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Archive for the ‘Legislature, Legislators’ Category

Sen. Butch Gautreaux dropped a bombshell on Tuesday when he revealed that he had learned that Gov. Bobby Jindal planned to proceed with the sale of the Office of Group Benefits (OGB) within days after the legislature leaves town upon adjournment of the current session.

The OGB privatization controversy has been swirling since Wall Street banking firm Goldman Sachs was brought in to the Division of Administration (DOA) last fall to begin preparation of a request for proposals (RFP) for a financial advisor to conduct a market value analysis of OGB and to then market the agency to potential buyers.

Goldman Sachs subsequently was the only company to submit a proposal but withdrew after negotiations broke down over the firm’s demand that the state indemnify it from future litigation.

In hearings before the Senate Retirement Committee and the Senate and Governmental Affairs Committee, Commissioner of Administration Paul Rainwater flip-flopped on whether the agency was to be sold or simply have its operations taken over by a contracted third party administrator (TPA).

The initial RFP specifically referred to the agency’s being sold but Rainwater at one time said the agency was not for sale during testimony before the Senate Retirement Committee, chaired by Sen. Butch Gautreaux (D-Morgan City), who also is a member of the OGB board of directors.

A second RFP was issued with a deadline for June 6 for the submission of proposals and a “probable” date for naming a contractor of June 15. DOA officials appeared at OGB on June 6 and took possession of the submitted proposals and no one from OGB has ever seen the actual proposals.

It was learned, however, that Goldman Sachs was one of three firms to submit proposals on the second RFP.

On June 17, LouisianaVoice asked the identity of the financial analyst but DOA Chief of Staff Dirk Thibodeaux said no one had been selected.

If Thibodeaux was accurate in his answer, that would mean that DOA had less than a week in which to select a financial analyst to conduct an in-depth financial analysis of the billion-dollar agency, have the analyst market the agency to the private sector, and to agree to terms with a buyer, a scenario virtually impossible to execute.

“My understanding is that Jindal will act on the sale Friday or Monday,” Gautreaux said in an email on Tuesday. “The deal is supposedly done. I am still fighting and will be making a statement in the Senate tomorrow.”

An earlier financial report performed by Chaffe & Associates of New Orleans reportedly said the only advantage in privatizing OGB would be if a buyer was able to keep the agency’s $500 million surplus.

A copy of that report was supposedly leaked to the Baton Rouge Advocate last week but that report contained no such wording.

The leaked report, however, was dated June 3 by the two Chaffe & Associates staff members who authored the report. Rainwater testified on May 31that his office had received the report on May 25, nine days before the June 3 date on the Chaffe report. DOA attorney Paul Holmes, in an email to LouisianaVoice on May 27 also said the report was received on May 25.

Adding to the mystery of the discrepancy in the dates was the fact that the report leaked to the Advocate had no date stamps on any of its 42 pages. DOA policy is that every document, including letters and documents, must be stamped in with the time and date of receipt.

A DOA spokesman said that there were reports within DOA that the Jindal administration was planning to move forward with the privatization of the agency.

If Jindal does proceed with the sale of the agency, it would go against the wishes of the Retired State Employees Association, active state employees, the Retired Teachers Association, and the Louisiana District Judges Association. The Louisiana District Judges Association in March approved a unanimous resolution in opposition to the proposed privatization.

There has been some talk of the possibility of a class action lawsuit by one or more of the associations in an attempt to block any privatization move.

If a move to block the OGB privatization is successful, it would be the second major setback to Jindal. He was earlier stymied in his efforts to sale three state prisons in Allen, Winn, and Avoyelles parishes.

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Last month, LouisianaVoice submitted the fourth in a series of public records requests to the Division of Administration in an effort to secure a copy of the report done by Chaffe & Associates of New Orleans on the financial evaluation of the Louisiana Office of Group Benefits (OGB).

On May 27, we received an email response from Paul Holmes, Attorney 4, Office of the General Counsel, Division of Administration (DOA). Here is his verbatim reply to that specific portion of our request:

“In response to your May 24, 2011, public records request, please be advised as follows.

A report generated by Chaffe & Associates was received on May 25, 2011. The report is privileged as part of the deliberative process and is exempt from disclosure under R.S. 44:4.1 as well as pursuant to Kyle v. Public Service Commission, 878 So.2d 650 (La. App. 1st Cir. 2004) and Donelon v. Theriot, 2011 WL 1733548, (La. App. 1st Cir. 5/3/11).”

On May 31, Paul Rainwater offered much the same testimony before the Senate and Governmental Affairs Committee, saying that he had received the report on May 25 but that it could not be released because it was “part of the deliberative process,” a well-worn excuse for the Jindal administration to hold back documents from public release.

Even more damning, it was revealed during his testimony that he had not even provided a copy to Scott Kipper, the head man at OGB. Kipper had been appointed CEO of the agency immediately upon the firing of his predecessor, Tommy Teague, on April 15.

Rainwater first promised the committee that he would make a copy of the report available to Sen. Karen Peterson (D-New Orleans) and shortly after his testimony he provided a copy of the report to Kipper. Kipper’s copy of the report supposedly said the only benefit to privatizing OGB would be if the buyer retained the $500 million agency surplus.

Rainwater, apparently because of that language, had a change of heart and directed Kipper not to make the report available to anyone, prompting Kipper to submit his resignation, effective June 24.

As pressure mounted on Rainwater and Deputy Commissioner Mark Brady from the committee and the Legislative Auditor’s office which also wanted a copy, Rainwater finally acquiesced and released a copy to Senate President Joel Chaisson (D-Destrehan) and to the auditor’s office but only after getting senators’ signatures on a confidentiality agreement.

An unnamed senator, however, leaked the report to the Baton Rouge Advocate, which posted the full 42-page report on its web site.

Or did it?

Remember, attorney Holmes and Commissioner Rainwater both said that the report was received by DOA on May 25. Both men are in agreement on that date. Remember that date because it’s important.

The report posted by the Advocate, however, contains a signature page (Page 11) wherein both Jonathan W. Briggs, managing director of Chaffe & Associates, and Jenny E. Day Austin, assistant vice president of Chaffe, signed off on the report.

The report’s signature page is dated June 3. Remember that date because it, too, is important.

So, how is it that both Holmes on May 27, and Rainwater on May 31, claim that the report was received by DOA on May 25 when the Chaffe officials did not sign off on the report until June 3?

Confusing? Yes. It just doesn’t make sense—unless….

….Unless there are two Chaffe reports—one to be “leaked” to the press and one to be withheld from public view.

As far-fetched as that may seem, it’s not unprecedented. It happened at Grambling State University in 1977 and it had repercussions. It cost one long-time employee his job at the university and resulted in a prison sentence for another.

The June 3 report, moreover, contains none of the language about a purchaser retaining OGB’s $500 million surplus.

Finally—and this is most revealing—DOA, like most state agencies has a policy that all incoming documents are date stamped with the time and date of receipt. That includes letters, cards, circulars, packages, and reports. None of the 42 pages of the report contains a single date stamp.

State Sen. Butch Gautreaux was also skeptical of the validity of the leaked report. “(that was) exactly my question when I read the report,” he said of the conflicting dates. “I don’t buy the ‘draft copy’ thing, not for a minute.”

Attempts were made to pose the question to DOA representatives. Neither Brady, DOA Chief of Staff Dirk Thibodeaux, nor Director of Communications Michael DiResto was available and neither returned calls from LouisianaVoice.

Nor was Briggs available at Chaffe & Associates, but Austin was and took our call. When asked about the apparent discrepancy, she first said she could not divulge any information about the report without permission from her client (the state).

When told that we were working on a news story about the conflicting dates and that we wanted to give the company an opportunity to explain the inconsistency, she said she would call officials in Baton Rouge and get back to us.

She never did call back, leaving unanswered the question of how, on May 25, the state could have received a report that its authors did not sign off on until June 3.

As a last resort, an attempt was made to obtain the copy of the report given to Kipper but sources said Rainwater’s office has since retrieved that copy.

Bear in mind, this is a report on the fair market value of OGB, done for OGB, under an OGB contract, the billing for which work will be paid by OGB.

Removing the document from the agency that by all accounts should be legally designated as the custodian of the record only fans the fires of speculation as to the true content of the report.

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“We heard of pressure being put on people, of deals and threats. I heard (Rep. Ernest) Wooton say he hoped that wasn’t done. But if it was, shame on the people who did it! If that was the case, if there was a road, or a bridge, or a ball park used in this, make sure every time you ride on it, cross it, or watch children play, that you think about the people who are suffering from the diseases caused by smoking.”

State Rep. H. Bernard Lebas (D-Ville Platte), a pharmacist, on reports of pressure applied by the governor’s office on legislators prior to a House vote to override Gov. Bobby Jindal’s veto of the renewal of a 4-cent cigarette tax.

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Is it possible that by letting his national aspirations get in the way of the public will Gov. Bobby Jindal has betrayed the citizens of the State of Louisiana?

Is it possible that he ignored his own words written 14 years ago because he was blinded by the lights of a bigger and more alluring playing field?

Is it possible that the siren song of higher office may have drowned out the governor’s ability to hear his own constituents?

Is it possible that Jindal’s rhetoric about no new taxes coupled with his obsession with privatizing state agencies in exchange for a financial quick fix could have caused him to turn his back on $48 million in revenue for the state treasury?

Sadly, yes, yes, yes, and yes.

Is it also possible that the 11 House members who switched their votes on the attempt to override the governor’s veto of the cigarette tax renewal represented politics as usual in Louisiana?

Add one more shameful yes.

On the vote to renew the tax, there were 70 yeas, 30 nays, and five no-shows.

On the vote to override the governor’s veto of the tax renewal, only 58 displayed sufficient courage to stand up to Jindal–12 votes short of the necessary two-thirds needed.

Let’s take a look at the voting on the veto override:

Of the five no-shows in the original vote, two voted in favor of the override. They were James Armes (D-Leesville), and Barbara Norton (D-Shreveport).

Billy Chandler (R-Dry Prong), George Cromer (R-Slidell), and Noble Ellington (R-Winnsboro) were also absent on the first vote but came back to vote against overriding Jindal’s veto.

For the most gutless act, we turn to Mickey Guillory (D-Eunice), Clifton Richardson (R-Baton Rouge), and Charmaine Sitaes (D-New Orleans). Each of the three voted to renew the tax but wilted under pressure, choosing to take a walk on the override vote when they were really needed. Can you say spineless?

Of the 11 members who originally voted to renew the tax but switched their votes to help kill the override two were Democrats: Robert Billiot of Westwego and Jim Fannin of Jonesboro. The others were all Republicans: Stephen Carter and Hunter Greene, both of Baton Rouge, Nancy Landry and Joel Robideaux, both of Lafayette, Charles Chaney of Rayville, Frank Hoffman of West Monroe, Kay Katz of Monroe, Tom McVea of Jackson, and Thomas Willmott of Kenner.

You think that’s bad? As the TV commercials say, “Wait. There’s more.”

Just where was the Louisiana Baptist Convention in the days leading up to the override vote?

Good question.

Apparently all those trips in the state helicopter to Protestant churches scattered across the north Louisiana landscape has paid huge political dividends for the governor.

Good move, Guv. Apparently it’s not enough that congregation members can set themselves up for future campaign solicitations by obligingly providing their names, phone numbers, and email and mailing addresses when you pass around your clipboard at those church services.

But now Jindal’s staff chooses to lobby the Louisiana Baptist Convention into submission only weeks after the organization joined with other faith leaders to call for tripling the state’s cigarette tax to 36 cents. The state’s cigarette tax currently is one of the lowest in the nation.

Jindal’s Chief of Staff Timmy Teepell claims he offered no tradeoffs and that his meeting with Rev. John Yeats, director of communications for the Louisiana Baptist Convention, was simply a “gentlemen’s meeting,” with no pressure applied. He said he just wanted to meet with officials of the organization so he could explain the administration’s anti-tax increase position.

Yeah, right. And Rep. Ernest Wooton (I-Belle Chasse) confided to his fellow House members prior to the vote that he hoped there was a Santa Claus.

So how would Teepell, or Rev. Yeats, for that matter, explain how the Louisiana Baptist Convention went from advocating that the state’s cigarette tax be tripled to going strangely quiet on the override vote—after the “Come to Jesus” meeting with Teepell?

Jindal insisted that the renewal of the 4-cent-per-pack tax, scheduled to expire in 2012, was a new tax. That took a huge leap of faith, bad pun intended. Moreover, the governor didn’t even attempt to reconcile his position to veto the renewal of an existing tax with his support of increased tuition at state colleges and universities.

Nor did he distinguish that position from his advocacy of a 3 percent increase in state employee contributions to their retirement contributions—money not earmarked to pay down the unfunded liability of the retirement fund, but instead to help close a $1.6 billion state budget deficit.

When is a new tax not a new tax? Apparently when it’s a fee increase.

Here’s what some of Wooton’s colleagues had to say in support of the override in the hours leading up to the failed effort:

Juan LaFonta (D-New Orleans)—“You cannot threaten or intimidate somebody who stands for what is right and stands up as a leader.”

Eddie Lambert (R-Gonzales)—“I’m a Republican, a fiscal conservative, but this (override) is the right thing to do.”

Sam Jones (D-Franklin)—“It seems we have no problem in taxing the dreams of our kids by raising tuition over and over.”

Elton Aubert (D-Vacherie)—“I ask you today if nobody lobbied you on this bill and you had to make a conscious decision on what you know to be right, how would you vote?”

Hollis Downs (R-Ruston)—“There’s a time for politics and a time for principle. This time, principle trumps politics.”

H. Bernard LeBas (D-Ville Platte)—“Be the voice of the people back home and not the voice of the people in the back of the chamber.” (Teepell and other members of the governor’s staff observed the vote from the rear of the chamber.)

Barbara Norton (D-Shreveport)—“We have an opportunity to let our light shine throughout the state. Let’s stand as a full body.”

Thomas Carmody, Jr. (R-Shreveport)—“My seatmate has said repeatedly, ‘Is no one going to go down and defend the governor on this?’ Damn, y’all, I can’t! Why? Because this does not make common sense.”

Jerome Richard (I-Thibodaux)—“I’m not voting for a tax increase, but this is not an increase. I voted for a renewal and I’m gonna stick by it.”

• House Speaker Jim Tucker (R-Terrytown)—“I don’t like objecting to a position my governor has taken. When two men agree on everything, only one man is thinking. That’s the case today. I have to vote to override to maintain my integrity. I urge all of you to maintain your integrity today so you’ll sleep well tonight.”

• HB 591 author Harold Richie (D-Bogalusa)—“There’s nothing I can take away from you, nothing that I can give you except the opportunity to vote your convictions and vote for your people back home.”

Walt Leger (D-New Orleans)—“ If you vote against (the override) you will be initiating a tax. You will be creating a $50 million hole in the budget. Think about what was said to you when you were asked not to override the veto.”

John Bel Edwards (D-Amite)—“ It takes a lot of courage to take on the governor, especially when he is demonstratively and egregiously wrong.”

Joe Harrison (R-Gray)—“There’s one way to avoid the tax: stop smoking.”

Wooton—“Man up.”

Jeffery Arnold (D-New Orleans)—“I told my mother this morning that I didn’t know if we had the votes to override. Her response was, ‘That’s stupid.’”

Ricky Hardy (D-Lafayette)—“Our governor raised the price of education and lowered the price of cigarettes. What’s wrong with this picture?”

But for the best, most revealing quotes of all, we need only go directly to the source of all the controversy—Gov. Jindal himself.

It was 14 years ago, 1997, when the Secretary of the Louisiana Department of Health and Hospital, a 26-year whiz-kid named Bobby Jindal authored a 10-page paper entitled “Choice-Sensitive Health Costs.”

Here, then, are excerpts of that paper, in the governor’s own words:

“Smoking is blamed for more deaths than all cancers not caused by tobacco combined.”

• “….Smoking causes 7.3 percent of the nation’s health care costs. Inflated to $21.2 billion in 1983 dollars, this corresponds to $87 per American or $393 per adult smoker.”

“It is unfair to others without these habits to take resources away from them to cover the health care expenses of risk-takers.”

“The enormous health care costs generated by unhealthy lifestyle choices cannot be ignored as society attempts to frame a health care system which is both just and efficient.”

• “….Studies cited document billions of dollars in health care costs and millions of years lost to premature deaths caused by smoking.”

“Some non-smokers are beginning to question why they should subsidize the health expenditures of others.”

“Though cigarette prices have been rising 6 percent to 19 percent every year since 1980, federal excise taxes stayed constant at 16 cents a pack from 1983 until the 1990 budget crisis.”

“Reducing cigarette consumption would dramatically improve Americans’ health status and lower expenditures.”

“Currently, the 24-cent-per-pack federal tax raises $5.2 billion annually.”

“Raising the tax would also reduce the incidence of smoking; every 10 percent increase in cigarette prices reduces adult demand by 4 percent and teenage demand by 12 percent to 14 percent.”

Wait. What? Did he really say that increasing taxes on cigarettes would reduce the incidence of smoking?

Yep.

Anyone see a potential TV ad for a Democratic opponent?

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“This veto is not the fruit of wise leadership. There’s a time for politics and a time for principle. This time, principle trumps politics. Tobacco, if not already legal, would be an illegal drug. It is the worst legal substance human beings can place inside their bodies. Don’t be on record today as supporting its use.”

Rep. Hollis Downs (R-Ruston), urging fellow House members to override Gov. Bobby Jindal’s veto of the 4-cent cigarette tax renewal. The override effort fell 12 votes short.

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