What We Know About Federal Funding, Louisiana Politics And COVID-19

From a source very familiar with the legislative appropriations process, some perspective on exactly how federal funding colors Gov. John Bel Edwards’ response to COVID-19 and his recent obsession with case counts.

If you paid attention to Edwards’ most recent press conference on the virus, which took place yesterday, you probably noticed as we did that he’s very long on scolding the public about mask-wearing, but a bit short of emphasis on actually treating people who have COVID-19. Many have explained this by concluding Edwards really only cares about drawing down as much federal money as possible in order to replace state and local revenue lost to his shutdowns. Whether that’s partially or completely true, we can’t say.

What we can say, per our source, is the following…

  • Louisiana has received approximately $3 billion in direct federal aid so far. That doesn’t include money which has gone to private citizens – PPP, the boosted unemployment payments which are set to run out in a week, and stimulus checks. It also doesn’t include FEMA dollars which are still flowing in.
  • Of that $3 billion, $1.8 billion of it is CARES Act money. The state has also received funding from a number of other federal sources. Some $150 million came in from the feds that went directly to public and private universities in the state, most of which was “off the books.” Plus the $1.8 billion wasn’t the only CARES Act money which came in; there was some $280 million to K-12 schools, there were smaller grants like a $14 million chunk to the Louisiana Department of Agriculture and Forestry for emergency food bank assistance, some $15 million that went to the state’s Councils on Aging to help with Meals on Wheels programs, $24 million for a rental assistance program, $20 million for the state’s unemployment insurance pool, cash to support libraries and museums, and on and on.
  • Some $524 million of that $1.8 billion in core CARES Act funding was aimed at local governments. This is where things start to become interesting.
  • The local money isn’t supposed to be used to replace lost tax revenue, for obvious reasons – you don’t want perverse incentives leading to local governments gratuitously locking down their own economies. But with so much of the virus response handled at the state level, the lost tax revenue really is the prime fiscal effect of COVID-19.
  • So how to allocate that $524 million? Well, a formula was set up which allocated 30 percent of it to the 64 parishes based on their populations, and 70 percent of it would be allocated based on case count as of the day the funding bill was passed – which was June 1.
  • But the Legislature didn’t include the allocation table as part of the funding bill, and that gave some wiggle room to Commissioner of Administration Jay Dardenne to make changes to the case-count allocation.
  • As a result, Dardenne has turned that 70 percent pool of money into a moving target, changing total allocations as case counts change. It’s beginning to look like an arbitrary, Byzantine process by which the locals are now incentivized to find more cases of COVID-19 and spend more federal money in something like a bizarre pageant with Jay Dardenne as the judge. The money is being doled out in phases, so the competition for federal dollars is ongoing.
  • The federal government put strings on the cash, so the locals have to qualify their expenditures in order to receive that funding. As we understand it, testing is one of those qualified expenditures. So there have been nearly 1.2 million COVID-19 tests done in Louisiana, a number equal to a quarter of the state’s population.
  • The Legislative Auditor has been tasked with verifying those local government expenditures. At some point we’ll see a report on how that money is being spent. We probably won’t think very fondly of the results of that report.
  • It’s a common opinion at the Capitol that the 1.2 million COVID-19 tests have come not out of any scientific basis but purely to run up a maximum case count. Particularly since there’s a Phase 4 stimulus plan being negotiated in Congress which started in the Senate at a trillion dollars, and Edwards is busy wrangling Louisiana’s congressional delegation to seek as much of that $1 trillion in federal relief money as possible.

Nowhere in any of this is a consideration for Louisiana businesses or the state’s private sector. It took a strident, unified effort by the legislature to carve out a couple hundred million in federal CARES Act money for grants to business, which Edwards reluctantly signed after complaining that the money was coming out of the local governments’ mouths. There are now 345,000 Louisianans who have filed active unemployment claims, which means the state has a double-figure unemployment rate even after what’s being described as a mass exodus to other states the size of which we won’t be able to ascertain for months to come.

In the meantime, legislators this week were broadsided with a poll asserting that Louisiana residents were wholly behind Edwards’ handling of the virus and staunchly opposed to the petition circulating in the House with about two-thirds of the Republican delegation having signed it which would cancel Edwards’ emergency declaration and force him to allow the state to go back to normal. The poll was commissioned by Leading Louisiana, a 501(c)4 organization formed by House Speaker Clay Schexnayder and Senate President Paige Cortez, and that’s a point of contention with several legislators we talked to this week.

Why? Because those legislators think it was a push-poll aimed at discrediting the legislators who have signed the petition. They point to the third question asked in the survey, which they thought was particularly loaded…

There are a number of moving parts here, but among them a few things rankle. First, the poll leaked to Sam Karlin at the Baton Rouge Advocate almost immediately after it was released to legislators. While it’s possible that Karlin got it from one of the legislators, the ones we talked to think the leak was more direct. An Advocate article essentially marginalizing those House members who have signed the petition followed shortly thereafter.

But the poll’s second question was also a sore spot. It asked respondents whether they had approved of the performance of the state’s hospitals vis-a-vis COVID-19, which seemed a little peculiar.

The pieces come together when, as a number of legislators we talked to told us, one considers that the political consultant who is the executive director for Leading Louisiana and works with Schexnayder as his consultant also has a six-figure contract to do communications work for Franciscan Missionaries, the organization which runs Our Lady of the Lake, Our Lady of Lourdes and St. Elizabeth’s hospitals in Baton Rouge, Lafayette and Gonzales, respectively. Over the weekend there was an Advocate article quoting OLOL’s head as saying the petition would be disastrous to the state’s COVID-19 response, and that was seen as connected to the release of the poll.

Our Lady of the Lake has never been a particular political player in Louisiana. All of a sudden that hospital is all over the news. Given that Louisiana’s public sector is wholly oriented toward drawing down as much federal money as possible, the rather cozy, if not incestuous, business relationships existing between the legislative leadership, the governor and the hospitals, and the lack of any sense that Louisiana’s government is interested in reopening the economy, there’s a growing sense among members of the Republican delegation that the game is rigged for the connected at the expense of ordinary folks and they’re powerless to fix it.

How all of that shakes out is anyone’s guess, but it’s hard to see it working out well unless you’ve put yourself in position to siphon up that federal funding.



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