SADOW: Tale Of Two Louisiana Corporations During Elections

It’s a tale of two corporations, and has everything to do with election-year and good-old-boy politics in Louisiana.

Last week, Fibrebond Corporation, located in Minden, pulled back on a threat to decamp for east Texas. For months, its owner had complained about the neglected condition of area roads and bridges, forcing long detours for its deliveries. The owner of the firm reaching back decades in the area gave officials an Oct. 1 deadline with economic incentives dangling elsewhere to make an offer.

They did, with Democrat Gov. John Bel Edwards triumphantly announcing a deal, its details forthcoming later this week. It should include a commitment to infrastructure upgrades and workforce incentives.

Of course, in a state with less centralized control over transportation that spends too much on revenue-sharing of state transportation dollars to local and private concerns, these infrastructure issues never may have surfaced nor required state intervention. As well, in a state better positioned to ensure economic growth – having one of the worst business tax climates in the country and considered one of the worst states for business – it wouldn’t need to bribe an employer to stay within its borders.

And it would have looked bad to have a few dozen more jobs disappear (piling onto the hundreds gone elsewhere) only days prior to Edwards’ reelection bid, compounding on his watch a record tax increase and spending growth significantly above the inflation rate.  Even his alleged great fiscal achievement, so-called budget “stability,” happened not because of anything he advocated, but from federal tax law changes that amounted to another, stealth, tax increase.

Yet another political consideration drove the dealing. Fibrebond rests inside the district of Republican state Sen. Ryan Gatti facing a fierce challenge from GOP businessman Robert Mills. So disappointed at a Gatti economic legislative record that endorsed higher taxes, bigger spending, and stifled legal reforms, business and local Republican parties have endorsed Mills over him (although the incumbent scored a teacher union’s endorsement).

Edwards if reelected could use allies like Gatti, his friend from law school days, so this created another imperative to do a deal. Gatti, who had expressed confidence that Fibrebond would stay, can make this a campaign talking point as proof he can do things for the district.

But life last week was different for another, much larger, Louisiana corporation. Freeport-McMoRan announced a subsidiary would pay to settle a suit a minimum of $23.5 million, with as much as $76.5 million more in proceeds from the sales of environmental credits – if the company stays in state, for the deal gives it every incentive to leave by 2024 and take its remaining hundreds of jobs, far from its peak of decades ago.


The Edwards Administration, which at first tried to have the state sue companies like this for activities at one time legal and sanctioned by the state, subsequently encouraged local governments to take this course of action. A dozen parishes have, ensnaring almost 100 firms.

This will divert money to local coastal restoration, but resources to accomplish would have come from state government in the future. That’s a wash, but there are losers in that it also will encourage such companies to scale back operations in, if not leave, the state, costing jobs and tax revenues.

So, there’s only one winner out of all of this – the trial lawyers brokering these deals, who will receive huge paychecks. Which then they will give some of the bounty to candidates like Edwards and Gatti – both trial lawyers – reinforcing why this deal also comes at a good time for the governor. Having received millions in trial lawyer bucks both in the 2015 election cycle and this one directly and indirectly supporting him, Edwards can present this as a payoff to the trial lawyer lobby and justification of their faith in him.

One corporation says it will stay, another larger one begins its long goodbye to the state. Chalk it up to election year imperatives emanating from the good-old-boy system that, until voted out of office, acts as a main influence in giving Louisiana the second-worst economy among the states.



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