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There was a popular game about 40 years ago called “Whack-a-mole.” (For all I know, it may well still be around.) Anyway, the object of the game was for a player to “whack” a rodent with a rubber mallet each time it appeared out of one of five holes. The problem was each time a mole was “whacked”, it invariably popped up again from one of the remaining four holes.

So it is with certain news stories that just when you think you’ve written about all there is to say on the subject, up pops another angle to pursue.

This time though, two separate—and seemingly unrelated—stories that have been covered extensively in the past by LouisianaVoice have now converged to warrant a fresh look at old news.

Before I go any further, I should acknowledge the ever-sharp eyes of my bronchitis-infected friend and Ruston High School classmate John Sachs (Class of ’61). It is he, after all, that brought an otherwise routine local news story in the Farmerville Gazette to my attention. (I guess I’m going to have acquiesce and give him that honorary Deputy Ace Reporter badge he’s been clamoring for.)

Eagle-Eye John called me about efforts to hire a private prison management company to take over management of the 380-bed Union Parish Detention Center. You may recall that LouisianaVoice had a couple of stories about the facility last year, on MAY 10 and MAY 31 about a convicted rapist who was allowed out of his cell to rape a female prisoner. Twice.

That incident, deplorable as it certainly was, is not what this is about, however.

The Gazette story recounted the reason for the decision by LaSalle Corrections to decline Union Parish’s offer. Those reasons dealt with the potential shortage of prisoners if Gov. John Bel Edwards is successful in reducing the number of state inmates and the financial impact of such a move.

Another factor, said LaSalle Chief of Operations Johnny Creed, was the size of four other facilities in north Louisiana managed by LaSalle: Richwood Correctional Center (1,129 inmates), Jackson Parish Correctional Center (1,285), LaSalle Correctional Center (785) and Catahoula Correctional Center (835).

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And then Creed said the thing that caught Sach’s eye, prompting him to call me with his croaking voice and rattling cough: “As small as (Union Parish Detention Center) is, we would need to bring our work release inmate that work for Foster Farms from our Richwood facility.”

Wait. What?

Foster Farms has 100 work release inmates working at its cotton-pickin’ chicken-pluckin’ plant in Farmerville?

Isn’t this the same plant that Bobby Jindal, with the support of State Sen. Mike Walsworth (R-West Monroe), gave $50 million to in order to get Foster Farms to take over the plant from Pilgrim’s Pride back in 2009?

Wasn’t Foster Farms supposed to provide up to 1,100 jobs with that $50 million?

Does Foster Farms get a $2,400 tax credit for each inmate it employs in the work release program?

And aren’t work release programs something of a cash cow for sheriffs and private prisons farming out prisoners to work for just a smidgen more than minimum wage?

Yes,

Uh-huh.

Yep.

Hell, yes.

You mean to tell me Foster Farms gets a $240,000 tax credit (that’s credit, not a deduction, meaning that’s $240,000 income on which Foster Farm pays no taxes) for hiring 100 prisoners at $7.75 per hour (about 60 percent of which goes to the local sheriff), jobs that should be going to local folks?

Very perceptive, Grasshopper.

This, folks, is yet another lingering smell that hits our olfactory like a pair of dirty socks but which we affectionately call the Jindal Legacy.

The work release program is such a golden egg that sheriffs all over the state, reading the tea leaves shaped like dollar signs, rushed to build their own programs, complete with barracks and vans for workers. And to make sure the beds stayed filled, which is the only way they can get the maximum state dollars, the accommodating Louisiana Sheriffs’ Association lobbied (read parties, booze, women and campaign contributions) Louisiana’s law and order legislators to be more law and order-oriented and pass stiffer penalties for even the most insignificant crimes.

To see just how lucrative this could be for a small parish like Union, let’s run the numbers.

State law allows the sheriff or operator of the private prison to take up to 62 percent of a prisoner’s earnings. One hundred prisoners working 40 hours per week for 50 weeks per year at $7.75 per hour. That comes to $1.55 million earned by the prisoner.

The Union Parish Detention Center is unique in that it is the only such facility in the state in which neither the sheriff nor a private company has operational controls. It is operated by committee comprised of a member of the Union Parish Police Jury, the district attorney and parish police chiefs. Lincoln Parish at one time was run in the same manner but it is now run by the sheriff.

If the parish takes “just” 60 percent, that’s $930,000 per year for the sheriff/operator. And that’s over and above the rate the state pays the sheriff/operator to house the prisoners. More than six years ago, LOUISIANA VOICE published a story that examined some of the housing contracts between the state and several Louisiana parishes.

Despite the money generated by the work release program, the Union Parish Detention Center has continued to lose money. That is the reason for the unsuccessful attempt to lure LaSalle into managing the center.

We followed our December 2010 post with a story in AUGUST 2015 that illustrated the abuses that can occur when someone with the right connections can use that advantage to manipulate a system like work release for his own monetary gain.

Jail operators, be they sheriffs or private corporations, love the money the work release program brings in to augment that paid by the state for housing the prisoners.

And businesses like Foster Farms love being able to hire 100 prisoners at near-minimum wage and receive a $240,000 tax credit in the process.

It’s a win-win for everyone but the taxpayers.

So, bottom line: Thar’s gold in them thar jails.

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Bobby Jindal, the Rhode Scholar who rode into town on the crest of a billion-dollar surplus nine years ago this month, rode out 12 months ago leaving the state wallowing in red ink and now it is learned that he inflicted even more fiscal carnage on his way out the door.

And knowing the way in which he and his final Commissioner of Administration, Kristy Nichols, juggled the books, it’s not at all unreasonable to think that Jindal’s final example of fiscal irresponsibility may well have been an intentional act of political chicanery carried out to buy him time so that his successor would be left with the mess to clean up. (Of course, Kristy didn’t become commissioner until Paul Rainwater left in 2012, but that does not change the fact that a lot of dollars were moved around—swept—before and after she was promoted.)

Hey! It’s not that far-fetched. He did it with the Office of Group Benefits. He did it with higher education. He did it with the LSU Hospital System. Boy, did he do it with the hospital system—with a contract containing 50 blank pages, yet!

By the time Jindal left office, virtually the only state agency left with a shred of credibility and integrity was the office of the Legislative Auditor—and that’s largely because the office has complete autonomy and is independent from outside political pressure, particularly from the governor’s office.

And now, coincidentally, it is that same Legislative Auditor who has issued a damning AUDIT REPORT that reveals a major SNAFU (if that’s truly what it was) in which the Jindal administration “misclassified” a $34.6 million default payment made by Northrop Grumman Ship Systems made in 2011.

The payment was made to Louisiana Economic Development after the shipyard failed to meet required hiring quotas but instead of using the money to pay off equipment the state had financed for Northrop Grumman, the audit says the Division of Administration “swept” the money when it was balancing the budget. As a result, the state has already paid some $2 million in interest and administrative costs on the equipment, and is potentially on the hook for some $6.2 million more.

Bobby and Kristy loved the process of “sweeping” agencies of excess funds lying around in order to try and plug gaping holes in the state budget that dogged Jindal every single year he was governor. “Sweeping” for funds is something like picking up crumbs off the floor in an attempt to gather enough to make a bundt cake.

“Since the debt could not be immediately defeased (a provision that voids a bond or loan) because of the limited prepayment options, the funds should have been segregated into a sinking account for defeasement of the debt, not a statutorily dedicated fund account that could be swept by legislative action,” the audit report says.

But the Louisiana Office of Economic Development (LED), then headed by $300,000-a-year Director Stephen Moret, failed to do that and, presto! The funds got swept by the Jindal Housecleaning Service and as a result, the state “will continue to incur additional interest and administrative costs until the debt (on the equipment) is defeased,” the audit reads. “If not defeased before the Oct. 2022 … the state will incur more than $6.2 million in additional interest and administrative costs.”

LED entered into a Cooperative Endeavor Agreement with Northrop Grumman in the early 2000s. The company had acquired Avondale Shipyard in Jefferson Parish and Northrop Grumman, under the terms of the deal, agreed to maintain employment levels of some 3,500 jobs a year with an economic impact of $1 billion. In return, the state agreed, among other things, to issue bonds to finance more than $34 million worth of cranes and equipment that would modernize the shipyard.

But dreams and schemes are made of fragile things. Northrop Grumman fell short of its job requirements and LED notified the company in early 2011 that it wasn’t living up to its employment obligations. Northrop Grumman agreed to settle with the state for $34.6 million, which represented the acquisition cost of the equipment. It wired the money to LED in March 2011, the report says.

But the state didn’t use the money to pay off the debt on the equipment, nor did it set the funds aside in an escrow account to pay it off in the future. Instead, it “swept” the money into the Louisiana Medical Assistance Trust Fund, was enacted during the 2011 session to help supplement the state’s Medicaid program.

But don’t worry, folks. It’s just another example of the superb financial management of the state’s resources about which Jindal would boast—in Iowa, certainly not Louisiana—during his comical quest for the Republican presidential nomination in 2015, his final year I office.

And now the state finds itself hanging out to dry while trying to come up with that long gone $34.6 million, plus about $2 million in interest and administrative costs.

In a written response to the audit’s findings, Commissioner of Administration Jay Dardenne pointed out that Jindal’s actions, while ill-advised, were nonetheless legal. “The (Jindal) administration’s decision to use the funds for other purposes was not prohibited by the terms of the (agreement) with Northrop Grumman,” he says, noting that the Legislature approved of the financial maneuver.

Perhaps, but we all know the definitions of the legal thing and the right thing are sometimes poles apart. In this case, those responsible knew what that $34.6 million was for and they chose to do what was legal but not what was right.

The question now is does the Office of Risk Management carry excess coverage that would allow the State to make a claim for recovery of the money on the basis of stupidity? Should Jindal, Nichols, and Moret be asked to dig deep into their pockets to come up with the money?

Nah. It’ll never happen.

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All those rabid LSU fans who find themselves in the unusual position of backing a team virtually buried in the 19th position among AP’s football elite can take heart; at least the Tigers aren’t 44th.

And those equally insane ‘Bama fans looking to secure another crystal football for their school’s trophy case can be glad the Tide isn’t ranked 46th.

As both teams head into their respective post-season games, 24/7 Wall St., a research firm that publishes some 30 ARTICLES per day on economy, finances, and government, has come out with its rankings of the best- and worst-run states in the country.

And it ain’t pretty.

Alabama is no. 46 out of 50 states but that’s okay. Never mind that it is one of the poorest states in the nation with 18.5 (5th highest) of its citizens living in poverty). The Tide is in the playoffs for the national championship.

Don’t worry about the state’s unemployment rate of 6.1 percent, which is tied for 8th highest in the country. Alabama, which proclaims itself to be the Heart of Dixie, pays the coaches of its two major college football teams, ‘Bama and Auburn, combined SALARIES of $11.67 million—$4.73 for Auburn’s Gus Malzahn and $6.94 million for ol’ Nicky Boy.

(Les Miles, before being unceremoniously cut loose by LSU’s Athletic Director Joe Alleva, himself the possessor of somewhat dubious talent, was pulling down a cool $4.3 million per annum. But all of these salaries pale in comparison to Jim Harbaugh’s $9.004 million salary at Michigan.)

LSU, meanwhile, is headed to this Friday’s Citrus Bowl in Orlando to take on the juggernaut Cardinals of Louisville—without the services of Leonard Fournette who has played his last game for the Tigers. (On that note, now that Fournette has declared himself draft eligible, retained an agent and opted not to participate in Friday’s game, has he, or any other player deciding to go pro, also opted out of attending classes for the remainder of the semester as well? If not, are any of them continuing to reside in free housing, enjoying free meals or using school training equipment for workouts? Just a thought.)

Meanwhile, back home, Louisiana ranks as the 44th best-run (or the seventh worst-run) state, just two notches ahead of Alabama. The two are sandwiched around Kentucky in the rankings while the state geographically wedged between them, Mississippi, is ranked 47th best, or fourth-worst with the fifth-highest unemployment rate at 6.5 percent and the highest poverty rate at 22.0 percent.

Louisiana’s unemployment rate of 6.3 percent (sixth-highest, right behind Mississippi) and its third-highest poverty rate of 19.6 percent (New Mexico’s 20.4 percent is second-highest) are nothing to brag about. Nor is its $4,067 debt per capital (16th highest).

The question, at least in Louisiana’s case, is: Why?

  • Louisiana has some of the highest crude oil and natural gas reserves in the nations;
  • Louisiana is one of the top crude oil producers in the country;
  • More crude oil is shipped to the Louisiana Offshore Oil Port (LOOP) than to any other U.S. port;
  • Louisiana has several of the nation’s largest ports with exports totaling $10,530 per capita in 2015, second highest of all states, behind only Washington;

So with this abundance of natural resources, why is it that Louisiana continues to struggle with high poverty, low educational attainment and high violent crime.

Well, for starters, you can tie the first two of those to the third: high poverty and low education rates equal high crime. Every time.

All that notwithstanding, however, the overriding question is how can a state with such an abundance of the world’s most valuable commodity fail to profit?

Market news has been replete with stories lately about how the poor oil companies are taking hits with some reporting net profits down by as much as 37 percent. Still, even with lower earnings, some, like SHELL, reported net profits of a paltry $2.24 billion for the second quarter of 2016. That’s three months’ profits, folk. Three months.

Yet, Louisiana continues to give away the store to big oil through more than generous tax breaks while allowing them to walk away from the ravages they have inflicted on our coastal marshes.

With so much revenue derived by the oil and chemical industries through these tax breaks, there is no reason why this state’s citizenry continues to wallow in the depths of financial despair and desperation.

With a more reasonable tax structure in which big oil, big chemical plants, and their related industries (ports, trucking, and rail) could be asked to bear more responsibility for wrecking our coastline, polluting our air and water, and tearing up our highways, Louisiana could forge ahead of most of those states ranked ahead of them.

Yet we continue to place the greatest burden on the backs of those who can least afford it: the middle and low income groups through the most inequitable form of taxes. Louisiana has the third-highest average (9.01 percent) in state and local SALES TAXES in the nation.

Ever wonder why that is? For starters, the average taxpayer doesn’t have the time or resources or a PAC to generate organized opposition to this rigged tax structure or to purchase legislators’ votes. Big oil, Big Pharma, and Big Banks do.

Do you think it was sheer coincidence that former State Sen. Robert Adley was appointed by Gov. John Bel Edwards as Executive Director, Louisiana Offshore Terminal Authority? http://gov.louisiana.gov/news/governorelect-edwards-announces-cabinet-executive-staff-bese-board-appointments

Think again. Here is LouisianaVoice’s overview on why Big Oil has the influence it exercises in this state: https://louisianavoice.com/2016/08/28/ag-jeff-landry-joins-jindal-legislators-in-protecting-big-oil-from-cleanup-responsibility-follow-the-money-for-motives/

(Be sure to click on Copy of Campaign Contributions)

But at least the NCAA playoffs and the Citrus Bowl—and national signing day—will keep the natives content for a while longer.

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Good Jobs First, a Washington, D.C.-based national policy resource center, has released an extensive study entitled Megadeals: The Largest Economic Development Subsidy Packages Ever Awarded by State and Local Governments in the United States.

Louisiana, with giveaways totaling $3,169,600,328, ranked sixth behind New York, Michigan, Oregon, New Mexico and Washington in the total dollar amount of so-called megadeals, the report shows, $65 million more than much-larger Texas, which had $3,104,800,000.

Louisiana, with 11, tied with Tennessee for fifth place in the number of such budget-busting deals behind Michigan’s 29, New York’s 23 and 12 each for Texas and Ohio.

The report, authored by Philip Mattera and Kasia Tarczynska, is somewhat dated in that it was published in 2013 but it still offers some valuable insights into how states, Louisiana in particular, was more than willing to give subsidies worth millions upon millions of dollars to corporations in the name of new jobs that rarely, if ever, materialized.

The subsidies included in the report, it should be noted, do not include tax incentives, which is another type of inducement. Accordingly, Wal-Mart, which has received more than $1.2 billion in total taxpayer assistance, is not included because its deals were worth less than $75 million each. Good Jobs First has documented giveaways to Wal-Mart in a separate report.

The single biggest example of corporate socialism contained in the report is the 30-year discounted-electricity deal worth an estimated $5.6 billion given by the New York Power Authority to Alcoa. In all, 16 of the Fortune 50 corporations (excluding Wal-Mart) were included as recipients of the report’s megadeals.

The biggest single deal for Louisiana—and the fifth-biggest overall—was the $1.69 billion subsidy in 2010 for Cheniere Energy in the form of property tax abatements and other subsidies for the Sabine Pass natural gas liquefaction plant. That project, the report said, created 225 new jobs—a cost to the state of more than $7,500 per job, the largest single cost-per-job project contained in the report.

Shintech, received a 2012 deal worth $187.2 million in subsidies to the company. That project was said to have created 50 new Louisiana jobs at a cost of $3,744 per job.

One of the biggest recipients of governmental largesse since the year 2000 has been General Motors with more than $529 in subsidies nationwide. Yet, it was General Motors who pulled up stakes pulled up stakes in 2012, leaving upwards of 3,000 former employees without jobs.

The megadeals cited by Good Jobs First in its report were dwarfed, however, by the seemingly insane subsidies given to banks and investment firms since 2000.

Of the top 21 recipients of bailouts by the federal government, the smallest was that of a company most probably never heard of: Norinchukin Bank, a Japanese cooperative bank serving more than 5,600 agricultural, fishing and forestry cooperatives from its headquarters in Tokyo—and it received $105 billion (with a “B”).

That’s nothing when compared with the heavy hitters. In all, 12 foreign corporations received loans, loan guarantees or bailout assistance from a generous federal U.S. government, led by the $942.7 billion received by the United Kingdom’s Barclays.

But Barclays ranked only fifth in terms of subsidies received in the form of federal bailouts:

Consider, if you will, the top four:

  • Bank of America $3.5 trillion;
  • Citigroup $2.6 trillion;
  • Morgan Stanley $2.1 trillion;
  • JPMorgan Chase $1.3 trillion.

All of this, of course, was the direct result of deregulation pushed by a congress whose members were supported by generous campaign contributions from CEOs, officers and stockholders of those very firms.

And yet we have elected officials—and citizens—who dare to rail against so-called welfare cheats, the costs of illegal immigrants, and the costs of health care for the poor.

These are the same people who wring their hands at the cost of social programs yet justify the expenditure of billions of dollars per day in military contracts to campaign contributors to support wars with no apparent objective (other than political payback) and with no end in sight.

These are the same ones who look us in the eye and tell us they support free market capitalism.

But pure capitalism doesn’t give away the public bank in order to entice some company that was probably coming to your state anyway. After all, if Louisiana truly has all these rich oil and gas deposits (and it does), does anyone really believe the oil and gas companies are going to locate their refining plants and pipelines in Idaho in order to mine for Louisiana’s resources?

You can check that box “no.”

What is the logic behind subsidies to lure an industry just so it can exploit cheap labor? Wouldn’t it be smarter to invest in public education and higher education so that our citizens might be capable of demanding higher wages for their knowledge and skills? Why would we opt to perpetuate the cycle of poverty by sacrificing taxpayer dollars to the advantage of some faceless corporation who cares not one whit for our citizens?

Free market capitalism doesn’t reward corporations with these kinds of subsidies while the recipients are simultaneously sending job oversees, depriving Americans of job opportunities.

Pure capitalism would dictate that each and every business in America succeed or fail on its own merit, without having to depend on governmental handouts.

Anything else has to be considered as something akin to (gasp) ….socialism.

But insisting on capitalism for the poor and socialism for corporations and the wealthy is a formula for disaster if ever such formula existed. The two philosophies are simply not compatible

And you will never get that lesson from the disciples of Ayn Rand.

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Less than three months ago, on June 24, Gov. John Bel Edwards signed an executive order in which he mandated more scrutiny over how significant industrial property tax breaks are doled out to manufacturers. http://www.nola.com/business/index.ssf/2016/06/john_bel_edwards_signs_executi.html

Theoretically, the order gave local governments that would lose out on property taxes a say in approving exemptions for heavy industry, and companies applying for five-year renewals of five-year tax breaks totaling $11 billion would be required to prove the breaks would create and/or retain jobs.

But the Commerce and Industry Board may be trying an end run around Edwards’ order.

The board waited until late Friday afternoon (one of Bobby Jindal’s favorite tactics of making announcements as the week’s news cycle winds down) to give public notice of a Monday board meeting during which it is scheduled to vote on redirecting millions in local property tax revenue from disaster-affected parishes to corporate tax exemptions, without any input from the local bodies losing that revenue.

One of the exemptions to be voted on Monday would “renew” an exemption for Georgia Pacific, a Koch brothers company, costing East Baton Rouge $1.9 million in property taxes.

Exemptions are costing $16.7 billion in lost property tax revenues to local governments, schools and law enforcement, according to the nonprofit Together Louisiana, which will hold a press conference to oppose the proposed exemptions Monday at 9:15 a.m. prior to the 10 a.m. board meeting. http://togetherbr.nationbuilder.com/about

The board meeting will be held in the LaSalle Building at 617 North Third Street in Baton Rouge. The Together Baton Rouge press conference will be held in front of the LaSalle Building.

The exemptions being voted on at Monday’s meeting are being considered in direct violation of Governor John Bel Edwards’ Executive Order issued, and “effective immediately,” on June 24th, 2016, which stated that no future industrial tax exemptions would be approved without the consent of the local governmental bodies — school boards, sheriffs, municipalities and parish governing authorities — whose tax revenue was at stake.

No public hearings, public deliberations or local votes have taken place on any of these proposals, despite the clear requirement of the Edwards executive order. Here is the full agenda for Monday’s board meeting: http://www.opportunitylouisiana.com/docs/default-source/boards-reports/MeetingCategory/louisiana-board-of-commerce-and-industry/9-12-16-c-amp-i-board-agenda.pdf?sfvrsn=0

 

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