Session Yielded Little Reform, PAR Says

For all the reform talk and promises made by the governor and legislators when they were candidates, the first regular session of this Legislature has closed with little in the way of substantial reform. The improvements that were made were overshadowed by the extravagant legislative pay raise members passed for themselves and the governor’s refusal to veto it.

The theme for this session was workforce development reform, and a few bills were passed that could kick-start the state’s production of new workers to fill new jobs. A mega-fund for economic development incentives was expanded to lure new jobs to the state. The Department of Labor was renamed and reorganized to build stronger links between workers and jobs (HB 1104), and a $10 million rapid response fund for worker training was established (HB 1018).

There was little resistance to or controversy over these changes, so while the effort was laudable, it was also quiet and failed to fulfill widely held hopes for a new era in Louisiana government where some major, longstanding problems would finally be tackled. The state’s monumental problems with health care and education were essentially left untouched. Elected officials not only failed to live up to high hopes, but they also managed to incite outrage with passage of a legislative pay raise that doubles current salaries. The Legislature justified the pay increase as being appropriate full-time pay for a full-time job — in spite of the fact the Louisiana Constitution calls for a part-time legislature. To further pour salt in the wound, the governor broke a campaign promise by insisting he would not veto the pay raise, which he called completely unreasonable. At the close of the session he still had two weeks to change his mind and follow through on his pledge to “prohibit” legislators from voting themselves a pay raise that would take effect this year, but that seemed unlikely.

Health Care

Expectations were high that this governor — with his expertise in health care administration — would set the stage for a shake-up of the way the state provides health care for the uninsured. A set of reform bills did finally pass that would improve budgeting practices for spending federal uncompensated care dollars (SB 337) and provide better access to care for the mentally ill (SB 182). While commendable, these measures don’t even scratch the surface of the hard shell protecting the state’s antiquated and inefficient charity hospital system, nor do they address the needs of the state’s 600,000 uninsured residents.

A long-awaited analysis of the LSU business plan for a new hospital in New Orleans was released by the Department of Health and Hospitals a few days prior to the end of the session. It outlines several measures that could improve financial sustainability for the new hospital. However, the DHH plan focuses on brick-and-mortar concerns for New Orleans and does not address related fundamental statewide health policy issues, such as reorganization of Louisiana’s system of care for the uninsured, as well as the need for long-term development of medical schools and academic medical centers competitive with the best that other southern states have to offer. The DHH budget was partially rescued by the Senate from a $170 million budget cut (including federal funds) imposed by House amendments, but the level of funding is still a concern at $47 million (state and federal) below departmental needs. Final approval of the DHH plan for reducing that spending will be made by the Joint Legislative Committee on the Budget. A major sticking point in budget negotiations could be whether institutional care for the elderly and disabled will be ranked ahead of in-home care for those populations.

Education

On the education front, the governor’s “reform” plan was to fund a pilot program to provide private school tuition for children in failing schools in New Orleans. As a short-term remedy for a sub-group of public school students, this $10 million voucher program (HB 1347) may be effective, but it does nothing to improve the performance of public schools.

Teachers got an across-the-board raise of around $1,000 and school support workers got a $1,000 bonus. While research generally does not find a link between salaries and student performance, it does link pre-K education to success. A bill to phase in universal access to pre-K (SB 286) finally passed but was initially opposed by the administration on the basis of cost — which will be around $11 million in FY 2010 and will rise to around $80 million over the next six years. To oppose a proven reform and support dubious ones demonstrates a disturbing contradiction.

Budgeting

Another disturbing trend is the continued call to trim budget fat that no one can find and to add fat that no one will trim. Following all the government-bloat campaign rhetoric repeated throughout the campaign season, the 2008-2009 executive budget submitted was $551 million in state general fund expenditures higher than this year’s budget. Try as they might, House Appropriations committee members could only find $120 million in cuts they were willing to make. That willingness was not shared by the Senate, however, which restored most of the cuts. A $30 billion budget was finally passed.

Both the House and Senate added 599 line items for local and non-governmental entities to one section of the operations budget. Those member amendments add up to nearly $35 million — $1 million more than last year. More local line items were scattered throughout the rest of the budget and added to the supplemental budget, bringing the member-amendment total to at least $55 million. This year, however, after being rejected as a stand-alone bill for the third year in a row, language was added to HB 1182 that will require more transparency and accountability for those budget items in the future.

The most grievous and shortsighted move, however, was to pass the personal income tax break (SB 87) that repealed part of a tax reform plan passed by voters in 2003 to make the state’s tax structure more progressive and able to grow with personal income levels. The Stelly tax plan granted a break on sales taxes for everyone and raised income taxes for those in the upper tax brackets. Continued public outrage over the tax increase made the passage of this partial Stelly tax repeal a popular cause in spite of the projected $360 million loss in state income tax revenues in FY 2010 and the higher reliance the state will now have to place on oil and gas revenues. Louisiana’s fiscal outlook is precarious.

It is remarkable that the administration was able to significantly reduce the amount of non-recurring revenues supporting recurring expenses in the budget. Also, the state’s construction spending budget process — capital outlay — was made somewhat more rational and accountable. But, again on this issue, the reform was touted as being much more robust than it actually was.

Two competing approaches to capital outlay reform were offered — an administration bill proposed ceding some decision-making power to the Legislature and several other bills would have shifted even more power to the Legislature. With passage of SB 808, little reform was achieved. Very limited opportunity for additional legislative input was inserted, leaving the governor still firmly in control of the process. In the end, budget makers were able to fit it all in — the fat, the tax breaks and the continuation of current service levels — without “busting the cap” on spending that restricts budget growth to a rate established by the state’s growth in personal income.

Higher Education

Initial budget cuts by the House threatened to undo recent gains in higher education funding that will enable colleges and universities to keep pace with their peers in other states, but most of the cuts were restored in the Senate. State appropriations were increased and the authority to increase tuition and fees was granted (HB 734). But, some key funding needs were ignored. No additional funding was allocated for deferred maintenance, and a $15 million performance incentive fund was cut from the budget. The unfunded performance incentive program would have set aside a reward pool for institutions that meet measurable goals to improve student outcomes. This link between quality and funding is an important next step for improving the state’s higher education system.

Ethics and Transparency

Ethics and transparency were shortchanged as lawmakers struggled to clarify the administration’s 2008 ethics agenda. Efforts to strike balance between broad language that creates unintended consequences and narrow language that leaves potential loopholes in the law resulted in missed opportunities and an overall loss for open and honest government.

While the Legislature did appropriate $4 million to the Board of Ethics as requested (HB 1), the code of ethics and the board’s ability to enforce those laws took big hits. In the 2008 “ethics” session, lawmakers stripped the board’s authority to adjudicate ethics complaints and handed it off to administrative law judges. Additionally, the burden of proof by which the board must prove ethics violations was made more stringent. The opportunity to correct those issues was passed over in this session. Conversely, blows to the board’s power continued. SB 53 eliminates the board’s ability to accept or investigate anonymous complaints. And although the governor vetoed similar legislation in the first special session, the Legislature passed HB 906 in this session, which dictates that the accused receive a copy of an ethics complaint lodged against them, with the complainant’s name included. Both measures likely will result in fewer alleged ethics violations because of fears of retribution.

In terms of receiving freebies and perks, the code of ethics was weakened significantly. The bill designed to clean up errors and oversights in the ethics laws passed during the special session was amended to create new loopholes and exceptions — several of which the governor had already vetoed in separate legislation. SB 769 allows public servants to accept complimentary admission to certain civic, nonprofit, educational, fundraising or political events, as well as complimentary admission, lodging and transportation to certain educational or professional development seminars. The bill also creates an exception for one legislator’s wife to continue working as his legislative assistant. Exceptions such as these were the very loopholes citizens expected the new administration to close. However, plenty of room remains for special interests to wine and dine public servants with no meaningful boundaries.

Legislation regarding financial disclosure produced mixed results. In response to widespread threats of resignation from volunteers, SB 718 creates a fourth tier of disclosure for most board and commission members. Those persons will be required to disclose their own and their spouse’s name, address, occupation and sources of income. Additionally, they will have to disclose the amount of each source of income received from the state or local government or gaming interests. However, the administration defeated HB 678, which would have required the governor to disclose the source and expenditure of contributions made related to his or her transition into office.

Lawmakers did tighten ethics provisions regarding conflicts of interest. HB 918 prohibits those who create bid or solicitation documents for a proposed project from later competing for that project. Additionally, a host of bills creates new circumstances for recusal from voting and/or debate for members of the judiciary (HB 1386), Legislature (HB 762) or certain boards and commissions (SB 56) who feel they have a potential conflict. However, small wins like these hardly make up for the setbacks in ethics and transparency reform.

More money was poured into the state’s new mega-project development fund (HB 926). More than $300 million was added for the Department of Economic Development to create or retain jobs in the state. Negotiations for the incentive deals can be deemed confidential by the department secretary and kept from the public for up to 24 months. This secrecy creates the potential for misspending and means that controversial projects may be well underway before citizens learn of them or are able to voice concerns.

A final major setback for government transparency was the rejection of HB 1100, which would have limited the extraordinarily broad public records exception for the office of the governor. A provision in SB 363 that is being cited as a win for government transparency actually does little to make more records in the governor’s office subject to the public records law. The vague language was added as a late amendment and leaves considerable discretion regarding which documents continue to be protected from sunshine laws.

Recovery

A major shift of power was made with the passage of HB 622, which reorganized the Louisiana Recovery Authority (LRA) and added to its duties the implementation of recovery programs — like the Road Home. The LRA’s lack of authority over the programs it created has been a major stumbling block to the recovery. This “reform” is late in coming, but the work of the recovery is still ongoing and the change is likely to shorten rebuilding timelines and make the administration of federal disaster aid programs more seamless at the state level.

Ridiculous

Another sign of politics as usual around the capitol was the passage of bills ranging from the laughable to the embarrassing. New Orleans now has an official cocktail, the sazerac (SB 6), the state has another official symbol, the fleur-de-lis (HB 455), and sex offenders are prohibited from wearing Halloween costumes (SB 143). Even more absurd is the Senate resolution (SR 117) requesting the state Board of Elementary and Secondary Education to require local school boards to punish students by having them perform custodial duties while wearing hot pink jumpsuits. Indeed, the resolution identified hot pink as the color of choice.

While it is unlikely anyone outside of the state will take notice of those bills, passage of shortsighted, fear-motivated legislation like the ban on using public funds for stem cell research and human cloning (HB 370) threatens to discourage outside investment in the state’s economy. Similarly, the Louisiana Science Education Act (SB 733) — a.k.a. the Louisiana Academic Freedom Act — which would allow the teaching of creationism in public school classrooms, threatens to undermine any hope the state had for overcoming its backwater image and is likely to lead to costly litigation.

Constitutional Amendment Proposals

There were seven bills passed that will require amendments to the Constitution if they are also passed by a majority of voters in the fall election. They are:

• HB 183 — Requires the Legislature to provide temporary successors for legislators ordered to active military duty
• HB 420 — Increases general severance tax allocation to parishes
• HB 461 — Provides for transfer of special assessment level to new property purchased to replace expropriated property
• HB 584 — Provides that funding reserved for post-employment benefits, other than pensions, may be invested in equities
• SB 232 — Provides for a three-consecutive term limit for certain constitutionally provided boards/commissions
• SB 295 — Removes certain restrictions on disposition of expropriated property
• SB 296 — Requires at least five days to elapse between a call being made for a special session and the start of the session

Conclusion

The governor has defended his refusal to veto the legislative pay raise by saying that he wouldn’t want the veto to cause a derailment of the clear path to reform laid out by his agenda this session. That path is not so clear, actually. There are a few promising, modest reforms sprinkled throughout a range of policy areas, but this session was short on big reform.

Rather than sparking a new era for Louisiana’s economic progress, this session instead served to establish a new order of power struggles between the executive and legislative branches of government. The Legislature put up a surprising fight on several fronts long considered protected by gubernatorial power: capital outlay, budget making, pay raises, tax cuts. Equally surprising, this growing rebelliousness was often met by the Jindal administration with disengagement and detachment. The governor lost control of the two most important bills of the session, the Stelly tax cut and the legislative pay raise. Perhaps having these early power struggles out of the way, Louisiana’s newly elected leaders can now get on with the business of planning for substantial reforms that overhaul the tired way things are done. Health care and education would be the place to start.