A NEW ORLEANS TRIBUNE EDITORIAL
Have You Heard…The Scutttlebut?
Have your heard the scandal? The big crisis with the Sewerage and Water Board, according to the inspector general—who actually gets paid to tell us this stuff—is that people are having a hard time paying their bills on time, which have recently increased by 10 percent, by the way.
Essentially, IG Ed Quatreveaux’s contention is that the S&WB is not doing enough to manage and aggressively collect delinquent accounts. And he wants to put pressure on the S&WB to make people pay. Perhaps when more New Orleanians can’t flush their toilets, they will be forced to pay out the money that they ostensibly can’t afford and Quatreveaux will be happy.
First of all, tell us something we don’t know. Although it was hardly news, a recent report released by the United Way helped to bring some perspective to challenges poor people throughout our state face. If you haven’t read the report, here’s a synopsis:
In Louisiana, 695,719 households — 40 percent of the state total — are unable to afford the basic cost of living, with conditions still lagging behind pre-recession levels, according to the report. For Black Louisianans, the numbers are disproportionately high. Although Blacks comprise about 30 percent of the state’s population, they make up 45 percent of Louisianans living in poverty and 42 percent of those considered Asset Limited, Income Constrained, Employed or ALICE. In Orleans Parish, 48 percent of the 158,354 households are either living at poverty or in conditions defined by ALICE, which is essentially the brink of poverty.
In other words, no-duh, Mr. Quatreveaux, folk are struggling. They are behind and not just on water bills.
It gets worse. In just a few weeks, New Orleanians will go to the polls to decide whether to raise local property taxes via a public safety millage increase. More money for police protection and to help with the fire fighter’s pension settlement sounds good. But the truth is property owners are already seeing increased bills thanks to the library millage and the school facilities millage, which, by the way, is still putting public money into the hands of unelected boards. Meanwhile, so many New Orleanians are so delinquent on their water bills that the inspector general is writing reports about it. People are financially stressed. These higher costs are also being passed on to renters who are crumbling under the weight. Another tax on the backs of New Orleanians—even for the best of causes—is not the right move right now.
And if there is still any doubt about who is pulling more than their fair share in Louisiana, it has been removed by the latest special legislative session to tackle the budget crisis. Let’s be honest, increasing the cost of a case of beer or a pack of cigarettes, raising the sales tax and removing sales tax exemptions on goods and services, and raising taxes on phone bills will not hurt major corporations and big industry.
It hurts poor people, who can now get ready to catch a little more hell. According to a New York Times report, Republican state Rep. Cameron Henry said business and industry is sharing about 47 percent of the burden to stave off the state’s financial meltdown. So…that means regular folk—many poor—are carrying about 53 percent, right? How ridiculous is it to expect those with the least to do the most. Poor people, the working class, those already marginalized and disenfranchised, those already mired in poverty, grappling to make ends meet are bearing way more than their fair share of the cost of keeping Louisiana’s head above water.
It’s almost laughable to read analyses and reports that suggest that consumers and business interests alike took evenhanded hits in order for Louisiana to get its money problems together in the short term. What bills are these writers looking at, because the ones we see all spell more dollars flowing from the pockets of the people who can least afford it, and that makes no sense.
From the additional one-cent sales tax to tax and rate increases on cigarettes and alcohol, to the reinstatement and renewals of sales taxes on car rentals and the telecommunications tax (read higher cellphone and home phone bills) to the sales tax that can now be charged at concerts and other non-athletic events held at domed stadiums—consumers are paying the price. In fact, even in those instances where businesses are facing tax increases or a reduction in tax breaks they had grown accustomed to, rest assured that they will simply pass their costs—at least as much as they can—on to the consumers.
Let’s not forget that the budget fiasco was also averted with the help of more than $100 million in budget cuts that have still not been detailed, but will likely impact various state agencies including Health and Hospitals, Education, Children and Family Services and Corrections. Rest assured, those cuts will trickle down, and guess who they will impact most? Yep, the poor. Indeed, the truth is that regular folk—many poor—will carry far more than 53 percent of this burden when it’s all said and done.
Maybe We Can Help
With all of the steady and urgent nature of conversations surrounding our state’s fiscal crisis, The New Orleans Tribune decided to spend some time looking at Louisiana’s money matters to consider and offer steps to save the revenue needed to meet the bottom line. To be sure, we know that some of our suggestions, such as ending TOPS and school vouchers, may not sit well with many who see these programs as untouchable sacred cows. But the questions that must be answered as Louisiana examines how and why it spends its revenue is whether programs are performing their intended goals and whether they are helping the people most in need of help. A state’s budget is a direct reflection of its values and moral compass.
We also suggest that our newly elected Governor lead by example. While we have not dismissed all hope that Gov. Edwards can help move Louisiana forward, we think he has gotten off to a shaky and questionable start with pay raises for his top staff even as the state had to figure how to make up a nearly $1 billion shortfall. We simply do not find good judgment in raising salaries for top execs with one pen and raising sales tax for consumers—especially those earning minimum wage even as big business continues to successfully stave off providing all Louisiana workers with a living wage—with another.
Of course, we understand that these pay raises hardly represent a drop in the bucket when compared to the fiscal fiasco Louisiana faced—a nearly $1 billion shortfall that has recently been addressed. Well, it was sorta, kinda addressed. The state is still $30 million short for the remaining fiscal year and still needs to find roughly $800 million for the next fiscal year. However, when a ship is sinking, you do not intentionally take on more water, not even a little bit. And more importantly, you demonstrate to both those you lead and to those you are elected to serve that your commitment to using public funds wisely starts at the very top. Raising salaries for folk already out-earning many Louisianans by three and four times is not a good look for leadership.
In fact, no one in Baton Rouge should be patting themselves on the back or grandstanding right now. It’s easy to say Bobby Jindal made this mess; and he did. But many of the same state representatives and senators that voted for the one-cent sales tax and for removing many of the exemptions on the current four-cent sales tax, were there, right there the whole time that Jindal was selling the people of Louisiana out. They didn’t prevent it. Maybe they couldn’t. But they didn’t even sound an alarm. And to add to their own slights against the very people they are supposed to represent, they voted in favor of laying the bulk of the responsibility of fixing the mess at the feet of the poor.
By the way, it is not lost on us that Gov. Edwards tapped a Black lawmaker state Rep. Katrina Jackson (D-Monroe) to carry his one-cent sales tax hike to the legislature for him—as if that will make us feel any better when we’re paying more at the cash registers. News flash: getting screwed doesn’t feel less painful just because it looks like Black hands are turning the screws. In fact, it might even hurt a little more.
So…the current budget challenge has been met (kinda-sorta) with a plug here and a patch there. Of course, in just a few months from now, the state will have to figure out how to plug an $800 million hole… again. It is time for Louisiana to get serious about its money matters.
Plug Leaks, Wasteful Spending, Improve Fiscal Accountability and Make Big Business Pay
The use of credits, incentives, suspensions and exemptions resulted in Louisiana missing out on nearly $8 billion in tax revenue. They need to be examined to decide if they are worth the revenue the state is passing on.
The Louisiana Legislatives Auditor’s (LLA) recently released annual report Key Audit Issues 2016, reveals a pattern of “failure to address recurring issues, a lack of effective internal controls, and nearly $1.8 billion in waste and inefficiencies continue to challenge the state.”
The report is a summary of major fiscal troubles discovered by the legislative auditor—many of them recurring issues that if addressed before could have helped Louisiana avoid its current challenge. Among items noted in the report:
- The questionable decision to suspend collection of severance tax (the tax levied on the production of natural resources taken from the land) revenue of horizontally-drilled wells, which cost Louisiana more than $1.1 billion between 2010 and 2014. While some states have approved reducing their severance tax rate for horizontal wells, Louisiana is the only state to have suspended it completely. Why this decision was ever made is unconscionable. This complete suspension of the tax has offered the oil companies a significant tax break and ostensibly encouraged the building of new wells to mine natural resources. But it has cost Louisiana lots of money—so much money that the current budget crisis could have completely eliminated. Amazingly, not one bill that was passed during the special session to address the fiscal crisis looked at reinstating the severance tax on these wells—not even at a reduced rate
- The Office of Homeland Security and Emergency Preparedness has consistently paid for work that was not in the scope of approved projects, paid contracts and made purchases that did not comply with federal and state procurement guidelines and reimbursed expenses that were not supported by invoices, receipts, lease agreement, contracts or any documentation to the tune of more than $170 million in 2015, of which $43.5 million in expenditures have neither been resolved or deemed as exceptions, according to the report.
- The continued failure of the Recovery School District to maintain and correctly report movable property assets, totaling over $800,000 for the current year and more than $6.1 million for the past three years.
Moreover, another report recently released by the state legislative auditor that examines the performance of the state’s tax incentives, exemptions and suspension provide. According to that report, Louisiana has nearly $8 billion in total tax exemptions, which include individual income tax, certain sales tax, severance taxes, corporate income and franchise taxes, petroleum taxes as well as tax incentives and exemption contracts for the movie industry, enterprise zones, research & development and new market tax credits, for 2015.
Countless economic studies indicate that average consumers spend money they get or have as a result of tax credits and exemptions. In other words, the money regular folk save at the grocery store and the pharmacy as a result of not having to pay sales tax on food or prescriptions or the money they get back on in the form of state income tax return, are actually spent and spur the economy.
Of course, it is widely purported that tax exemptions and tax credits are a good way to introduce and encourage business activity of all types. The reality is the state has little to no data to indicate that many of the tax credits and exemptions it extends to big business and corporations are resulting in the desired outcome. And short of that data, many of these tax credits, incentives and exemption contracts ought to end. A few small tax breaks were reduced in the special session, such as the reduction in the discount rate tobacco dealers pay for expenses of tax collection (look for that to be passed on to the consumer, a reduction in the tax break given to insurance companies (wonder who will pay for that) and few others that will yield relatively minor savings. But there were others—like the tax incentives and tax breaks the motion picture industry enjoys that weren’t even touched by legislature. Surely Hollywood South can afford to lose a few million if it means our state will stay afloat.
The bottom line is that with its fiscal problems, the state of Louisiana can no longer afford to hand out tax credits and exemptions to major corporations like candy without documented proof that the state is getting the sort of return it needs and that the impact of that return is being felt by the all of the state’s residents—especially poor, disenfranchised and marginalized Louisianans most in need of the opportunities created by programs designed to develop and invigorate the economy.
Ending TOPS would saves at least $250 million annually
Yes, we know that folk nearly lost their natural minds when the future of TOPS looked shaky early in the budget crisis discussions. Anyone worried about losing TOPS doesn’t really understand what it has become, how it’s really being used and by whom.
The program, with its GPA and ACT score requirements, has long failed to serve the students that need it most. The Tuition Opportunity Program for Students, now ineffectively modeled after the efforts of the late Patrick F. Taylor, who set out on a personal mission some 30 years ago to ensure that 183 middle school students from disadvantaged backgrounds could go to college as long as they stayed out of trouble and graduated high school with a 2.5 GPA and a 17 on the ACT, no longer reflects the intent or spirit of that worthy endeavor. To be clear, poor and minority students are NOT benefiting from the largess of TOPS. So how about we just stop.
Today, TOPS Opportunity, Performance and Honors programs require ACT composites of 20, 23 and 27 respectively. Students must achieve GPAs of 2.5 for Opportunity TOPS and 3.0 or better for Performance and Honors TOPS. The reality is that disadvantaged and mostly Black students trapped in low-performing secondary schools with limited resources aren’t the ones that benefit from TOPS. Instead, it has become a kitty for the children of the state’s middle-class and well-to-do residents. Audits and evaluations of the program bear that fact out. The most recent TOPS report details that more than 74 percent of 2014 TOPS recipients are White and that more than 58 percent of 2013-14 graduates that enrolled in TOPS came from families with incomes of at least $70,000. In fact, nearly 20 percent reported family incomes of more than $150,000. More plainly, more than half of TOPS recipients have parents that can afford state college tuition. Moreover, students earning 3.0 or better GPAs and scoring in the mid to high 20s on the ACT can often count on some merit-based scholarships to help fund their tuition costs.
What’s more is that the number of students from middle class and affluent households using TOPS has grown steadily over the years. While the number of students from low-income backgrounds has remained stagnate over a 10-year period, which suggests that very little is being done to increase the pool of low-income students eligible for TOPs as the requirements have grown more stringent. We’re not surprised that the poorest students at low-performing schools aren’t getting TOPs at the same rate as well-to-do students because research repeatedly indicates that parental income and academic performance are causally related. This makes recent talk of raising the TOPS ACT requirement to 28 laughable. Actually, it makes such an idea repulsive.
So even as the state’s expenditure for the program swells, it has only fed into the cycle of poverty Patrick F. Taylor dreamed that his promise to those 183 kids from New Orleans would help to break. In 2016, you can’t get a TOPS grant for a 4-year school if you don’t have a 20 on the ACT. And if your parental income is hovering somewhere around the poverty line, it gets harder to earn that 20 on the standardized test. Meanwhile kids with 23s and 27s also get small stipends with their TOPS grants. So why are we doing this again? Oh, yeah, so some White kid with rich parents can get a free ride to LSU and have pocket change for beer and pizza—yep, that’s why we can’t wait to pay taxes.
By the way, why in the hell is anyone worried about how the absence of TOPS would affect athletic programs at LSU? If a student athlete is good enough to be on the team—any team—baseball, track, basketball, soccer, etc., then give them athletic scholarships instead taking advantage of TOPS to essentially free up more money to attract out-of-state student athletes, which is what has been happening. What is that you say, those sports don’t generate enough funds to support full athletic scholarships for every team member? We’re sure the LSU football program, which generated a net revenue of more than $57 million in 2015 and is one of the nation’s most profitable college football programs, would be happy cover the shortfall for other athletic programs on the campus. After all, that’s what we do in Louisiana. We come together in times of crisis and make sacrifices for the greater good. Don’t we? Oh, wait, that’s just what the state makes poor people do.
Get outta here with that!
Yes, free college education for all sounds great; but on paper and for a state facing the type of budget issues Louisiana is facing, spending public money for students whose parents can either fund their college education or who could otherwise earn academic or athletic scholarships to college is not wise. Ending TOPS as it now exists would save the state at least $250 million a year.
To be sure, we are not categorically opposed to college tuition assistance for deserving students that actually need the help. End TOPS as it is, then revamp/reintroduce the program to include income limits that ensure it focuses on assisting students that meet some basic academic requirements and have a demonstrated financial need. In other words, if we are going to pay for students to go to college it should be for students who couldn’t afford to go without the state’s help.
End School Vouchers
Ending this program would save roughly $42 million annually
As the state Department of Education faces budget cuts, it has been suggested that the voucher program might meet its end. We’d love to see that happen.
At an average cost of about $5500 for roughly 7400 vouchers statewide, this program cost taxpayers about $42 million in 2014-15 school year. This is money that can be used to shore up and improve resources at public schools, which would benefit far more children.
This again has simply not been a wise investment for the state of Louisiana; and here’s why. First, many of the private and parochial schools that receive these vouchers are doing so poorly at educating the students they already have that they have been prohibited from accepting new voucher students. In other words, the program supposedly created to give parents the opportunity to improve their child’s education outcomes by sending them to a private school using public dollars is failing on that front.
Now here’s reason number two. Even if the vast majority of these schools were doing an excellent job at educating voucher students, the programs still does not do enough. There are more than 700,000 public school students in Louisiana; and surely more than 1 percent of them are attending poor performing public school. But the voucher program is only reaching about 1 percent of students that would otherwise attend public schools.As such, putting that $42 million or so back into public education where it could benefit the most students a much better use of public money.
End Corporate Welfare for Professional Sport Franchise Owners
This would spell tens of millions of dollars annually in savings once the current contract between the State and the Saints has expired; and it would just make us feel a lot better.
Yes, we’re talking about Tom Benson. This notion that a professional sports team owner is somehow investing in a city or state and its people by simply owning and sustaining his franchise in a certain location is ridiculous. Tom Benson invested in Tom Benson. He is a savvy business owner and is filthy rich to prove it. We are not mad at him.
We just don’t get why our tax dollars have to support him and his businesses. His NFL team brings in annual profits of more than $30 million. His NBA franchise has an annual profit upwards of $11 million, according to Forbes. So why Benson needs direct cash payments, more Superdome revenue, and additional payments from the state in the form of lease agreements, bonuses, tax breaks, rent on office space from Louisiana is beyond us. We cringe every time we think about the senseless decision Bobby Jindal (our state’s very own Robin Hood in Reverse) made a few years back to sell Benson a state-owned property in New Orleans to only turn around and lease office space for state agencies in one of the buildings to the tune of $8 million a year to keep the billionaire, car salesman happy. Through this agreement, the state has actually been paying for office space in Benson Towers it wasn’t even using
In all, Benson will receive about $392 million from state subsidies through 2025 after inking his most recent agreement with the state–a state that has to scramble every fiscal year to keep afloat and still shortchanges health care, early childhood education programs.
It seems as if in Louisiana we love the Saints; but we loathe four-year-old children.
If the Bensons decide to move the team because they can’t get any richer on the taxpayer’s dime, oh well. The state of Louisiana survived for 155 years before the Saints came to town. We imagine it could survive for a century or two without them should they bail.