After years of using gimmicks to patch holes in the state budget, Gov. Bobby Jindal’s latest proposal to sell future revenues of the state’s 1998 tobacco settlement seems like another exercise in political expedience. Critics of Jindal’s fiscal policies have good reason to be skeptical.
Basically, the state would sell bonds to quickly get $750 million, then repay those loans with the proceeds that the tobacco companies would pay over the years. State officials borrowed against 60 percent of the annual revenue from the tobacco settlement in 2001. Jindal’s plan would sell bonds against the remaining 40 percent.
The state would use 80 percent of the lump-sum money to help pay for TOPS, the popular college tuition-paying program that is formally known as the Taylor Opportunity Program for Students. Twenty percent of the proceeds would go to fund coastal restoration projects.
“It is a method of borrowing from the future to pay for today’s expenses,” the nonpartisan Public Affairs Research Council concluded, saying the sale process is being rushed by the administration.
To advance the deal, Jindal’s Division of Administration rehired the consultants used for the 2001 sale of the first chunk of the tobacco settlement. Why not hire this know-how through a competitive bid process?
“The consultants might perform well for the state, but the noncompetitive way they were hired could injure public confidence,” PAR comments. “The deal also provides another example of how the administration is inconsistent about when to pursue contracts with competitive bidding.”
That’s a polite way of saying the administration is doing something to get its own way, despite the proprieties, even as it criticizes agencies like the state Department of Education for doing the same thing on new state test contracts. The inconsistency underscores Jindal’s willingness to put politics above principle, a guiding theme of his governorship.
PAR is not alone in questioning the tobacco sale.
State Treasurer John N. Kennedy says the process is being fast-tracked — and that the costs and benefits should be much more closely examined. He said the proposal “will only add to our structural deficit, and, besides, what will we do next once the money is gone?”
The Tobacco Settlement Financing Corporation Board must sign off on Jindal’s proposal, but most of the board’s members are appointed by the governor and serve at his pleasure, thus greasing the wheels for Jindal’s plan. The Louisiana State Bond Commission also must approve the deal.
Officials should do what they can to force a real inquiry into the tobacco settlement sale before it becomes a reality.