SADOW: Full-Frontal Cowardice And Hypocrisy On Display At The Revenue Estimating Conference

In fewer than 15 minutes, Louisianans were treated to full-frontal political cowardice and hypocrisy at yesterday’s Revenue Estimating Conference meeting.

That gathering came after the REC punted during its previous meeting last week its duty concerning the state’s unemployment trust fund. R.S. 23:1474 requires that the REC, between Sep. 5 and 30, project the balance of the fund for the beginning of next September. In doing so, it is to “consider all information, including projections and information from the United States and state departments of labor, in its analysis for [the] official projection.”

The determination affects what rates employers must pay and maximum benefit amounts payable to unemployment insurance recipients for next calendar year. If the fund has below $750 million, the former increases and the latter decreases for 2021.

And, in fact, on Sep. 1, not only was the amount far below that number – courtesy of a drain from higher joblessness triggered by economic restrictions imposed by Democrat Gov. John Bel Edwards intended to combat the Wuhan coronavirus pandemic – it was closing on in zero. State projections say it will go into the red any day now.

Unfortunately, the elected/designee members of the REC don’t want to acknowledge this, most desperately Edwards’ chief lieutenant, Commissioner of Administration Jay Dardenne, because it will make all too obvious the consequences of Edwards’ mishandling of the pandemic, which among the states has produced the worst economy and most troubling health indicators (as of the end of September ranking per capita first in total positive cases, fifteenth in current hospitalizations, and fifth in total deaths). Nor are Republicans House of Representatives Speaker Clay Schexnayder and Senate Pres. Page Cortez eager to prompt a tax hike and benefits reduction in case they receive blame for it.

Thus, when the only member not elected or designated by someone elected, economist Stephen Barnes – an appointee of the three elected members – moved to recognize the reality of a fund far below the cutoff to avoid tax hikes and benefit cuts, in fact projected at $233 million underwater, Dardenne moved in with a substitute motion to do nothing until within 10 days after the current special session expires, which remarks by Cortez previously showed he and Schexnayder backed. Although one dissenting vote would have defeated the measure, Barnes withered under this social pressure and went along with the other three to pervert the law.


There’s no reason the politicians on the panel couldn’t have followed the law. The legislators could avoid adverse publicity by getting their chambers to suspend that statute during the session and then again during next year’s regular session through the end of 2021, so had the REC recognized reality that would have had no actual impact. And Dardenne deserves special condemnation for his hypocrisy, after raising a stink beginning two years ago when Schexnayder’s predecessor wouldn’t go along with increasing revenue projections, a position that Dardenne insisted represented a politicized flight from reality, as well as earlier this year when the two GOP leaders blocked a proposed forecast, when Dardenne declared it wasn’t the panel’s job to buck the experts.

Worse, some fiscal shiftiness may come to pass. As a potential response to the fund deficit, talk has surfaced that the state ought to float a bond to cover it. But this unwisely would be for an operating expense and would have to sidestep the Constitution’s requirement that debt be incurred only to “repel invasion; suppress insurrection; provide relief from natural catastrophes; refund outstanding indebtedness at the same or a lower effective interest rate; or make capital improvements,” and slip under the net state tax supported debt limit in statute, although the Legislature could change the latter.

Almost as devious, lawmakers could take the nearly $106 million stashed away from the fiscal year 2019 surplus apportioned out earlier this year and load it into existing capital projects with general fund components, then back out that amount and flush it into the fund. Another option depends upon voter ratification of Amendment #3 on Nov. 3, which would permit a third of Budget Stabilization Fund monies for use related to a federally declared disaster.

Still, in tackling this problem that Edwards and the Legislature kicked down the road months ago when they didn’t right-size state government in the aftermath of a known revenue decline. Instead they set ablaze federal money that could have shored up the fund, throwing it into a bonfire of overinflated state recurring expenses. Policy-makers should have started with honesty, which they ditched with this REC decision, and would have avoided Dardenne’s hypocrisy.



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