Capitol Views by Maginnis: Panel OKs merging LSUS with La. Tech
The major higher education bill of the session, to merge LSU Shreveport into Louisiana Tech, heads to the House floor after passing the Education Committee today. Pushed by civic and business leaders in Shreveport and backed by the Board of Regents and the University of Louisiana System, House Bill 964 was approved, 14-4, over the objections of LSU System leaders. Later today the House will debate the session's other big education bill, a constitutional amendment to strengthen the Board of Regents' budgetary powers over the other management boards. LSUS supporters promoted the merger as a way of saving higher education in the state's third largest metropolitan area by stemming the school's declining enrollment. "My entire life I have seen LSUS basically just subside," said Rep. Thomas Carmody, R-Shreveport. "Not only are we in that death spiral, but the coup de grāce is not far from coming." The bill's author, Rep. Jim Fannin, D-Jonesboro, called the measure "almost a local bill," stating, "People from north Louisiana have come and said this is what we want to do." Read more on the discussion of this bill today—as well as an unrelated vote by a committee to require drug tests for welfare recipients—in the full column here
.(John Maginnis will publish a daily update throughout the legislative session on
Daily Report PM. The report is also available to
LaPolitics Weekly subscribers on the Subscribers Only page at LaPolitics.com. Registration is available on the homepage.)
Louisiana Public Broadcasting is providing a daily video update featuring highlights of the session, which you can see beginning at 6 p.m. here
New condos planned for Tessier Building site
A set of 16 condos is planned for the space just behind the historic Tessier Building on Lafayette Street, architect Dyke Nelson announced this morning at the Downtown Development District's regular monthly meeting. Buquet and LeBlanc will be the general contractor on the project, which is slated for a groundbreaking in June or July. Three apartments in the recently renovated building, said to be the oldest commercial building in Baton Rouge, already have secured tenants, Nelson says. Other items of note discussed at this morning's DDD meeting include:• The owners of The Office plan to open Restaurant IPO in the space below the bar at 421 Third St. Scott Varnedoe, Stroubes' executive chef, is a consultant on the menu, which will feature international food with a Southern twist.• Brian Marshall, CEO of the Capital Area Transit System, thanked DDD meeting attendees for their support of the recently passed transit tax, but cautioned them that the system still faces a deficit in 2012, which he says will be a "status quo year." The system will begin buying a variety of new vehicles when it has access to the new funding in 2013, preparing for a "real rollout" in 2014, Marshall says. —David Jacobs
DMC Carter Chambers to build new headquarters in B.R.
Gov. Bobby Jindal joined officials from DMC Carter Chambers today to announce the company's plans to spend $10 million to build a new 90,000-square-foot headquarters facility on a lot next to the company's current headquarters at 19151 Highland Road. The project will include consolidating the existing headquarters with its Gonzales and Prairieville operations, and is expected to create 80 new jobs over the next nine years, as well as retain 128 existing jobs. Louisiana Economic Development—which is providing DMC with a performance-based $600,000 Economic Development Loan Program award and a $400,000 Modernization Tax Credit, along with customized job screening, hiring, and training services through its FastStart program—estimates the project will also create 155 new indirect jobs. DMC is also expected to utilize the state's Quality Jobs and Industrial Tax Exemption programs, LED says. "The company looked at relocating the Baton Rouge headquarters to Houston, where its parent company is based," Jindal says in news release. "Ultimately, the company decided to not only stay in Baton Rouge, but to expand their operations because of their strong and dedicated workforce and the tremendous support of our local and state economic development allies." Construction of the new facility will begin this year and be completed by next fall. In addition to corporate offices, the new headquarters will be home to 17 employees moving from the company's Gonzales distribution center and 12 employees moving from its Prairieville filtration center. Altogether, DMC Carter Chambers—a subsidiary of Pon Holdings BV of The Netherlands—oversees 486 employees in multiple states.
Budget proposes $71M in cuts to Louisiana colleges
Louisiana's public colleges face cuts of at least $71 million in next year's budget proposal, which awaits debate on the House floor this week, and higher education leaders will be pushing a bill to allow schools to raise new fees on students to cover the gap. Commissioner of Higher Education Jim Purcell says he received an estimate Monday of what cuts colleges and universities would take if the budget passes in its current form. Colleges had been proposed for standstill funding next year, but that was before the state's income forecasts fell more than $300 million. The House Appropriations Committee rebalanced the budget proposal to account for the revenue loss, levying cuts most heavily on higher education. Purcell says the governor's financial analysts foresee higher education being slashed by $71 million in the fiscal year that begins July 1. And that gouging could worsen if lawmakers make cuts to deal with a deficit in the current year or refuse to use some of the financing plans proposed for next year. "It does put us in a very difficult situation. My concern is that for some of the campuses it would be very painful," he says. In response, higher education leaders are working on a proposal to allow campuses to boost student fees by up to $25 per credit hour—which could raise as much as $107 million a year. Purcell says the idea could come up for debate in the House Education Committee on Wednesday. Read the full story by The Associated Press here
Metro Council to take up downtown library design contract Wednesday
At its regular meeting Wednesday, the Metro Council will once again take up the yearlong saga that's been the awarding of a design contract for the new downtown library. A city-parish committee on May 19, 2011, chose a joint venture by WHLC Architecture of Baton Rouge and Boston-based Schwartz/Silver Architects to design the library—for which the Metro Council had previously approved a $19 million allocation—but the deal has yet to be inked. In the meantime, local architect Trey Trahan has alleged the selection process was corrupted and threatened to file suit if the process was not restarted. The city-parish has nonetheless moved forward, with its capital improvements committee last week voting to recommend that the Metro Council award the contract to the WHLC-Schwartz/Silver venture. According to the agenda for Wednesday's meeting, the contract is not to exceed $1,516,847. Also on the agenda is a contract with Looney Ricks Kiss Architects for limited design services on the library planned in the Rouzan development off Perkins Road. That contract is not to exceed $49,800. The Metro Council convenes at 4 p.m. at City Hall, 222 St. Louis St. You can see the complete agenda here
Stanford investors soon may claim a small part of losses
People who lost money in the R. Allen Stanford investment scheme could see a plan in place by year's end to begin recouping a fraction of their losses, an attorney for the court-appointed receiver says. "There's now a structure and a process for those who have claims," says Kevin Sadler of Baker Botts, lead counsel for the receiver, Dallas lawyer Ralph Janvey. As reported by The San Antonio Express
, U.S. District Judge David Godbey of Dallas, who is overseeing the receivership, on Friday approved a formal claims process that sets a Sept. 1 deadline for those who have not previously filed a claim. Sadler calls the ruling a "key milestone" because it allows Janvey to get an accurate count of how many claims are out there. Once the deadline passes, Janvey can prepare a recommendation for how to distribute the money. But Angela Shaw, a defrauded investor and the founder of the Stanford Victims Coalition, downplayed the significance of the ruling. It's merely a formality, she says, something that "has to happen." Shaw's concern is that investors—many already confused not only by the intricacies of the $7 billion fraud scheme but also by the various groups injecting themselves into the fight over assets—will think the ruling means a check is imminent. In addition, when that check comes, she says, it could be for as little as 2.5 cents on the dollar after the receiver's fees and costs of distributing the money are deducted. "The investors can't win for losing in this case," she says. Read the full story, which includes information on how to file a claim for those who have not yet done so, here
'Real Estate Weekly': BRAC and LED helping prep sites for project pipeline
The Capital Region missed out on at least three project deals over the past year because there wasn't an appropriate site ready to be developed quickly enough, says Iain Vasey, executive director of the Baton Rouge Area Chamber's Business Development Group. To prevent that from happening again, BRAC and other regional economic development groups are partnering with Louisiana Economic Development to compile a roster of "certified" sites: those that are shovel-ready and with a clear path to ownership. Vasey says a prospect often wants to identify a site and get it under control in less than a month, with an eye toward beginning construction in 60 to 90 days. Of the 20 sites currently listed as certified by LED, two are in the Capital Region (both are in Ascension Parish). BRAC's goal is to add 10 more Capital Region sites this year and 40 more over the next four years. Vasey says 16 regional sites are in various stages of the process. Sites with deepwater Mississippi River access are in particularly high demand. Certification can be a useful marketing tool for a willing seller. Vasey says certification might cost from $5,000 to nearly $30,000 per site, depending on how much work already has been done, although BRAC and the parish where the site is located may be willing to share the cost. For a recent Business Report
story about the program, click here
. —David Jacobs
Read the rest of the new Real Estate Weekly
Credit firms call for 'mobile wallets' at cellphone trade show in N.O.
CTIA Wireless—the U.S. cellphone industry's annual trade show that begins today in New Orleans—is drawing heavy participation, not just from those in the cellphone industry, but also from MasterCard, Visa and other companies in the business of moving money around. At a pre-show event Monday, MasterCard unveiled a suite of services to enable "mobile wallets," secure applications that run on phones and can hold virtual payment cards, transit tickets, coupons and other valuables. The credit card companies are hoping to stake a claim in what the industry expects to be a world where cellphones take over some of the functions of regular wallets. A handful of phones can already be used on payment terminals in drugstores and fast-food restaurants, but wide adoption is probably still years away. Gary Flood, president of global products and solutions at MasterCard, is to speak at the trade show today, followed by John Partridge, president of Visa, on Wednesday. In other pre-show news in the industry, T-Mobile USA announced this morning that Ericsson and Nokia Siemens Networks will supply the network equipment for its new "4G LTE" network, a $4 billion project. Complete details on the trade show, which is expected to feature up to 1,000 exhibiting companies over three days, are available at its website here
Maginnis: Nothing neat about balancing the budget
As the state House of Representatives takes up the budget this week, it has been four years since lawmakers have seen a surplus. For new members, that bygone concept seems as mythical as the unicorn. With revenue projections declining and costs—particularly Medicaid—ever rising, there is no simple way, despite rhetorical claims, to make ends meet. The state's fiscal situation may be bad but could be a lot worse. Or, as former House Speaker Jim Tucker would say, "I'll take a budget crisis over a cash-flow crisis any day." He could read a balance sheet to see that while the state is running deficits in the general fund, it is sitting on other piles of cash. The most useful such pile is the so-called rainy day fund, or Budget Stabilization Fund. Up to one-third of its $647 million balance can be tapped, just enough to cover the $211 million shortfall for the fiscal year ending June 30. Estimating revenues for months to years in advance is not rocket science; it's harder, especially with an economic recovery that stubbornly is not living up to Gov. Bobby Jindal's peppy rhetoric. To take from that fund requires two-thirds legislative approval, and some fiscal conservatives are dead set against it, even if not one of them has come up with a reasonable or unreasonable alternative solution to apply in the next seven weeks. The state has no business keeping a savings account when there are bills to pay, so legislators need to get over their qualms and make the withdrawal. Read the full column here
. (John Maginnis publishes
LaPolitics Weekly, a newsletter on Louisiana politics, at LaPolitics.com.)
Freddie Mac to do away with fee for deeply underwater loan refinancing
In the latest bid to help homeowners hit by the housing crash, Freddie Mac, the U.S.-supported mortgage giant, is set to drop a fee associated with refinancing deeply underwater loans, The Wall Street Journal reports. The firm plans to eliminate a fee of 0.5 percentage points, called a "cash adjustor," on loans refinanced under the Home Affordable Refinance Program with balances greater than 125% of the property's value, says Paul Mullings, a senior vice president at Freddie Mac. He spoke at a Mortgage Bankers Association conference on Monday. Dropping the fee represents the latest sign that the government-sponsored enterprises and their regulator are determined to extend the reach of the refinancing program. Changes last year eliminated the loan-to-value cap and relieved banks of some liabilities that could arise with homeowners willing to default. Freddie Mac had earlier this year dropped the cash adjustor on HARP refinancings for mortgages with loan-to-value ratios ranging from 105% through 125%, and encouraged the lenders to pass the savings to consumers. Mullings expects the change should increase the number of borrowers who tap the program, which was revised last year to boost participation. Already this year, refinancings under HARP are increasing as a percentage of loans refinanced by Freddie Mac, he says.
Officials warn multiple pipeline companies of cyber attacks
Hackers have been targeting computer networks managing natural gas pipelines in a series of cyber attacks over the past several months, according to several media outlets. The Department of Homeland Security has been warning multiple pipeline companies of a "gas pipeline sector cyber intrusion campaign," according to Christian Science Monitor. Peter Boogaard, a spokesman for the agency, told The Hill that Homeland Security officials are working with the FBI and other federal agencies to ward off the attacks, which appear to have started in December 2011. It has also been reported that the attacks were "related to a single campaign from a single source." It was unclear what pipeline companies might have been targeted or what—if any—damage might have been caused by the ongoing attacks. The attacks are reportedly coming in the form of emails to specific employees at pipeline companies. The emails have been carefully crafted to appear to be sent from a close associate and typically contain a malicious software attachment or link that could give hackers a way to enter the computer system. The attacks come as Republicans and Democrats debate whether to require companies to meet minimum cyber security standards. Democrats and the White House have argued those standards could protect the vital pipeline network from potentially devastating cyber attacks, but Republicans say the mandates are unnecessary and would burden businesses.
U.S. to make a $15B profit from AIG bailout
A new report from a congressional watchdog panel says the U.S. government stands to make $15.1 billion profit from the bailout of insurer American International Group. The Government Accountability Office says the exact size of the profit will be determined by the long-term health of AIG, as well as the timing of the U.S. Treasury's sale of its stock and AIG's share price. The GAO says AIG was showing signs in 2011 that it was becoming "stable and profitable," with net income of $18.5 billion for the year, bolstered by income tax benefits and divested businesses. The Treasury's exposure to AIG, which received government aid beginning in 2008, has been reduced sharply from the more than $180 billion committed to the bailout. In the latest sale of AIG stock, the Treasury reported Monday that it plans to sell about $5 billion worth of common stock, reducing the remaining investment to $30.7 billion. The GAO says it conducted the study because assistance to AIG from the Treasury's Troubled Asset Relief Program and the Federal Reserve "represented one of the federal government's largest investments in a private-sector institution." AIG was bailed out due to its exposure to the faltering mortgage market during the recent housing meltdown. See the complete report for more details here
News roundup: Government cuts summer gasoline price forecast … U.S. employers posted 3.74 million March jobs … Ledet competes for top 3 spot on 'Idol'
Small change: The government says gasoline will be cheaper this summer than previously expected, thanks to a drop in the price of oil. The Energy Department says drivers should pay an average of $3.79 per gallon at the pump from April through September. That's down 16 cents from last month's outlook and not that dramatic an increase from last summer's average of $3.71 per gallon. This month's forecast is a reversal from previous warnings of a sharp rise in gasoline prices. The government said last month that gasoline prices in May could jump above a monthly average of $4.01 per gallon. Oil prices have dropped about $7 per barrel since April 2. The national average for gas has declined 17 cents since early April to $3.76 per gallon today.Help wanted: U.S. companies in March posted the highest number of job openings in nearly four years, a sign that hiring could strengthen in the coming months after slowing this spring. The Labor Department reports today that employers advertised 3.74 million job openings in March. That's up from a revised 3.57 million in February and is the most since July 2008, just before the financial crisis erupted. Even with the increase, roughly 12.7 million people were unemployed in March. That means an average of 3.4 people competed for each open job. While that's far better than the nearly 7-to-1 ratio calculated when the recession ended, in a healthy job market the ratio is usually around 2 to 1.Geaux, Joshua: Louisiana's Joshua Ledet, one of the last four contestants standing on American Idol, just needs to wow the judges one more time to bring the show to Louisiana. If the 20-year-old gospel singer from Westlake, near Lake Charles, makes it to the final three, the Fox singing competition will bring the show to southwest Louisiana to film Ledet as he greets fans and is reunited with his family. Ledet and the three remaining finalists perform Wednesday night. Viewers across America are given two hours to vote for their favorites, and the results show airs Thursday night at 7 p.m.
News roundup: Jindal signs private school tuition tax break … B.R. firm lands contract to build $32.5 million student union at SLU … Trilingual vacuum robot utters witty dialect
On the books:
Gov. Bobby Jindal has signed into law a bill to create a new tax break program providing rebates for donations to voucher programs that allow students to attend private schools. Jindal says it will give children in failing public schools more opportunities to get an improved education. He signed the measure Monday. The tax break begins with the 2013-14 school year. The bill provides a nearly dollar-for-dollar state tax rebate to individuals and businesses donating money to nonprofit organizations that give the private school scholarships to students. Opponents say the tax break program will damage public education in the state by siphoning off children to private schools and taking dollars away from public schools.Big time:
Lincoln Builders of Baton Rouge Inc. has been selected by Southeastern Louisiana University—through its affiliate, University Facilities Inc.—as the contractor on the $32.5 million expansion and renovation of the SLU Student Union building on the Hammond campus. The three-phase construction project will include a new 87,000-square-foot addition to house dining operations on three floors, as well as renovation of the existing 89,000-square-foot War Memorial Student Union, originally built in 1964, and the renovation of the Student Union Annex, which was built in 1981. Holly & Smith Architects of Hammond is the design firm on the project. The expected completion date is October 2014.'Cool and feeling good':
It looks just like iRobot's Roomba vacuuming machine, except the new circular roaming vacuum cleaner from Sharp Corp. is trilingual, and even knows a hip, humorous dialect. Cocorobo, which can also send photos taken from your home to your cell phone, says 36 phrases, including "Long time no see" and "Hello," in Japanese, English and Chinese. The Japanese electronics maker says the robot also speaks the Kansai dialect of southwestern Japan widely viewed as more comical and witty than standard Japanese. The machine answers, "So good," when asked, "How's it going?" In the Kansai dialect, it replies the equivalent of, "I'm cool and feeling good." Sharp is based in Osaka, where the Kansai dialect is spoken. The dinner plate-sized robot sells for about 130,000 yen, or about $1,600. Check out a video of it in action here
. Today's poll question:
Will you start donating, or increase your existing donation, to school voucher programs in light of the new tax break?
Capitol Views: Panel OKs merging LSUS with La. Tech; drug testing for welfare recipients clears committee
The major higher education bill of the session, to merge LSU Shreveport into Louisiana Tech, heads to the House floor after passing the Education Committee today.Pushed by civic and business leaders in Shreveport and backed by the Board of Regents and the University of Louisiana System, House Bill 964 was approved, 14-4, over the objections of LSU System leaders.Later today, the House will debate the session's other big education bill: a constitutional amendment to strengthen the Board of Regents' budgetary powers over the other management boards.LSUS supporters promoted the merger as a way of saving higher education in the state's third largest metropolitan area by stemming the school's declining enrollment."My entire life I have seen LSUS basically just subside," said Rep. Thomas Carmody, R-Shreveport. "Not only are we in that death spiral, but the coup de grāce is not far from coming."The bill's author, Rep. Jim Fannin, D-Jonesboro, called the measure "almost a local bill," stating, "People from North Louisiana have come and said this is what we want to do."He also framed the merger within the state's fiscal problems, calling it a way "we can reduce costs to taxpayers and elevate higher education standards." Fannin was challenged on that point by committee members who cited transition costs of over $1 million and indeterminate long-term savings.Fannin answered, "Sometimes you have to spend money to save money," adding that savings would come through combining administrative positions.Leading the opposition was the old, but new, face of LSU, Interim President Bill Jenkins, the former president who came out of retirement after last week's firing of system President John Lombardi. Jenkins restated LSU's position that it has been the Board of Regents, not the system office, that has denied new programs to the Shreveport school.The bill's next hurdle will be higher: a two-thirds required majority in the House, where last year's effort to merge the University of New Orleans and Southern University New Orleans failed.—The perennial effort to require random drug testing to one-fifth of welfare recipients heads for another debate on the House floor, after clearing the House Health Committee today.Under HB 380 by Rep. Sherman Mack, R-Albany, one in five applying for the payments from the Family Independence Temporary Assistance Program would undergo a drug test. Those who fail would have benefits suspended for 90 days while they seek treatment. If they fail a second test, they would not be able to apply again for assistance for one year.About 3,500 adults receive FITAP payments averaging $192 per month, according to testimony from the Department of Health and Hospitals."They are taking that money intended for kids and using it for illicit activities," Mack said.Mack was challenged by Rep. Katrina Jackson, D-Monroe, to show how the current system, in which all applicants are screened by interview, is not working. He answered that it was the top issue raised in his election campaign in his rural-suburban district that is 94% black.
Nothing neat about balancing budget
As the state House of Representatives takes up the budget this week, it has been four years since lawmakers have seen a surplus. For new members, that bygone concept seems as mythical as the unicorn.With revenue projections declining and costs—particularly Medicaid—ever rising, there is no simple way, despite rhetorical claims, to make ends meet. The state's fiscal situation may be bad but could be a lot worse. Or, as former House Speaker Jim Tucker would say, "I'll take a budget crisis over a cash-flow crisis any day." He could read a balance sheet to see that while the state is running deficits in the general fund, it is sitting on other piles of cash.The most useful such pile is the so-called rainy day fund, or Budget Stabilization Fund. Up to one-third of its $647 million balance can be tapped, just enough to cover the $211 million shortfall for the fiscal year ending June 30.Estimating revenues for months to years in advance is not rocket science; it's harder, especially with an economic recovery that stubbornly is not living up to Gov. Bobby Jindal's peppy rhetoric.To take from that fund requires two-thirds legislative approval, and some fiscal conservatives are dead set against it, even if not one of them has come up with a reasonable or unreasonable alternative solution to apply in the next seven weeks. The state has no business keeping a savings account when there are bills to pay, so legislators need to get over their qualms and make the withdrawal.That's the easy part. For the budget year starting July 1, the Revenue Estimating Conference, hoping not to be caught short again, has downgraded projections by another $304 million. That goes on top of the $895 million difference in projected expenses and expected revenues. It is slightly less horrible than it seems, for an added $200 million in state money would attract over $500 million in federal Medicaid matching funds, covering most of the problem.To cover it all, in addition to new spending cuts, the latest plan calls for using about $346 million in so-called one-time money, which conservative legislators and others, including Sen. David Vitter, say is irresponsible. This is not the first time we have had this argument. Every budget debate for the last four years has come down to a dispute over how much, if any, one-time money should be used.That running controversy should tell us something: There is nothing more constant in state budgeting than one-time money—there is always some available. The kicker is that most of what is labeled "one-time" is not at all. Most of it comes from sweeping the unused balances of dozens of special funds—more piles of cash—which are replenished annually with dedicated taxes and fees. Does it make sense to call money "one-time" when it is there every year?This year's sweeps range from $20 million not spent by the New Orleans convention center authority to $183,949 in the Louisiana Filmmakers Grant Fund on down to $13 vacuumed from the Teacher Educational Aid for Children Fund.Some sweeps hit politically sensitive nerves, like the $766,044 taken from—but then restored—to the Boll Weevil Eradication Fund. Business groups rallied against money being taken from funds into which they pay for state regulation. Local governments don't want their locally raised funds to be swept. Sometimes legislators have gone along, sometimes not.Every fund has a story of what won't get done if the state seizes dollars not yet spent. But there is a larger story of what happens to higher education and health care, which have no dedicated funding. Those protesting these fiscal fixes the loudest are silent on what specific cuts to make instead to programs and services. Without suggesting to college officials how to do so, the Appropriations Committee last week ordered another $50 million excised from campus budgets. Is that any more responsible than taking unused balances from a wide array of dedicated funds?Balancing budgets in hard times is messy business. There is a place, not here, for those who would stand on principle and never stoop to compromise. It's called Congress, which has not passed a budget in over two years or balanced one in the last 10. Since this Legislature and governor won't raise taxes, don't agree on deeper spending cuts and can't print money, they are doing what they can.