Critics of the Jindal administration say the governor’s $25 billion proposal to pay the bills next year includes a good bit of “money laundering.”
“In Zachary, where I grew up, we would call this bull****,” State Treasurer John N. Kennedy, said of the accounting gimmicks the administration used this year and over the past few.
C.B. Forgotston, the blogger who once was the lawyer of the House Appropriations Committee, says Gov. Bobby Jindal is trying to boost sagging poll numbers prior to a presidential bid with “the Coastal Fund money-laundering machine.”
“They’re getting around the law by changing the color of the money. That’s money laundering,” said state Rep. Brett Geymann, the Lake Charles Republican who heads a faction of the legislature that wants the administration to embrace the spirit of responsible budgeting, not just technically comply with the rules.
Money laundering usually is associated with drug traffickers and gangsters trying to disguise the origins of their money. Federal prosecutors describe three steps: “Placement,” slipping the tainted money into an accepted institution; “layering,” transferring and mixing the money with untainted cash; and “integration,” putting the money whose origins are now obscured back into circulation.
In a report that launched a thousand criticisms, the Legislative Fiscal Office took 13 pages — including a diagram that looks like a computer chip schematic — to describe the governor’s accounting methods.
Basically, state law forbids government officials from spending “one-time” money on everyday expenses that recur year after year. “One-time money,” also called “nonrecurring revenue,” sounds like what it is: Found cash likely to be unavailable next year — winnings from a lawsuit, for instance.
The idea is for government officials to use “recurring revenue,” like tax proceeds, to pay for ongoing expenses — say, employee salaries. Use the one-time money to pay for nonrecurring expenses, such as building a bridge.
In his 2015 budget proposal, the governor allocated $300 million of nonrecurring revenue into various funds. One fund pays down the state’s debt. Another is the Coastal Protection and Restoration Fund, which eventually will be used to rebuild Louisiana’s fast-eroding wetlands and is slotted to receive $51 million.
The fear is that the money sent to the Coastal Fund will then be transferred to the “Overcollection Fund.” There are some limits on the handling of one-time money versus recurring revenues, but generally, money in the Overcollection Fund can be appropriated to pay ongoing expenses, such as for higher education and for the state Department of Health and Hospitals, called DHH.
The actual mechanism used to start the process is called the “funds bill,” which generally pops up late in the legislative session to authorize the transformation that converts one-time money into revenues that can be spent on recurring expenses.
“Projections of the LFO and past history suggest the (Coastal Fund) money will end up going to DHH,” said Robert Travis Scott, who heads the Public Affairs Research Council of Louisiana. Better known as PAR, the Baton Rouge-based group researches and opines on government policies.
“I would rather head it off now, than talk about it when it happens. You can’t raise it during the final minutes of the legislative session,” Scott said.
Commissioner of Administration Kristy Nichols, Jindal’s top financial aide, has testified that the proposed budget didn’t use one-time money for continuing expenses. Her spokesman, Doug Baker, last week told The Associated Press that the Coastal Fund swap would help avoid cuts. “This policy allows us to maintain our investments in higher education, health care, and our state’s infrastructure without raising taxes on Louisiana families,” he wrote in an email.
Treasurer Kennedy points out that the Coastal Fund is poised to receive billions of dollars in federal funds and from the various settlements surrounding the Deepwater Horizon oil spill. He says Congress, BP and the rest of the country could look at Jindal’s fund swap and conclude that coastal restoration is not a priority for Louisiana.
“If the administration would stand up and say, ‘Privatization of the hospitals is more important than coastal restoration,’ then I would respect their candor. But that’s not what they’re doing,” Kennedy said. “This is why people hate government. Just tell me the truth.”
Mark Ballard is editor of The Advocate Capitol news bureau. His email address is email@example.com