Tuesday, August 12, 2014

Tuesday, August 12, 2014

The worst idea of 2014; Louisiana’s oil and gas revenues may not fund pre-school programs; Kennedy criticizes state fund raids; Welcoming former prisoners back to our community

The worst idea of 2014
The executive director of Celtic Studios paid a visit to the Baton Rouge Press Club on Monday and presented what surely must be the worst public policy idea in recent memory. Not content with the film industry draining upwards of $200 million in a year in state resources to produce the likes of Shark Night 3D ($5.3 million) and Duck Dynasty ($6.2 million and counting), Patrick Mulhearn wants to let the oil and gas industry in on the action. His plan, as described in The Advocate, is to expand the existing 30 percent tax credit so it can be applied to severance taxes owed by oil, gas and timber companies for the resources they extract.

“It would make sense to have an existing Louisiana industry supporting a burgeoning one, and vice versa,” Mulhearn said.

No, it wouldn’t. For starters, oil and gas drillers already enjoy one of the most generous tax breaks on the books – a two-year severance tax exemption on horizontal drilling that has contributed mightily to the state’s chronic budget shortfalls, as the lucrative shale plays in Haynesville and Tuscaloosa have yielded paltry returns for state coffers. Even Gov. Bobby Jindal judged the tax break to be unnecessary and proposed getting rid of it as part of his 2013 tax-shift scheme.

On a more basic level, extraction industries don’t need another tax break as an incentive to do business in Louisiana. Unlike Hollywood filmmakers, who might look for greener pastures if Louisiana stops paying them to grace us with their presence, oil and gas drillers aren’t going anywhere because the oil and gas they seek isn’t going anywhere. Paying the industry more money to do what it’s already doing – thereby hurting Louisiana’s ability to finance basic services – would be the very definition of bad public policy.


Louisiana’s oil and gas revenues may not fund pre-school programs
A steady decline in Louisiana’s share of federal revenue from offshore oil drilling is threatening the viability of the 8(g) fund that finances preschool for nearly 3,000 low-income children each year. As Nola.com reports, “In the 2008-09 fiscal year, Louisiana received $41 million of federal revenue, compared to 2014-15’s budgeted $24 million.” In addition to fewer dollars from offshore oil drilling and development, preschools are also facing higher operating costs due to Act 3 of the 2012 Legislative Session, which requires higher education standards and a streamlining of multiple childhood programs. The increased costs will likely be passed on to some parents as higher tuition.

Despite reams of evidence that early childhood education is one of the best public investments a state can make, Louisiana has made deep cuts to these programs in recent years. Funding for the Child Care Assistance Program, which helps low-income parents stay in the workforce, is down 58 percent since 2009. As LBP pointed out in March, investing in high-quality early childhood education benefits everyone by lowering dropout rates, reducing crime and increasing long-term economic growth.


Kennedy criticizes state fund raids
State Treasurer John Kennedy says Louisiana policymakers need to stop draining state trust funds to pay its operating expenses. Writing in The News Star, Kennedy cites the depleted reserves in the Office of Group Benefits, the draining of a nursing home trust fund and the diversion of tobacco settlement proceeds to pay for TOPS scholarships as the kind of practices that need to stop for the state’s finances to get back on track. He writes:

“Louisiana state government finances must be stabilized. The way to do it is not especially complicated:

• Stop draining the state’s savings accounts and trust funds.
• Stop spending more money than we take in.
• When we do spend money, spend it on things citizens need, not things politicians want.”


Welcoming former prisoners back to our community
Hundreds of men and women return to New Orleans communities each day after serving long sentences, and most are met with shame and judgment from their churches, possible employers and even family members. Meanwhile, the churches and civic organizations that support re-entry do not collaborate very well. These are some of the factors that contribute to a recidivism rate of nearly 60 percent and more crime, writes Rev. William H. Barnwell, a volunteer with Kairos Prison Ministry International and Episcopal pastor at Angola. Barnwell proposes that city and church officials sponsor a “Coming Home from Prison” Sunday or Sabbath, where a wide range of community groups will receive resources to help lower the city’s recidivism rate.


Number of the Day
— The “funded ratio” of Louisiana’s state pension plans in 2012, according to an analysis by Standard & Poor. That’s the 46th worst performance in the country and well below the state average of 70.9 percent (Source: Federal Funds Information for States).