In The News › Coastal project financing tops ballot list

Sep 19, 2006

Source: Times-Picayune

Coastal project financing tops ballot list

Coastal project financing tops ballot list
Amendments would commit to key priorities
Tuesday, September 19, 2006
By Robert Travis Scott
Capital bureau

BATON ROUGE — Voters will have a chance Sept. 30 to decide whether to approve changes to the Louisiana Constitution on a post-Katrina issue that goes to the heart of a state and national debate about how to pay for coastal restoration and hurricane protection.

Proposed Constitutional Amendment No. 1 would ensure that a possible increase in federal cash from offshore drilling would flow to coastal restoration and levee projects rather than being doled out for other purposes at the discretion of the governor and the Legislature. Proposed Amendment No. 2 would steer any future sale of the state’s tobacco settlement to the same coastal protection priorities.

Congress is debating whether Louisiana should get a larger portion of the approximately $5 billion in federal revenue annually from Outer Continental Shelf oil and gas activity offshore of the state. The state currently gets little of that money.

The core provision of Amendment No. 1 is to instruct the state to put that potential windfall into a Coastal Protection and Restoration Fund, with the expenditures dedicated to hurricane protection, coastal restoration and conservation.

“I think that sends a positive message to Congress and the nation that Louisiana is willing to put a constitutional lock-box on revenue we get from offshore drilling,” said state Sen. Reggie Dupre, D-Montegut, who authored the bill for the amendment. “This will assure the nation that the money is not going to a huge legislative slush fund.”

Broad support

In a November 2005 special session called in response to Hurricanes Katrina and Rita, Dupre’s bill passed unanimously in the House and Senate. Proposed amendments nos. 1 and 2 have been endorsed by the Council for a Better Louisiana and the Bureau of Governmental Research.

“The proposal is not only important for the immediate work of coastal restoration and protection, but also for persuading Congress to pass legislation that will provide desperately needed funding for these projects,” according to an independent analysis by the Public Affairs Research Council, which does not endorse or oppose proposed amendments.

The proposals have encountered little opposition. Dupre said some people who favor coastal restoration do not want to see that effort diluted by levee projects. PAR notes that “critics say geologic factors affecting Louisiana’s coastal erosion make restoration a futile effort.”

Under that thinking, “the alternative is to move everyone out of harm’s way, and to move New Orleans,” said Dupre, who thinks that view is unsupportable.

Creating a new fund

Amendment No. 1 would establish the new fund, which would supplant and rename the existing Wetlands Conservation and Restoration Fund, which currently holds about $131 million.

The new fund would continue to draw on resources that feed the wetlands fund, including certain mineral revenue collected by the state and cash the state gets from court settlements stemming from disputes with energy companies over severance and royalty payments. The new fund also would collect federal offshore revenue, particularly from sites more than 6 miles off the Louisiana coast.

The change would not affect federal revenue from oil and gas produced between 3 and 6 miles off the Louisiana coast that now goes to the Louisiana Education Quality Trust Fund.

Proponents for the change say the state alone cannot afford the multibillion-dollar expense of restoring the disappearing wetlands and paying the local share of massive new levee projects. Dupre said wetlands and barrier islands help buffer storm surges and the impact of hurricanes, but the state’s coastal lands are disappearing at an alarming rate.

Tobacco settlement

Proposed Amendment No. 2, based on a bill by Sen. Jay Dardenne, R-Baton Rouge, deals with the Louisiana Coastal Restoration Fund, which has no money but could receive millions in the future if the state sells more of its legal settlement with major tobacco companies.

As part of the 1998 settlement to resolve claims by 46 states, the tobacco companies are obligated to pay Louisiana one or two payments per year in perpetuity, a deal valued at $4.6 billion over the first 25 years. To get the money up front and hedge against the companies eventually failing to pay, the state sold 60 percent of that deal to investors for $1.2 billion, which was placed in state trust funds for health care and education.

If the state sells more of the its future revenue from the tobacco settlement, under current law 20 percent of the revenue would be reserved for the Louisiana Coastal Restoration Fund. Proposed Amendment No. 2 would repeal that fund and direct the money to the newly created Coastal Protection and Restoration Fund if amendment No. 1 passes. If amendment No. 1 fails, the money would go to the existing Wetlands Conservation and Restoration Fund.

To raise visibility with voters, Dupre requested that the secretary of state’s office place the coastal protection measures as the first two amendments on a ballot that will list 13 proposed changes to the Constitution.

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Robert Travis Scott can be reached at or (225) 342-4197.

Sep 19, 2006

Source: Times-Picayune

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