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Fans of mystery, intrigue and political corruption can have a field day with DA motives in Livingston Parish investigation

Posted in Audit Reports, Auditor, Contract, Contracts, Corruption, Courts, Ethics, Fraud, GOHSEP, Lawsuits, Politicians, Waste on February 24, 2015| 8 Comments »

By Robert Burns (Special to LouisianaVoice)

When Hurricane Gustav struck south Louisiana on Sept. 1, 2008, almost three years to the day after Katrina, it set in motion a series of events that would ultimately:

  • upset the Livingston Parish political structure;
  • leave the parish facing a bill for more than $40 million in cleanup costs;
  • see a call for but never a follow up on an investigation into the formation of a fictitious corporation (at a fictitious address headed by a fictitious person) which somehow managed to be the only bidder on a lucrative contract;
  • result in the arrest of another contractor who was also serving as an FBI informant to help root out fraud, and
  • leave residents more than six years later still wondering who are the good guys and who are the bad guys.

First, some background.

The massive cleanup that followed Gustav required fast action and, regrettably, such fast action oftentimes opens the door for governmental abuse. The Federal Emergency Management Agency (FEMA) declared that to be the case in Livingston Parish’s cleanup, and the agency denied an astounding $59 million in clean-up costs.

Crucial to FEMA’s decision was Corey delaHoussaye, a contractor hired by Livingston Parish to assist with U.S. Army Corps of Engineers permitting issues nearly a year after the storm struck.  DelaHoussaye, coincidentally, also served as an FBI informant during the cleanup.  Livingston Parish District Attorney Scott Perrilloux, along with the State Office of Inspector General (OIG), have accused  delaHoussaye of submitting his own fraudulent invoices for hours they assert he did not perform work as part of his $2.3 million billings.  DelaHoussaye attorney, John McClindon, contends that the OIG got a search warrant for delaHoussaye’s residence on July 17, 2013 but delayed executing it and arresting delaHoussaye for eight days so it would coincide with a council meeting to approve delaHoussaye’s final $379,000 in invoices.  DelaHoussaye wasn’t paid, and he sued the parish for nonpayment.

Meanwhile, Perrilloux sought an indictment against delaHoussaye, but he came up one vote short in an 8-2 vote of the grand jury in December of 2013.  Undeterred, Perrilloux proceeded with a bill of information containing 81 counts, including 73 of filing false public records, but last Friday Perrilloux dropped 19 of those 73 counts.

On Monday, 21st Judicial District Judge Brenda Ricks ruled that insufficient evidence exists to proceed with a trial—a major victor for delaHoussaye.  Perrilloux presented only one witness during Monday’s hearing: OIG investigator Jessica Webb, who testified that, during times delaHoussaye charged the parish for hours worked, he sometimes was at an anti-aging clinic, at Greystone Country Club playing golf, or at Anytime Fitness working out.

McClindon, calling the OIG’s investigation “half baked,” said the OIG’s office seized his client’s computers and “looked at what they wanted to look at,” ignoring emails and failing to talk with anyone.

Similarly, at the trial of Murphy Painter, former director of the State Office Alcohol and Tobacco Control (ATC), former OIG investigator Shane Evans testified that he merely “wrote down” what ATC employee Brant Thompson said to him regarding Painter’s being “manic depressive, out of control, and selectively enforcing alcohol statutes,” and admitted the OIG did zilch to corroborate Thompson’s assertions even though it was Thompson’s initial characterization that reportedly prompted Gov. Bobby’s firing of Painter. (Subsequent details later revealed Painter’s firing was steeped in the time-honored tradition of Louisiana politics as usual.) https://louisianavoice.com/2013/02/06/emerging-claims-lawsuits-could-transform-murphy-painter-from-predator-to-all-too-familiar-victim-of-jindal-reprisals/

A company called Comprehensive Business Solutions, with an address on Coursey Boulevard in Baton Rouge, was created by someone named Patterson Phelps of Mandeville in March of 2010, according to corporate records filed with the Secretary of State’s office.

That date was just prior to the Livingston Parish Council’s issuing invitations to bid on a lucrative contract for cleanup.

The only problem is there is no such business at the address given and in fact, never was, and no one has been able to ascertain who Patterson Phelps is, other than speculation that it was an alias for a member of the parish council who was attempting to obtain the contract for himself.

A spokesperson for the Secretary of State said the corporate papers were filed electronically with payment made by credit card and that no records exist that would reveal who was actually responsible for creating the shell company.

The parish council did indicate it would instruct Perrilloux to conduct an investigation into the identity of the mystery person, but no results of any investigation, if it was ever conducted, have been made public.

Perrilloux, apparently fuming over Ricks’ ruling, said after the hearing that he would proceed with trial anyway and added, “Just because they wear a black robe doesn’t mean they know everything.” Legally, Perrilloux cannot proceed with a trial unless Ricks’ ruling is overturned by the First Circuit Court of Appeal or the Louisiana Supreme Court. He later said he would appeal the decision.

Brian Fairburn was Livingston Parish’s Emergency Manager and Coordinator for Homeland Security at the time Gustav struck.  His job was to hire monitors who would oversee operations to ensure FEMA reimbursement eligibility.

Fairburn testified that Mike Grimmer, then-Livingston Parish President, indicated to him that he had grave concerns regarding some of the itemized charges on the FEMA project worksheet and likely would not sign off on it.  When asked why, Fairburn indicated Grimmer told him, ‘“The costs are too high and we have permitting issues.’ (He) specifically told me we were taking kickbacks, that we were just out there creating work for these contractors to do.”  When asked whom Grimmer asserted was taking kickbacks, Fairburn responded, “Jimmy McCoy (Councilman from District 2), and he included me as being in on it also.” Fairburn added that Grimmer, “tried to ruin McCoy,” and that he “wanted to show that there was trouble, corruption, and crime in the parish.”  Fairburn also testified that he was terminated soon after the Gustav project but added that when Layton Ricks defeated Grimmer for parish president, he was rehired.

Brian Fairburn testified that during a meeting on November 26, 2008, Eddie Aydell of Alvin Fairburn and Associates (no relation to Brian) expressed serious reservations about proper permitting with the Army Corps and that Aydell was “scared” the Corps would assert that permits should have been issued before work was begun.

It was at that juncture that delaHoussaye was hired to assist with permitting issues.  Brian Fairburn said that McCoy said that the parish “would not” be obtaining any Corps permits and that Grimmer “shut the project down,” after which the Corps issued a cease and desist order on drainage projects.

FEMA’s attorneys were not happy with state and parish attorneys’ attempts to turn the hearing into a trial of delaHoussaye, and they strongly objected to 20 exhibits and depositions, including photographs of delaHoussaye and his son, which they said were unrelated to the hearing.  FEMA attorney Linda Litke said, “delaHoussaye was hired a year after the disaster in 2009 to basically go through the documentation and clean up the mess……  The parish attempted to criminally indict him…..They have now attempted to proceed with criminal action against him without an indictment.  It is reprehensible that they would bring this documentation in this case……DelaHoussaye is a confirmed FBI informant.  He was a whistleblower, and that is why the parish has gone after him.”

Perhaps the most riveting testimony was that of former Parish President Mike Grimmer, who testified that McCoy signed a contract addendum even though Grimmer was the only one with authority to do so.  He said he was “unaware the contract addendum was even out there.”  He indicated the addendum greatly increased the prices, including an increase in the per linear foot price.

Grimmer stated that he got calls from irate homeowners regarding crews, “trespassing on their properties….. and the trees had been taken with no permission.”  Grimmer also testified he obtained invoices for payment on work performed at local schools and North Park which had already been paid by other local agencies.  He referenced Legislative Auditor Daryl Purpera’s report which he testified that he’d requested.  He said it reinforced his concerns about documentation problems for cleanup operations. Grimmer’s response took “no exception” to the report.

That report also cited a contractor for hiring direct family members of Council members McCoy and Don Wheat which the report said may have violated ethics laws, so the matter was referred to the Louisiana Ethics Board.  Wheat, Councilman from District 6, responded angrily to the report and stated that Gov. Jindal’s GOHSEP’s Office had indicated the FEMA report was “fundamentally flawed” and on appeal and that Purpera, “continued with the same flaws and I urge you to correct your mistakes.”

Grimmer expressed shock when he attended an Office of Emergency Preparedness (OEP) meeting in May of 2009 and a $42 million tab for wet debris removal was “dropped in my lap.”  Grimmer asked for a breakdown and, on June 9, 2009, he got one and an indication that the final tab was estimated at $92 million.  He refused to sign off on the $42 million and verbally instructed all work to cease, and the Army Corps followed up with a written cease and desist order shutting down all drainage work.

FEMA attorneys then provided the panel with a handout of a power point presentation created by Grimmer entitled, “The Truth about the Debris Cleanup.”  Slides were presented depicting:

  • an oak tree removal for $8,415;
  • two other single-tree removals for $6,570 and $4,600, and
  • a pile of limbs for $2,805.

Grimmer said those types of vastly inflated costs prompted his decision to shut down the entire project.

Grimmer, over the objections of state and parish attorneys, last May told a three member arbitration panel that he alone would have been accountable to Purpera if he’d approved the project worksheet and that contractors, monitors, councilmen, and others would all be “gone and happy.”  He expanded on how the whole episode and his decision had adversely impacted him in the community, with long-time friends and business associates distancing themselves from him and people being angry at him but that, “at the end of the day,” he felt he’d made the right decision and felt vindicated by Purpera’s report.

Cross examination at that hearing focused on Grimmer’s frosty relationship with council members and his having referenced five such members as “the five amigos.”  Grimmer confirmed McCoy and Wheat were included in the five.  Grimmer admitted that delaHoussaye shared the fact that FBI investigator Steven Sollie had contacted him and that he was cooperating in an FBI investigation of the Gustav cleanup operations.  State and parish attorneys sought to get Grimmer to admit that he “had no interest” in the project’s costs until he obtained knowledge of the ongoing FBI investigation, a charge Grimmer vehemently denied.  Grimmer also indicated that, though he couldn’t remember which one, a FEMA monitor was paid $20,000 to make debris FEMA-eligible.

The panel ruled in FEMA’s favor.

If Perrilloux follows through and if the state’s and parish’s appeal hearing of FEMA’s decision is any guide, a trial is likely to air some of the dirtiest elements of Livingston Parish political corruption.  Louisiana Voice has obtained a transcript of the 2,197 page appeal hearing, and the contents are interesting, to say the least.

Perhaps that may be why delaHoussaye attorney McClindon said after Ricks’ ruling, “It would probably be best for us all to sit down and work this whole thing out.”

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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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Team Bobby inadvertently posts governor’s statewide election endorsement list—from wrong election year

Posted in Attorney General, BESE, Elections, Governor's Office, House, Legislators, Legislature, Media, Politicians, Senate on February 15, 2015| 10 Comments »

The late comedian Brother Dave Gardner once said, “If a man’s down, kick him. If he survives it, he has a chance to rise above it.”

Well, Gov. Bobby is definitely down and we would be remiss if we did not accommodate Bro. Dave’s sage advice to the fullest extent possible.

Besides, that appears to be pretty much the same philosophy of Gov. Bobby as evidenced by his failed economic policies and by his depriving the state’s working poor adequate health care.

Plus, it’s fun to watch Team Jindal screw up to this extent. There’s a quote by author Patricia Briggs that keeps coming to mind at times like this: “Some people are like slinkies. They aren’t really good for anything, but they still bring a smile to my face when I push them down a flight of stairs.”

In what has to be his most embarrassing gaffe since his European Islamic “no-go” zone blathering of a few weeks ago or his empty boasts about Louisiana’s robust economy, Gov. Bobby has released his endorsements for this year’s statewide elections. http://www.bobbyjindal.com/news/610-bobby-jindal-announces-endorsements

Except, it turns out, they weren’t endorsements for this year, but for 2011, as featured in this New Orleans Times-Picayune story from Sept. 13 of that year. http://www.nola.com/politics/index.ssf/2011/09/gov_bobby_jindal_makes_endorse.html

Now that’s embarrassing.

How did that happen? As one of our readers observed, heads may well roll. Another said this SNAFU is just an example of what happens when Gov. Bobby is always gone from the state and never around to see that things are done correctly.

And it’s not as if someone simply pulled up an old page by accident and posted it. The page also contains clips of current news events involving Gov. Bobby, including the CNN interview with Wolf Blitzer given on the same day as Bobby’s infamous Islamic “no-go” zone fiasco of only a couple of weeks ago.

But, at the same time, it’s just another indication of how disorganized, dysfunctional, and disconnected  this administration is and how this governor can no longer be taken seriously.

About anything.

Here are a few interesting names off the list of endorsements posted by Team Bobby:

  • Walter Lee, former DeSoto Parish School Superintendent and former Board of Elementary and Secondary Education (BESE). Lee, who pleaded guilty to reduced charges in December, has since retired from the DeSoto Parish school system and resigned from BESE.
  • State Treasurer John Kennedy who has yet to announce whether he will run for re-election, or for governor or for state attorney general. Regardless which office he seeks, it is extremely doubtful he would obtain Bobby’s endorsement—or seek such. It’s equally improbable that Kennedy solicited the 2011 endorsement. Kennedy and Bobby have been at odds over state spending for most of Bobby’s seven years in office.
  • Jane Smith of Bossier Parish for State Senate District 37. Smith previously served in the House but lost her election for the Senate in 2011—despite Gov. Bobby’s authentic endorsement. Bobby subsequently appointed her to a cushy post with the Louisiana Department of Revenue but she now serves as a member of BESE, also by gubernatorial appointment.
  • Don Menard of Opelousas for House District 39. Menard, a two-term St. Landry Parish President, lost his bid for that seat in 2011 and last month he was arrested for issuing worthless checks.

There was no explanation of why Team Bobby would make such a stupid blunder as posting endorsements from 2011, particularly when one might expect a candidate to run fast and far from any Bobby endorsement these days—even one that’s four years old. These days, such validation from this governor could well be perceived as the political kiss of death.

Even more embarrassing for Bobby, who will probably be teaguing some hapless aide or student intern for this latest misadventure, is the fact that 14 legislators who are either term-limited or who are seeking other offices were among the list of those “endorsed” on the web page.

State Sen. Sharon Weston Broom (D-Baton Rouge), for example, is vacating her senate seat to run for Baton Rouge Mayor-President and will not be returning to the Senate despite her “endorsement” by Bobby.

Term-limited but “endorsed” senators:

  • Jody Amedee (R-Gonzales). His seat is likely to go to similarly term-limited Rep. Eddie Lambert (R-Gonzales), who is looking to move to the upper chamber.
  • Robert Kostelka (R-Monroe). Eying that seat is House Appropriations Committee Chairman Rep. Jim Fannin (R-Jonesboro) who also is term-limited from returning to his House seat.

Over in the House, Rep. Simone B. Champagne (R-Erath) is not term-limited but she has resigned to become the new Chief Administrative Officer for the City of Youngsville.

Term-limited “endorsed” representatives in addition to those already cited:

  • Richard Burford (R-Stonewall). Unable to run for his current House seat, he is running for the Senate seat now held by Sherri Smith Buffington who also is term-limited and running instead for Burford’s House seat (see how this term limits stuff works?).
  • Henry Burns (R-Haughton). He is running for the Senate District 36 seat now held by term-limited Robert Adley (R-Benton).
  • Speaker Chuck Kleckley (R-Lake Charles). Kleckley has indicated he may run for Lake Charles mayor.
  • Ledricka Thierry (D-Opelousas) is considering a run for the Senate District 24 seat now held by Sen. Elbert Guillory (R/D/R-Opelousas), who is running for lieutenant governor.
  • Mickey Guillory (D-Eunice). Keeping it in the family, his son, John Ross Guillory, is said to be considering a run for Papa’s District 41 seat.
  • Joel Robideaux (R-Lafayette). Term limits present no problem for Robideaux who is running for Lafayette City-Parish President.
  • Gordon Dove (R-Houma), like Robideaux, may be term-limited but plans to run for Terrebonne Parish President. A possible candidate for his House seat is Republican Jerome Zeringue, formerly one of Bobby’s top advisors—not that that gives him any special qualifications.
  • Karen St. Germain (D-Plaquemine). No word from her whether she intends to continue her political career by seeking another office.
  • Tim Burns (R-Mandeville). Again, no word of his plans for another office.
  • Austin Badon (D-New Orleans). Badon has announced no plans for other elected office.

Jeremy Alford of Louisiana Politics, gives a nice wrap-up of all the term-limited incumbents and those who are taking advantage of other opportunities available to them.

http://lapolitics.com/2015-legislative-races/

So now at least we have a reasonable explanation for Gov. Bobby’s inability to come to grips with the dire financial crisis facing the state: he’s obviously caught in a time warp and thinks it’s still 2011. He has the job he wants, and he plans to endorse Texas Gov. Rick Perry for President in 2012. And just in case things don’t go as planned, he has a speech in his pocket about some stupid party.

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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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Bobby so out of touch on Morning Joe that he missed LSU tuition by half; state subsidies revealed for state colleges

Posted in Governor's Office, Higher Education, LSU, Media, Politicians on February 10, 2015| 7 Comments »

Bobby just keeps on taking hits from the national media.

First it was Politico, then the Washington Post and the New York Times.

On Tuesday, Bobby made the unwise decision to appear on Morning Joe on MSNBC and got him appropriately scalded.

While he did his best to squirm out from under the host Joe Scarborough’s scrutiny of looming budget cuts of up to 40 percent for LSU and tuition costs that have already risen by 90 percent at the state’s other public colleges and universities, he kept getting steered back to an estimated $350 million in budget cuts anticipated for the entire state university system, including about $141.5 million just for LSU.

That means about $210 million for the other schools, or an average of about $21 million each.

All the latest budget cuts are on top of $460 million in cuts imposed by Bobby, who obviously failed economics while enrolled at Brown, since he took office seven years ago.

As further evidence of his disconnect since abandoning the governor’s office in his shameless quest for the GOP presidential nomination, when pinned down by Scarborough on the proposed university budget cuts, he stammered and sputtered and finally claimed that it cost “less than $10,000” per year for housing, fees and books at LSU.

When Bobby took office in 2008, tuition and fees at LSU were around $5,000 a year. That was then. This is now. Because Louisiana has experienced sharp increases in tuition over the past five years because of Bobby’s policies, it now costs not “less than $10,000” but $20,564 per year to attend the state’s flagship university, according to the Baton Rouge Advocate. http://theadvocate.com/news/11567837-123/jindal-stumped-with-lsu-tuition

C.B. Forgotston, king of the subversive bloggers, noted that Bobby’s spokesperson Shannon Bates Dirmann claimed that her boss was not referring to housing costs in his estimate of fees but in a review of the video, Bobby clearly included housing in his estimate.

“Dirmann blatantly lied,” Forgotston said.

In a related matter, LouisianaVoice, with an assist from one of our readers and USA Today, came upon some interesting statistics that tie directly to one of our earlier stories about how the budget cuts might impact college sports.

Our earlier story, which was a bit more parody than serious, speculated on what would happen if budget cuts included the so-called “paper courses” that help keep student athletes eligible among the 1,400 classes LSU might lose.

Our reader suggested this web page to track the amounts schools all over the country receive in state subsidy funding. http://www.usatoday.com/sports/college/schools/finances/

We checked out the link and compiled the data for the Southern University and the nine schools under the University of Louisiana system.

                        ATHLETIC   ATHLETIC       ATHLETIC        PCT. ATHLETIC

SCHOOL       REVENUE    EXPENSES   ST. SUBSIDY      SUBSIDY

  1. TECH $18.5M            $18.44M                      $9.2M                49.6

ULM               $11.2M            $11.44M                      $4.1M                36.5

GSU                $6.3M              $7.85M                        $3.63M            57.9

SU                   $8.8M              $7.7M                          $4.75M             54.1

NWS               $11.8M            $12.34M                      $7.6M               64.7

SLU                $10.9M            $10.9M                        $6.54M            59.8

MCN               $9.7M              $10.3M                        $4.5M              46.3

ULL                $18.1M            $18.65M                      $7.7M               42.4

NSU                $6.96M            $6.96M                        $4.2M             60.6

UNO               $4.3M              $4.3M                          $2.96M          69.33

TOTALS       $106.56M        $108.88                         $55.18M          50.7% ave.

 

TEXAS           $165.7M          $146.7M                      0                   0

ALABAMA   $143.8M          $116.6M                      $5.79M             4.0

LSU              $117.5M          $105.3M                       0                  0

 

As you can perhaps see (the columns don’t line up precisely in our format), the state subsidized the 10 schools a total of nearly $55.2 million during 2013, which represents approximately 26 percent of the total combined cuts for the schools.

By comparison, we also included three other schools. The University of Texas had the largest amount of sports revenues in the nation at $165.7 million in 2013 against expenses of $146.7 million and received no subsidies from the State of Texas.

LSU, with a revenues of $117.5 million against $105.3 million in expenses, also is self-sustaining in that it received no subsidies from the state. The University of Alabama had revenues of $143.8 million and expenses of $116.6 million and received nearly $5.8 million, or 4 percent of its total revenue, from the state of Alabama.

Of the 10 Louisiana schools receiving subsidies, Louisiana Tech had the most at $9.2 million, which was nearly half (49.6 percent) of total revenues.

Though the University of New Orleans had the lowest amount in revenues at $4.3 million and the lowest amount of state subsidies at $2.96 million, its percentage of state support was the highest at 69.33 percent.

The University of Louisiana Monroe was third lowest in the amount of funding from the state at $4.1 million against revenues of $11.2 million for the lowest percentage (36.5 percent) of state subsidies of the 10 schools.

Grambling State University’s state funding of $3.63 million was second lowest but it represented nearly 58 percent of its total revenue of $6.3 million, the USA Today report said.

In all, the 10 state schools received 50.7 percent of their sports budget in the form of state subsidies, something the Legislature may have to consider when it convenes in April to tackle the projected $1.6 billion in budgetary shortfalls anticipated for the state budget.

Granted, that $55.2 million for the 10 schools won’t go far in filling the void, but as the late Sen. Everett Dirksen once said: “A billion her and a billion there and pretty soon you’re talking about real money.”

But according to Bobby’s math, the deficit is probably only a couple of million dollars and can be made up by selling a state building or two or by laying off a few hundred more state employees. We just don’t really know what he’s thinking because he is never in the state anymore and gives all his interviews to Politico.

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