Cash Cows

Bobby Jindal has spent the past few years arguing that Louisiana cannot accept federal funds for Medicaid expansion now in fear that it might increase the financial burden on the state at some point in the future.  This week, the Legislature agreed with the Governor for the third year in a row and rejected the expansion.

But opponents argued that the expansion would be a financial drain on state coffers over time. Phillip Joffrion, state director of the Americans for Prosperity, pointed to the escalating expenses as more people are being covered in Medicaid expansion states than originally projected.

In addition, Rep. Richard Burford, R-Stonewall, said Louisiana should not depend on the federal government as “a cash cow.”

The state of Louisiana is currently facing a $1.6 billion fiscal crisis. In December, a legislative auditor determined that state Medicaid expenses alone had increased by $900 million since Jindal's  privatization scheme (itself the source of an indictment of Jindal's former Health and Hospitals Secretary) went into effect.

But no matter.  We don't need any help from the federal government to sort this out.  Never a borrower or lender be... or something like that.

On the other hand, we would very much like to be borrowers.  How else to explain the massive payday loan Jindal hocked the state's tobacco settlement for.

At 5 p.m. on Friday, March 13, Jindal's office announced the appointment of four members to a state-run corporation that oversees Louisiana's tobacco borrowing. Four days later, the corporation's 13-member board held a hastily called meeting to approve a $750 million deal with the help of Citigroup.

That didn't sit well with Treasurer John Neely Kennedy, also a Republican, who sits on the board along with Jindal's appointees and other statewide elected officials. "This is about the last savings account left that we haven't taken money from," Kennedy complained at the March session.

The deal would pledge 40 percent of Louisiana's annual tobacco settlement revenues in bond repayment that would stretch out nearly 30 years. In 2001 and 2013, the state borrowed against the other 60 percent of its tobacco settlement money, netting about $1.2 billion. Citigroup served as an underwriter in 2013.

Turning recurring revenues like the tobacco money into upfront payouts is widely considered poor fiscal management.

"You're borrowing money from the future to pay today's expenses. That's how we got into this problem, and this is only kicking the can down the road and paying interest on top of it," said Steven Procopio, Policy Director for Public Affairs Research Council of Louisiana, a Baton Rouge research group that has studied the state's financial woes.

Can't "depend on the federal government to become a cash cow" in order to fix Jindal's mess.  But somehow Citigroup is fine.