Political Horizons: Behind the failed promises of development incentives _lowres

Advocate staff photo by BRYAN TUCK -- Louisiana Gov. Bobby Jindal, right, holds a model of a Bell Jet Ranger X helicopter presented to him by Bell Helicopter CEO John Garrison, left, in August 2014 during a press conference at the Lafayette Regional Airport. Bell Helicopters is abandoning the Lafayette option for Montréal.

Louisiana Economic Development has long been the favorite son among state government agencies.

For at least the past decade, legislators have patted LED secretaries on the head, praised them and opened their wallets wide. But that may be changing.

One hint might be Sen. Eric LaFleur’s appraisal of how politicians view economic development: Everyone slapping each other on the back at project announcements, congratulating themselves as masters of the universe for landing a plant that will translate into millions of dollars for the economy and lots of jobs. “We don’t really spend a lot time looking at the details that closely,” he added.

What may make his sarcastic evaluation more ominous is that the Ville Platte Democrat also chairs the Senate Finance Committee — and he gave it minutes before taking on the job of rewriting the state’s spending plan for the fiscal year beginning July 1.

Gov. John Bel Edwards’ original budget whacked $6.2 million from LED’s $20 million appropriation. (Another $30 million is used to fund incentives.) The House replaced most of those dollars.

LaFleur said a number of legislators have voiced concern about how much economic development costs the state. The sentiment shouldn’t be misread as wanting to do away with economic development, just being more attentive to what’s being spent and how.

“We do need to change. We may have been too generous,” LaFleur said. “We’re going to try to be a little less political and a lot more critical.”

That could be considered reasonable given recent headlines.

Two weeks ago, Bell Helicopter announced that it would abandon plans to build its 505 Jet Ranger X in the $26.3 million Lafayette facility that Louisiana taxpayers helped build for them. Instead, they’re sending the work to a suburb of Montréal.

A couple of weeks earlier, Union Tank Car announced it would lay off in mid-June 224 workers from the Alexandria plant for which Louisiana taxpayers ponied up $65.2 million in incentives.

German Pellets Louisiana filed bankruptcy in February after receiving a $75 million industrial tax exemption for capital improvements under a state program for job creators.

In December 2015, Nucor Corp. announced it would shut down its St. James Parish steel mill for an undetermined length of time. The company was promised about $160 million in state incentives.

Bloomberg News reported in April that Louisiana provided $7 billion in tax breaks in 14 separate deals in the past three years.

All this during a time that Edwards was having to wrestle with a $2 billion revenue shortfall and find money to cover the popular TOPS scholarships and care for disabled children, with a Legislature unwilling to cut enough spending or raise enough taxes.

Louis Reine, head of the Louisiana AFL-CIO, says part of the present feeling of malaise about economic development comes from reality butting up against all the rosy promises. That doesn’t mean projects aren’t coming, it’s just they’re not coming as quickly as politicians had promised. But that may not be so bad, he said.

For one thing, Reine says, slowing things down helps better train the workers. Union apprenticeship programs — frozen out of the action during the previous administration — have proven over the years to be very effective in preparing workers for the tasks employers seek.

Like past economic development secretaries, LED Secretary Don Pierson also falls back on the notion that a handful of bad outcomes shouldn’t be included in the calculation about the worth of economic development programs.

Companies have announced $97 billion in projects, he said. His agency’s statistics estimated 20,745 “new, direct jobs actually created to date since 2008.”

“To cherry pick a few of the ones that aren’t doing well against literally hundreds of projects that do make good,” Pierson said Thursday while waiting a summons from LaFleur, “…Well, I think that sometimes the legislators, they do need to be concerned that we’re appropriately dealing with public funds, but I don’t think they really understand that there is a 27-page cooperative endeavor agreement with claw-back provisions in it, if (the companies) don’t meet their job targets.”

It’s part of his philosophy that the state spending on economic development is not so much spending as investment — one with protections for taxpayers in case the rosy images at the beginning of the relationship sour with time.

Still, Pierson says he understands the strain of the state’s budget deficit and the need for the department to adjust.

“We want to align Louisiana economic development and the work that we do with circumstances that we find ourselves in today,” Pierson said.

Mark Ballard is editor of The Advocate Capitol news bureau. His email address is mballard@theadvocate.com and is on Twitter @MarkBallardCNB. For more coverage of government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politicsblog/