouge is that such tax breaks create jobs which in turn produce taxes for the state coffers through consumer spending and state income taxes, thus making the exemptions and credits a win-win for everyone concerned.

Take the five-year tax credit awarded in 2013 to Lakeview Regional Medical Center in St. Tammany Parish for an upgrade to its hospital facilities, for example. In exchange for the creation of five new jobs with a new five-year payroll of $1 million, Lakeview was awarded $330,000 in Enterprise Zone tax credits. (A tax credit is a dollar for dollar reduction of a tax liability meaning a $1 tax credit reduces one’s taxes by a full dollar.)

Broken down, that comes to $200,000 per year in new payroll, or an average of $40,000 per new employee per year against a tax credit of $66,000 per year.

At Louisiana’s 4 percent tax rate for that income bracket for a family of three, that means the state will rake in $4,000 per year total for all five employees ($800 each). http://www.tax-brackets.org/louisianataxtable

For a single employee, the state income tax revenue increases to $5,650 for all five employees ($1,130 each), still a far cry from the $66,000 per year in tax credits awarded to the hospital.

Obviously, the new employees will spend money locally which will generate local and state sales tax revenues, but it will take a lot of income and sales taxes from five employees to make up for the loss of $66,000 per year over that five-year period.

Louisiana, meanwhile continues to offer inducements to business and industry that defy logic—projects like the $152,000 Enterprise Zone five-year tax credit for Wal-Mart. Enterprise Zone credits are awarded ostensibly for businesses to locate in areas of high unemployment.

This Wal-Mart, however, was built in St. Tammany Parish, one of the most affluent areas of the state. And Wal-Mart pays low wages, has been cutting back on offering medical benefits for its employees and last March, the EEOC filed a an age and disability discrimination lawsuit against Wal-Mart stores in Texas.

In this case, the total five-year payroll for the 65 new jobs created by the new Wal-Mart was $2.78 million, or about $8,550 per year per employee. The federal poverty level for a single person is $11,670 per year and $19,790 for a family of three. That means the typical Wal-Mart employee in Louisiana is eligible for food stamps and Medicare/Medicaid–at state expense. The 2014 That salary for a family of three produces a state income tax of $21 ($41 for a married person with no children or $61 for a single employee claiming only him/herself).

The total taxes owed, depending on marital status and number of dependents, would range from $1,365 to $3,965 for all 65 employees, or between $6,825 and $19,825 for the five years of the Enterprise Zone tax credit—a far cry from the $152,000 tax credit awarded Wal-Mart.

In 2013 alone, Entergy, the electric-utility holding company with total assets of $43.4 billion and which provides electricity throughout south Louisiana and parts of Arkansas, Mississippi and Texas, received 21 separate 10-year property tax exemptions totaling $115 million while creating….not a single new job.

Entergy CEO J. Wayne Leonard received $27.3 million in compensation in 2009 and that same year, Entergy directors awarded him an additional $15,871 to pay part of his 2008 federal income taxes. The question here might be: how many Entergy employees did the directors help with their federal income taxes?

All this from a company that, after independent audits of charges, had to refund nearly $3.4 million to the New Orleans Sewer and Water Board in 1992 ($1 million), the City of New Orleans in 1993 and 1994 ($2.2 million), the New Orleans Superdome Mall ($70,000) and LSU ($90,000).

While state income taxes are not the only barometer in calculating the impact of corporate tax breaks (state and local sales taxes paid by those employed as a result of the incentives, for example, would add to the equation), but just taking state income taxes for a typical family of three or four, this what LouisianaVoice found:

  • The state gave 10-year Quality Job payroll rebates of an estimated $40.85 million in 2013 against projects creating 1,357 new jobs with a combined new 10-year payroll of $680.85 million. That comes out to an average salary of $49,700 per year. For an employee married, filing jointly and with 3 exemptions (including him/herself) that comes to an average state income tax of $1,008 per year—or a 10-year total of $13.7 million total for all 1,357 employees. So, the state collects somewhere between $13.7 million and $20.6 million (depending on marital status and dependents) against payroll rebates of $40.85 million over 10 years—a net loss to the state of about $20 million.
  • The state gave five-year Enterprise Zone tax credits totaling $19.6 million during 2013 for projects producing 4,857 new jobs with a combined five-year, new job payroll of $658.3 million, an annual average salary of only $26,900—an average state income tax liability of $400 per employee which, over a five-year period, produces about $9.7 million to $10 million in state income taxes—against tax credits of $19.6 million, or a net loss of $9.6 million to $9.9 million to the state over the five year life of the tax credit.
  • But the real kicker is the 10-year property tax exemption of $790 million in 2013. For that, 3,696 new jobs were created with a new 10-year payroll of $1.84 billion, or about $184 million per year, which comes out to $49,780 per new employee per year. That salary would produce an average state income tax liability of about $1,200 per year per new employee, or about $44.4 million over 10 years, a loss to the state of more than $750 million over 10 years. By these calculations, it would take something like 17.5 years of state income taxes from these 3,696 employees to make up for the $790 million in lost property taxes.

These three programs combined for a net loss to the state of about $80 million per year just in state income and property taxes. And that doesn’t even include the movie and TV credits or tax abatements, the inventory tax rebates, and the other incentives. So, since Jindal has been in office, the state has given away well over $5 billion dollars in Enterprise Zone, Quality Jobs, and 10-year property tax exemption programs without coming anywhere near recovering that amount in individual taxes paid by employees of those corporations who nevertheless are called upon to shoulder a disproportionate share of the cost of government not borne by their employers.

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