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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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Regular readers of this site know our disdain for the undue influence of lobbyists and special interests over lawmakers to the exclusion of the very voters who elected those same lawmakers to represent them and their best interests.

Our opposition to political decisions made with priority given to campaign contributions over what is best for the state is well-known—and uncompromising. Money should have no place—repeat, no place—in political decisions.

Unfortunately, we know that is not the case. Politicians for the most part, are basically prostitutes for campaign funds and those who choose to remain chaste usually find themselves at a serious disadvantage come election time.

To that end, you can probably look for State Rep. Jay Morris (R-Monroe) to attract strong opposition when he comes up for re-election in 2019. And that opposition, whoever it might be, is likely to have a campaign well-lubricated by the Louisiana Association of Business and Industry (LABI), the Louisiana Chemical Association, and the oil and gas industry.

At the risk of belaboring the obvious, we have gone on record on numerous occasions as saying the voters are merely pawns to be moved about at will by big business in general and the banks, pharmaceutical companies, Wall Street and oil companies in particular. It is their money that inundates us with mind-numbing political ads that invade our living rooms every election year telling us why Candidate A is superior to Candidate B because B voted this way or that way and besides, good old Candidate A has always had the welfare of voters uppermost in mind.

The presence of that influence was never more clearly illustrated than in Tyler Bridges’ insightful story in Friday’s Baton Rouge Advocate. http://theadvocate.com/news/15225624-78/la-legislative-staffers-sort-out-changes-added-at-the-last-minute

In the very first paragraph of his story, Bridges wrote that a secret deal between Senate President John Alario (R-Westwego), House Speaker Taylor Barras (R-New Iberia) and lobbyists for LABI and the Louisiana Chemical Association.

We won’t bother to re-hash the details of that meeting and the agreement finally reached just before the closing minutes of the recent special session. You can read the details in the link to the Bridges story that we provided above.

But suffice it to say had it not been for Morris digging his heels in and threatening to kill his own bill when he learned of a manufacturing tax break that had been added to his bill, HB 61 that aimed at eliminating exemptions and exclusions on numerous sales tax breaks. Though a Republican, Morris feels that big business isn’t paying its fair share of taxes.

“I was not aware of the deal,” Bridges quoted Morris as saying. “I was not invited.”

Neither, apparently, were any spokespersons for consumers, organized labor, teachers, or the citizens of Louisiana.

Oh, but you can bet LABI President Steve Waguespack was invited to a meeting in Alario’s office earlier in the day, as was Louisiana Chemical Association chief lobbyist Greg Bowser.

Given that, we would like to ask Sen. Alario and Rep Barras why no one representing the people were invited to that little conclave. And don’t try to tell us that the Senate President and House Speaker were representing the people. You were not. You were representing the vested interests of the chemical industry and big business. Period.

Sen. Alario, Rep. Barras: the people of Louisiana are far more deserving of a place at the table in some furtive backroom meeting than LABI and the chemical association.

Either all factions are invited in or no one is. The playing field should be level.

By not excluding lobbyists or by not inviting those on whose shoulders are placed the greatest burden, the ones who placed you in office, you have not just failed at your job; you have failed miserably.

Our late friend C.B. Forgotston would have said of the meeting which produced that secret deal: “You can’t make this stuff up.”

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On Feb. 15, an arrest warrant was issued for a north Louisiana employee of the Louisiana Department of Children and Family Services (DCFS) following an investigation of more than two months by the Office of Inspector General.

Kimberly D. Lee, 49, of Calhoun in Ouachita Parish, subsequently surrendered to authorities and was subjected to the indignity of being booked into East Baton Rouge Parish Prison on Feb. 17 after being accused of filing false reports about mandatory monthly in-home visits with children in foster care.

As is often the case, however, there is much more to this story.

A month earlier, on Jan. 10, LouisianaVoice received a confidential email from a retired DCFS supervisor who revealed an alarming trend in her former agency:

“I served in most programs within the agency, foster care, investigations, and adoptions,” she wrote. “Over my career I witnessed the eight years of (Bobby) Jindal’s ‘improvements.’

“Those ‘improvements’ endanger children’s lives daily. The blight is spread from the Secretary to the lowliest clerical worker in the agency. People are overworked and underpaid but it’s not just that. People are so distraught from the unrelenting stress that children are in danger. Add to that the inexperience of most front line workers and their supervisors’ inability to properly train new staff.”

She then dropped a bombshell that should serve as a wake-up call to everyone who cares or pretends to care about the welfare of children—from Gov. John Bel Edwards down to the most obscure freshman legislator:

“In the Shreveport Region, the regional administrator (recently) told workers that they may make ‘drive-by’ visits to foster homes, which means talking to the foster parents in their driveway. Policy says that workers will see both the child and the foster parent in the home, interviewing each separately (emphasis added). A lot of abuse goes on in foster homes. Some foster families are truly doing the best they can but they need counseling and guidance from their workers. The regional administrator’s answer to that one? Have the foster parent call their home development worker—another person who can’t get her job done now.”

She wrote that she had heard of two separate incidents “where a child new to foster care was taken to a foster home and left without paperwork, without contact information for the person in charge of the case and without knowing even the child’s name.”

Moreover, she said, vehicles used in the Shreveport Region “are old, run-down, and repairs are not allowed. The last time new tires were bought was in 2014. When one (of the vehicles) breaks down, they just tow it away. No replacement is ordered.”

Could those factors have pushed Lee to fudge on her reports? Did the actions attributed to her constitute payroll fraud or did budgetary cuts force her into cutting corners in order to keep up with an ever-increasing caseload? Lee says yes to the latter, that she was told by supervisors to get things done, “no matter what.” Child welfare experts said her actions and arrest shone a needed light on problems at DCFS: low morale, high turnover, fewer workers handing greater numbers of caseloads, and increasing numbers of children entering foster care.

http://theadvocate.com/news/14909284-31/louisianas-child-protection-system-understaffed-and-overburdened-after-years-of-cuts-child-advocates

To find our own answers, LouisianaVoice turned to a document published on Jan. 5 of this year by the Child Welfare Policy and Practice Group of Montgomery, Alabama.

The 77-page report, entitled A Review of Child Welfare, the Louisiana Department of Children and Family Services, points to:

  • A growing turnover rate for DCFS over the past three years from 19.32 percent in calendar year 2012 to 24.26 percent in 2014;
  • A 33 percent reduction in the number of agency employees to respond to abuse reports;
  • A 27 percent cut in funding since fiscal 2009, Bobby Jindal’s first year in office;
  • An increase in the number of foster homes of 5 percent;
  • An increase of 120.5 percent in the number of valid substance exposed newborns, from 557 to 1,330;
  • A trend beginning in 2011 that shows 4,077 children entered foster care but only 3,767 exited in 2015;
  • A 19 percent decrease in the number of child welfare staff positions filled statewide from 1,389 in 2009 to 1,125 in 2015.
  • Of the 764 caseworkers, 291, or 38 percent had two years’ experience or less and 444 (58 percent) had five years or less experience.

Moreover, figures provided by the Department of Civil Service showed that of the agency’s 3,400 employees, 44.5 percent made less than $40,000 a year and 19 percent earned less than $30,000.

In 2014 (the latest year for which figures are available), the median income for Louisiana for a single-person household was $42,406, fourth-lowest in the nation, as compared to the national single-person median income of $53,657.

http://www.advisorperspectives.com/dshort/updates/Household-Incomes-by-State.php

“The stresses within the system are at risk of causing poorer outcomes for some children and families,” the report says in its executive summary. “…Recent falling outcome trends in some of the areas that have been an agency strength in the past are early warnings of future challengers.”

Despite years of budgetary cuts under the Jindal administration, Louisiana has maintained “a high level of performance in achieving permanency for children in past years and currently is ranked first among states in adoption performance,” the report said.

The budget cuts, however, “have negatively affected the work force, service providers, organizational capacity and increasingly risk significantly affecting child and family outcomes” which has produced a front-line workforce environment “constrained by high caseload, much of which is caused by high turnover and increasing administrative duties and barriers that compromise time spent with children and families.”

And it is that threat to “compromise time spent with children and families” that brings us back to the case of Kimberly Lee and to the email LouisianaVoice received from the retired DCFS supervisor who cited the directive for caseworkers to make “drive-by” visits to foster homes, leaving children with foster homes with no paperwork, contact information or without even knowing the children’s names, and of the state vehicles in disrepair.

It’s small wonder then, in a story about how Jindal wrecked the Louisiana economy, reporter Alan Pyke quoted DCFS Secretary Marketa Garner-Walters as telling the Washington Post if lawmakers can’t resolve the current budget crisis, many Louisiana state agencies will see budget cuts of 60 percent. http://thinkprogress.org/economy/2016/03/07/3757416/jindal-louisiana-budget-crisis/

As ample illustration of Bobby Jindal’s commitment to social programs for the poor and sick, remember he yanked $4.5 million from the developmentally disadvantaged in 2014 and gave it to a Indy-type racetrack in Jefferson Parish run by a member of the Chouest family, one of the richest families in Louisiana—but a generous donor to Jindal’s gubernatorial campaigns and a $1 million contributor to his super PAC for his silly presidential run.

Well, thanks to the havoc wreaked by Jindal and his Commissioner of Administration Kristy Nichols, the legislature did find it necessary to pass the Nichols’ penny tax (not original with us but the contribution of one of our readers who requested anonymity) to help offset the $900 million-plus deficit facing the state just through the end of the current fiscal year which ends on June 30.

Were legislators successful? Not if you listen to Tyler Bridges, one of the more knowledgeable reporters on the Baton Rouge Advocate staff. “Legislators were neither willing to cut spending enough, nor raise taxes enough nor eliminate the long list of tax breaks that favor one politically connected business or industry over another,” he wrote in Sunday’s Advocate (emphasis added). http://theadvocate.com/news/15167974-77/a-louisiana-legislature-that-ducked-tough-budget-decisions-during-its-special-meeting-convenes-again

As is all too typical, most of the real “legislation” was done in the flurry of activity leading up the final hectic minutes of the special session, leaving even legislators to question what they had accomplished. In military parlance, it would be called a cluster—.

But that should be understandable. After all, 43, or fully 30 percent of the current crop of legislators, had to work their legislative duties around their busy schedules that called upon them to attend no fewer than 50 campaign fundraisers (that’s right, some like Neil Riser, Katrina Jackson, and Patrick Connick had more than one), courtesy of the Louisiana Oil and Gas Association, the Beer Industry League, CenturyLink and a few well-placed lobbyists. http://www.nola.com/politics/index.ssf/2016/03/louisiana_special_session_fund.html

It is, after all, what many of them are best at. (Seven of those were held at the once-exclusive Camelot Club on the top floor of the Chase Bank South Tower. We say “once-exclusive” because last week the Camelot announced that it was closing its doors after 49 years. Restrictions on lobbyists’ expenditures on lunches for legislators was given as one cause for the drop in club membership from 900 to 400. Not mentioned was the fact that Ruth’s Chris and Sullivan’s steak restaurants in Baton Rouge have become favorite hangouts for legislators and lobbyists during legislative sessions. One waiter told LouisianaVoice during the 2015 session that one could almost find a quorum of either chamber on any given night during the session—accompanied, of course, by lobbyists who only wanted good government.) https://www.businessreport.com/article/camelot-club-closing-afternoon-can-no-longer-viable-club-owner-says

LEGISLATORS’ FUNDRAISERS

Bridges accurately called the new taxes that will expire in 2018 “the type of short-term fix” favored by Jindal and the previous legislature “that they had vowed not to repeat.”

Can we get an Amen?

In the meantime, he observed that Gov. John Bel Edwards and Commissioner of Administration Jay Dardenne, because the legislature still left a $50 million hole in the current budget, will have to decide which state programs will be cut—again.

Emphasizing the risks to children, Garner-Walters told legislators in a committee hearing during the just-completed special session that state DCFS staff numbers 3,400, down a third from the 5,100 it had in 2008. “You can’t just not investigate child abuse,” she said.

Former Baton Rouge Juvenile Court Judge Kathleen Richey, now heading up Louisiana CASA (Court Appointed Special Advocate), a child advocacy non-profit, has expressed her concern over the budgetary cuts that make DCFS caseworkers’ jobs so much more difficult.

“Our political leaders need to understand that while infrastructure represents a physical investment in our future, our children represent an intellectual investment in our future,” she said. “We have to protect innocent children who have no one else to stand up for them.”

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Thursday (Feb. 25) was an unusually big day in politics, even by Louisiana standards.

The big news in Baton Rouge on Thursday was House passage of Gov. John Bel Edwards’ one-cent sales tax (minus the assessment on manufacturing) but the action was quickly overshadowed by a credit rating downgrade by Moody’s. http://theadvocate.com/news/14993547-79/moodys-downgrades-louisianas-credit-rating

The state also received a “negative outlook” from Moody’s, meaning the state could be downgraded again.

Coupled with the sales passage, which must now go to the Senate for a vote, was additional cuts of $100 million in state spending and the taking of $128 million from the rainy day fund. With the $60 million already cut by the Edwards administration, Thursday’s action will make up about $700 million of the $900 million needed by the end of the current fiscal year on June 30.

The downgrade was the first for the state since Hurricane Katrina and the lower rating means when borrowing money, the state will have to pay higher interest rates.

And just to add a touch of spice to an already politically volatile state, Public Service Commissioner Foster Campbell announced on the Jim Engster Show on Thursday that he will be a candidate for the U.S. Senate seat being vacated by Sen. David Vitter. http://www.jimengster.com/

Campbell, an outspoken PSC member and a former state senator, is the second Democrat to enter the already crowded field of senatorial hopefuls. So far, U.S. Reps. Charles Boustany, Jr. of the state’s 3rd Congressional District and John Fleming of the 4th District, State Treasurer John Kennedy and U.S. Air Force veteran Rob Maness, all Republicans, a second Democrat, New Orleans attorney Caroline Fayard, and, of course, the former director of Louisiana Alcohol and Tobacco Control, the inimitable Troy Hebert, an Independent.

A debate between all the candidates could be reminiscent of the early debates between the 17 original candidates for the Republican president nomination—but without the charm, sparkle and depth of Ted Cruz and Donald Trump, a lot less fun.

Maness was an unsuccessful candidate for the U.S. Senate seat won by Bill Cassidy in 2014 and Fayard was defeated in a special election for lieutenant governor in 2010 by Jay Dardenne.

Campbell, something of a throwback to the populist candidates of another era, is outspoken on issues, particularly with utility companies and the oil and gas industry, and while in the State Senate, he crossed party lines to lend strong support to then-Gov. Dave Treen’s proposed Coastal Wetlands Environmental Levy (CWEL), a $450 million tax on petroleum and natural gas. Campbell today says had CWEL passed, the state would not be in the financial bind in which it now finds itself. But strong opposition by LABI and the oil and gas lobby defeated the proposal.

In a related but relative minor matter, LouisianaVoice received one of those “independent political polls” that was so obviously commissioned by Rep. Fleming that it may as well have been conducted by the good congressman himself.

The questions were prefaced by glowing stories of Fleming’s humble background and how he pulled himself by the bootstraps to not only become a doctor but to establish “numerous businesses,” one of which just happened to be a payday loan company that preys on low-income citizens, hooking them for exorbitant interest rates.

At the same time, the pollster, a woman, set up other questions about the other candidates with disparaging background stories on Boustany, Fayard and Kennedy (Maness was omitted, possibly in deference to his military service) that stopped just short of labeling them as subversives. Also omitted from the verbal flogging was Campbell, obviously only because he was not a declared candidate at the time Fleming wrote the questions for the poll.

Louisiana’s credit rating was not changed by Fitch and Standard & Poor’s, the other two major financial rating agencies.

But Moody’s move, dropping the state from Aa2 to Aa3 leaves Louisiana with better credit ratings than just two other states, New Jersey and Illinois. The downgrade will be applied to the state’s general obligation bonds and gas and fuel tax bonds. That means in turn that when the state issues bonds to finance construction projects such as roads and public buildings, it will have to pay higher interest rates on the borrowed money.

The move came as a surprise as most observers, including Kennedy, though Moody’s would wait until the Legislature completed the current special session, which is scheduled to end March 9.

Kennedy used the downgrade to take shots at both Bobby Jindal and Gov. Edwards. “You can’t spend more taxpayer money than you take in for seven years in a row and not expect a downgrade to your credit rating,” Kennedy said. “You also can’t make public statements about suspending TOPS, ending LSU football, closing Nicholls State University and closing five prisons without scaring the daylights out of the credit rating agencies that grade our debt and the institutional investors that buy our debt. What we tell our children is true: Acts have consequences.” http://theadvocate.com/news/14993547-79/moodys-downgrades-louisianas-credit-rating#comments

Edwards, meanwhile, blamed the downgrade on the seven years of patchwork budgeting by the Jindal administration, calling it “a disappointing development, particularly since we believed that Moody’s would wait until the conclusion of the special session to make any decision on our rating. Unfortunately, the downgrade confirms what we’ve been saying about the structural imbalance of our budget. The overuse and abuses of one-time money and fund sweeps by the Jindal Administration were a major factor in this decision.”

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