As we dig out from the rubble of the 2015 gubernatorial election, it’s clear that for the next four years the battle for Louisiana’s economic competitiveness will be a desperate one.
That’s nothing particularly new, mind you. When Texas is your next-door neighbor any public policy you make which is not directly intended to improve your state’s economic competitiveness – your tax climate, the quality of your infrastructure, the quality of your workforce, your regulatory environment, etc. – puts you in danger of losing jobs and capital to the behemoth across the Sabine River.
Louisianans ought to know this after some 40 years of draining our brightest people and most profitable businesses to the Lone Star State. And for the most part that lesson has been understood. As Texas has become a free-market paradise, Louisiana has trended more conservative. The Republican Party has gained membership, at least within the political class, and Democrats cannot win statewide without making conservative noises.
But the election of John Bel Edwards was a major step backward in the fight to keep Louisiana competitive. Americans For Tax Reform’s Patrick Gleason, in a damning Forbes piece surveying the scene in the wake of Edwards’ victory, paints a disconcerting picture of what putting this Democrat in this governor’s mansion at this time will mean…
Site selectors looking to save time can go ahead and cross Louisiana off the list of good places to relocate a business. Competitor states are set to blow by a Louisiana in which John Bel Edwards is governor. While Gov.-elect Edwards will be carrying water for his trial lawyer and union backers after he moves into the governor’s mansion in Baton Rouge, states that Louisiana competes with will continue to pass policy reforms that make them more attractive to employers and investors.
Next year Gov.-elect Edwards will move to expand Medicaid – referred to by Avik Roy, a senior fellow at the Manhattan Institute, as the developed world’s worst health care system – and is expected to also push for higher taxes, likely starting with an oil processing tax. This contrasts with what is happening in states around Louisiana.
In neighboring Mississippi, for example, Lt. Gov. Tate Reeves will be leading the charge next year to phase out that state’s franchise tax and provide income tax relief. Mississippi isn’t the only state set to outperform Gov.-elect Edwards’ Louisiana. The fact that Tennessee doesn’t tax wage income already gives it a competitive advantage over Louisiana. Next year Tennessee is poised to increase that advantage, when Senator Mark Green and Representative Charles Sargent will move to reduce or phase out Tennessee’s tax on investment income. To Louisiana’s west, Texas, another state with no income tax, is already a more attractive place to do business than Louisiana. Yet Lone Star State lawmakers are not resting on their laurels. This year Texas Gov. Greg Abbott signed into law $4 billion in tax relief. When Texas lawmakers come back into session in 2017, they are expected to take up legislation to enact a responsible spending cap that will ensure state government lives within its means, as well as make their tax code even less burdensome and more pro-growth.
If a CEO or site selector is looking for the best place to do business on the Gulf coast or the American South, Louisiana is not it. Unfortunately for individuals, families, and employers across Louisiana, Governor-elect Edwards’ agenda is likely to make matters worse.
With those neighboring states doing everything they can to rework their tax codes to make themselves more business-friendly, two things are true – Louisiana is going to stick out like a sore thumb as an economic backwater in an otherwise fairly dynamic region, meaning places like Picayune, West Orange, Vicksburg, McComb and Marshall might be joining Houston, Dallas, Atlanta and Nashville as repositories for a diaspora of ex-Louisianans leaving the Bayou State for greener economic pastures. We saw that happen for 30 years following the bust of the oil and gas business in the 1980’s – a bust which in Louisiana was exacerbated by that industry’s recognition that Louisiana’s political class was little more than a rapacious gang of thieves, and its desire to escape with what assets it could to a locale not governed by philosophical descendants of Jean Lafitte.
Say what you want about Bobby Jindal, whose missed opportunity to make truly meaningful and comprehensive reform to Louisiana’s tax code and complete the task of right-sizing the state’s public fisc during his eight years in office now stands as an enormous negative given the four years of an Edwards-Leger-Alario cabal looming at the state capitol, but he at least put an end to the net outmigration and even despite the current downturn in oil and gas Louisiana’s economy topped two million private sector jobs during his administration for the first time in history. Jindal might well be remembered, for all his certain faults, as a real bright spot in our history of governance.
With Edwards, we now see a fairly obvious tell as to his solution for the state’s budgetary woes. It won’t be the badly-needed shrinking of the size and scope of state government Treasurer John Kennedy is begging for, but instead the oil processing tax Gleason warns about.
We know this, because earlier this week Edwards put the chief advocate of that tax, Public Service Commissioner “Bananas” Foster Campbell, in charge of the committee on his transition team in charge of fixing the state’s budget problems. Campbell has for more than a decade publicly demanded an oil processing tax, which would attach to every drop of oil entering the state from the Louisiana Offshore Oil Port or any of the various pipelines traversing Louisiana, not to mention that carried on trains or other conveyances, into the state’s refineries and petrochemical industry.
The oil processing tax would all but wipe out the planned $60 billion in capital expansion within Louisiana’s industrial sector; those projects will be shelved or re-sited for friendlier locales, and the 200,000 jobs they carry with them will vanish as well. What will Gov. John Bel Edwards, he of the alleged conservative ideological bent, offer as a replacement for the engine of economic growth he will have broken down? More casinos? Medical marijuana? Swamp tourism?
My American Spectator column this week sums this up in a rather morose fashion…
But in four years, Louisiana will find itself deeply uncompetitive with its pro-growth, low-tax neighbors in Texas, Mississippi, Arkansas, and elsewhere, and a long pattern of outmigration to those states, which largely ended during Jindal’s eight years as governor, will inevitably recommence.
Charles Krauthammer famously said “Decline is a choice.” Louisiana has made a choice, and it wasn’t a good one. For the sake of a 15-year old scandal already litigated by the public in a 2010 Senate election it installed an unaccomplished left-wing state legislator in a position to stonewall a needed reform agenda.
– At least we’ll have Troy Brown to kick around for a time. That will make the malaise more bearable.
Brown, who we believe has earned the title of Sen. SmackMyBitchUp, has refused to resign from the state Senate after being arrested for battering his “side friend” – what some might call a mistress – of the past 10 years in a fracas inside the Hyatt Regency hotel in New Orleans following the Bayou Classic on Saturday. It appears the “side friend” was less enthusiastic than Brown over the prospect of a menage-a-trois with him and another female he is also not married to.
The details are somewhat sketchy, according to Brown, on account of “brain damage” he suffered in a 1991 car wreck which has made his “short-term memory” less than exemplary. What else is sketchy is the silence emanating from the rest of Louisiana’s political class about Brown’s fitness as a political leader.
Louisiana’s voters just abandoned their well-established ideological direction over memories of a politician’s consensual, if illicit, sexual wanderings. John Bel Edwards was ensconced in the governor’s mansion over the question, and his sanctimonious show of faux outrage over David Vitter’s moral failings served as his chief attraction during the election cycle.
Well? Where is that sanctimony and faux outrage now? Did he use it all up? Is he tired? Or does the distemper over current and ongoing moral turpitude, rather than the 15-year-old version fail to manifest when it’s a member of his own party?
Or is it just that John Bel Edwards needs to be running against somebody to ratchet up his indignation?
What a joke. Perhaps Edwards ought to push John Alario aside as Senate president and give the gig to Sen. SmackMyBitchUp, in a show of the Christian charity that he wasn’t capable of during the election. Everybody deserves some opportunity for redemption, right?
– An interview with Donald Trump is a trip down a rabbit hole.
Last night he was on O’Reilly talking about killing the wives and children of Islamic terrorists and using bin Laden’s family as an example.
I would certainly agree that all the bin Ladens here in America on 9/11 should have been detained and investigated to determine the level of their involvement in the attacks of that day. But “taking them out?” Can it get any goofier than that?
When the voters get serious about the election they’re not going to pull a lever for this guy. It’d be like giving the loudmouthed drunk at the end of the bar title to the place.
Trump’s support consistently seems to come from non-college graduates and self-identified moderates; in other words voters who are less likely to head to the polls for a presidential primary. More activist voters, those better educated and perhaps more ideologically driven, seem to be less in his camp.
And with Ted Cruz looming as an anti-establishment candidate with a more well-developed understanding of policy and a more identifiable record of acting on his professed beliefs, Trump’s voters do have a place to go if he were to falter. Cruz is much more conservative than Trump but the answer for those voters is they want somebody who’s not affiliated with big corporations and K Street. Cruz is hated by K Street and he’s been tailoring his message to position himself on the side of the middle class against at least crony capitalists if not all of the corporate world.
Trump’s poll numbers are the envy of the field. I maintain they won’t last. Voters aren’t serious yet, but they will be.
– I did Chad LaBorde’s podcast earlier this week on the F. King Alexander/Les Miles free-for-all. Yesterday, Alexander confirmed pretty much everything we had here on the site about how Joe Alleva was attempting to move Miles out as LSU’s football coach and Jimbo Fisher in, which the dead-tree media is confirming was true, but the school’s president killed the deal because he didn’t want to spend private money on Miles’ buyout.
Because of how it would have looked to the Legislature.
This is truly asinine stuff, which we’ve already covered here and here. The long and short of it, of course, is that none of that money is Alexander’s to spend on any purpose other than what its owners agree for it to be spent on. Those large TAF donors willing to part with the $15 million over eight years to buy Miles out of his contract were willing to do so in the assumption that replacing him with Fisher, or some other coach, offered the prospect of a championship-level football program and increased profitability for the athletic department, and consequently increased cash flow from the athletic department to the university’s coffers.
What Alexander told the Baton Rouge Business Report is that the public won’t care what the source of the money is, so his all-important hosepipe into the state general fund would be threatened if the perception that football gets extravagances while academics get shortchanged on his campus were to exist.
But a perception by whom? Joe Bob Six-Pack of Negreet, Louisiana? Or his state legislator? One would assume that the leges would have the intellectual capacity to understand the concept of private dollars and earmarked donations, particularly given the exigencies of the state budget for similar reasons of dedicated funds. One would also assume the leges, whose constituents are in large part LSU fans after all and presumably would be interested in the football team winning championships, would not oppose the idea of improving LSU football without spending any state money on the project.
One would assume that Alexander might believe himself capable of making and winning that argument. But obviously he either thinks he can’t, or he refuses to. We’ll assume it’s the former. Either way, he seems more and more clearly a square peg in a round hole and LSU needs a president more in tune with its needs.
But as noted above, this is not shaping up to be an era of improvement in Louisiana. For the next four years the battle will be to avoid having things get worse, not trying to make them better. That battle will commence in 2019.
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