Business of Politics

Setting the Stage

by Jeremy Alford

Gov. Bobby Jindal’s decision to turn down part of the stimulus package is pitting Democratic lawmakers against business and industry. What Democratic lawmakers describe as a hidebound decision by Gov. Bobby Jindal is viewed by business interests as smart policy. His decision to refuse part of the massive stimulus package being offered up by the feds is earning the high-profile Republican more critics — and more fans.

A group of state lawmakers recently held a teleconference to plot against Jindal and raise awareness about their opposition. They want to go over the governor’s head during the upcoming regular session to create a soft spot for the money to land. If nothing else, it sets the stage for what promises to be an interesting battle in the next few months.

Sen. Butch Gautreaux, a Morgan City Democrat who serves in Jindal’s leadership as chairman of the Senate Retirement Committee, complains the governor is merely positioning himself for national publicity. “There’s no question in my mind that it’s all political and this is about the governor’s presidential interests,” Gautreaux says. “I support the whole stimulus package, as do many others. Jindal is absolutely incorrect on this. It’s all Rush Limbaugh speak. It’s misinformation.”

President Barack Obama’s stimulus package directs about $3.8 billion to Louisiana in aid and tax breaks, but Jindal was the first Republican governor last month to announce his plans to turn down roughly $98 million meant for unemployment assistance. Since then, Govs. Haley Barbour of Mississippi and Mark Sanford of South Carolina have likewise put the gris-gris on their states’ shares.

Jindal says the cash comes with costly strings attached that would require the state to change its laws and possibly hike certain taxes. Democratic members of the Legislature, however, say they’re prepared to insert the money into the state budget anyway when the upcoming session begins in late April. Some lawmakers are also filing the necessary legislation needed to alter Louisiana’s unemployment laws per Obama’s instructions.

Gautreaux, for one, says the changes could always be reversed later if there’s a negative impact. “The stimulus package doesn’t call for a permanent change in law,” he says. “The fact is that every law can be repealed.”

Rep. Kevin J. Pearson, a Slidell Republican who supports Jindal’s decision, admits this could be a possibility, although he would oppose any such effort. “I would be very reluctant to take money that creates new taxes on companies for future years,” he says. “Once you give something like this, it’s tough to take it away. The only way to do it would be sunsetting it to go away in two years.”

If lawmakers do act independently, Jindal could always use his veto authority to squelch the effort. Then it would be up to the Democratic-controlled Legislature to go into a veto session to override the governor. A two-third majority from both chambers would be needed to erase Jindal’s ink.

But lawmakers won’t only be fighting Jindal. Business and industry considers the idea a bad one as well, and lobbyists argue that the stimulus legislation not only forbids lawmakers from repealing the necessary laws, but that the U.S. government might ask for its money back should that happen.

Renee Baker, the Louisiana director of the National Federation of Independent Business, says once the stimulus money runs out, Louisiana would have to raise payroll taxes in order to fund the expanded benefits. “Gov. Jindal is doing the right thing by refusing $98 million for federal unemployment assistance,” says Baker. “It’s hard to turn down that kind of money, especially when so many people are telling you to take it, but Gov. Jindal is right when he says the money comes with too many strings attached.”

According to the Louisiana Association of Business & Industry, there are actually three provisions in the stimulus package regarding unemployment compensation. The first adds six extra months of emergency unemployment compensation benefits, which the feds would bankroll. The second calls for an extra $25 per week in benefits through June 30, 2010 — another perk funded with federal dollars.

The third provision is the one rubbing folks the wrong way. It would transfer pro-rata shares of $7 billion to states from federal unemployment compensation taxes paid exclusively by employers. States will receive this money only if they enact new unemployment laws (only 18 states, none of which is in the South, already have the laws on their books).

The stimulus package outlines four possible law changes, but states only have to adopt two of them to get their dough. The first set would ensure that individuals would not be denied benefits because they refuse to work or aren’t searching for full-time work, or if they quit work for a “compelling family reason” over which the employer has no control. The third possible law change would allow individuals to receive an additional six months of benefits if they enroll in state-approved or federal workforce training. The final law change proposed in the stimulus would create dependent allowances of at least $15 per dependent.

Jindal, most state Republicans and business interests are opposed to all of the potential changes. Dan Juneau, LABI’s president, says the purpose of the unemployment compensation system has always been to provide assistance to workers who lose their jobs because of what happens at the workplace and not at home, and who genuinely desire to rejoin the workforce. “Adoption of the expensive expansions in the stimulus package would constitute a significant departure from this,” he says.

The business community’s top argument against the proposed laws — or “expansions,” as they call them — involves protecting the solvency of Louisiana’s unemployment fund. While a new group of individuals would get benefits under Obama’s plan, Juneau and others contend that unemployed individuals in Louisiana who are already eligible might see their benefits reduced. “This is not free money,” Juneau says. “It comes at a price.”