Number

Description

BGR Position

1.

Expand the scope of fiscal-only legislative sessions, and allow tax reduction bills in non-fiscal sessions.

Oppose

2.

Tobacco settlement trust fund.

Support

3.

Allow biennial state budgets.

Support

4.

Allow supplemental pay for levee, bridge, and port police.

Support

5.

Donation of surplus property to public safety agencies.

Oppose

6.

Donation of asphalt removed from state roads to local governments.

Oppose

7.

Maintain university funding when a community college begins classes nearby.

No position

8.

Limit automatic pardons only to certain first time felonies.

No position

9.

Repeal authority for a separate school district in part of Rapides Parish.

Support

10.

Tax assessment freeze for restoring blighted residential property in New Orleans.

Support

# 1. Expand the scope of fiscal-only legislative sessions, and allow tax reduction bills in non-fiscal sessions. (Act 1391)

BGR Position:

Oppose.

Explanation of Amendment:

Under a 1993 constitutional amendment supported by BGR, annual legislative sessions alternate between fiscal only sessions and general non-fiscal sessions. The proposed amendment would allow legislators to prefile up to five non-fiscal bills each in fiscal sessions, adding as many as 720 bills to the calendar. The amendment would also allow bills that reduce tax liability in non-fiscal years. The Governor would retain his existing power to call special sessions. The amendment also makes administrative changes in the length of sessions and the timing of introductions.

Rationale for BGR Position:

Since the proposed amendment would undermine the purpose for which BGR initially supported fiscal only sessions, BGR opposes this amendment.

Treating all fiscal matters at one session allows legislative concentration on revenue and expenditure issues. The amendment would allow the introduction of up to 720 additional bills on non-fiscal matters, which are likely to divert attention from critical fiscal matters.

In spite of Louisiana’s untidy habit of requiring special sessions, separating subject matters into two years appears to have done no harm to the legislative process. The administrative changes in the proposed amendment could be accomplished by a new amendment not carrying the negatives of the amendment as proposed.

#2. Tobacco settlement trust fund. (Act 1392)

BGR Position:

Support

Explanation of Amendment:

Louisiana’s share of the national tobacco settlement is estimated at $160 to $180 million a year. It is expected to pay $4.6 billion into state coffers over the next 25 years. The legislature’s proposal to create a trust fund with the settlement is a lengthy, complex amendment that would take effect in FY 2001.

This amendment would establish a trust fund (dubbed the Millennium Trust, composed of three dedicated funds), and a separate fund (the Louisiana Fund) limited to healthcare, research and education services. The amendment also provides the option for the legislature (by 2/3rds vote) to create the Millennium Leverage Fund. That fund would secure revenue bonds that would be retired using the spread between the fund’s investment income and revenue bond interest payments.

The distribution of the settlement proceeds to the various funds would be as follows:

FY2000

FY2001

FY2002

FY2003

FY2004 and beyond

Millennium Trust:

Health Excellence Fund

0%

15%

21.67%

25%

25%

Education Excellence Fund

0%

25%

31.67%

35%

25%

TOPS

0%

15%

21.67%

25%

25%

Louisiana Fund

100%

45%

25%

15%

25%

TOTAL OF FUNDS

100%

100%

100%

100%

100%

By 2/3rds majority, the legislature could increase the distribution of funds to the Millennium Trust by reducing the share going to the Louisiana Fund.

The State Treasure would invest the funds, with as much as 35% in stocks. With the approval of 2/3rds of the legislature, up to 50% could be invested in stocks.

Appropriations could be made only from interest, dividends, and realized capital gains on each fund, but only after deducting for the effect of inflation.

Health Excellence Fund appropriations would be limited to:

• Optimal development of children
• Innovation in advanced health care
• Comprehensive chronic disease management services

Education Excellence Fund appropriations would be distributed as follows:

• For distribution "on behalf of" private elementary and secondary school children: 15%
• To special schools (including NOCCA and the proposed Louis Armstrong High School for the Arts): $75,000 annually, plus the statewide per student average allocation to other schools.
• To independent public schools: the statewide average allocation to other schools
• For local public schools, the remaining funds would be allocated differently in two time periods:

• Through FY 2007, 30% equally to all school systems, and 70% allocated in proportion to minimum program allocations.
• From FY 2008 and beyond, distributed pro-rata based on student population.

Education Excellence Fund appropriations would be subject to the following restrictions:

• Only pre-K through 12^th grade instructional enhancements may be funded
• May not be spent on:

• Building maintenance/renovation
• Capital improvements
• Salary increases

• Recipient school must submit plans for departmental and legislative approval
• Funds may not displace, replace, or supplant state or local revenue

TOPS Fund appropriations are restricted to financial assistance to post-secondary Louisiana institutions.

Louisiana Fund appropriations are restricted to:

• Optimal development of children
• Innovation in advanced health care
• Comprehensive chronic disease management services

• Capital improvements for state health care facilities
• Tobacco-related direct health care
• Diminishment of tobacco-related injury and death

The amendment provides the option of creating the Millennium Leverage Fund. This is intended to allow the state to take advantage of a projected spread between interest on revenue bonds, and what the state could make on invested funds At current interest rates, this option could produce a slightly larger stream of available appropriations while increasing the corpus of the trust fund. However, rates in the future could affect this.

The Millennium Leverage Fund option would require a separate 2/3rds approval of the legislature. If implemented, the leverage funds’ interest, dividends, and realized capital gains, less an allowance for inflation, would be available for distribution equally to each of the four funds (Health Excellence, Education Excellence, TOPS, and the Louisiana Fund), and would be restricted to the purposes of those funds stated elsewhere in the amendment.

If the amendment is defeated, all of the settlement funds go into the Louisiana Fund under existing legislation. Appropriations from that fund are restricted to essentially the same purposes as they would be under the constitutional amendment, but a simple legislative majority could change this restriction.

Rationale for BGR Position:

The amendment places settlement funds in trust rather than leaving them to the vagaries of the appropriations process. Although the specified uses for the funds are broadly worded, they focus on improvement and enhancement rather than routine expenditures. Further, a substantial portion of the funds would require state-approved expenditure plans. This should encourage more careful consideration of how the funds are spent.

The amendment would divert some public funds to benefit children in private schools. However, this is limited to 15% of the Education Excellence Fund, or about 4% of the total long run appropriations (based on BGR estimates).

Another concern about the amendment is that local school districts are given little flexibility in how to spend their share of the Education Excellence Fund. The prohibition on funding building maintenance, renovation, and capital improvements is undesirable to school systems with older buildings. However, the funds will be entirely "new" revenue, and should not impact the flexibility with which local districts spend their existing revenues.

The wording of the amendment is extremely confusing; even the condensed description that will appear on the ballot is about 850 words long. The amendment would add verbal clutter to the constitution. As undesirable as this is, BGR still believes that the benefits outweigh this drawback. The amendment strains to strike a balance among the many competing interests for the tobacco settlement funds. Further, considering these competing interests, it is unlikely that a more concise amendment would be crafted if the legislature tried it again.

# 3. Allow biennial state budgets. (Act 1391)

BGR Position:

Support.

Explanation of Amendment:

The proposed amendment would allow (but not require) a biennial state budget. Appropriations would have to specify separately each fiscal year’s allocation.

Rationale for BGR Position:

If implemented, the change has the potential to improve state budgetary practices. The potential advantages include more stability in departmental budgets, thereby allowing better planning and resource allocation. A switch to biennial budgets is not a panacea, but it will facilitate good planning and program evaluation.

The amendment does not mandate biennial budgets; the legislature will retain the option of annual budgets. If a change to biennial budgets is made and the legislature does not consider it successful, the state can return to the present annual appropriation method without another constitutional amendment.

# 4. Allow supplemental pay for levee, bridge, and port police. (Act 1394)

BGR Position:

Support.

Explanation of Amendment:

This amendment would give the legislature the authority to provide state supplemental pay of $300 monthly for law enforcement officers "patrolling levees, bridges, waterways and riverfronts." Although not mentioned by name in the amendment, the provision effectively applies to the Orleans Levee District police, the harbor police, and the bridge authority police. Currently, these forces are technically under the state civil service system, and cannot receive supplemental state pay under the current constitution.

Rationale for BGR Position:

Providing state supplemental pay to these law enforcement personnel would increase state spending in the New Orleans area for what are state agency functions as a matter of law. BGR recognizes a concern: increasing the pay of these forces makes them more attractive relative to the NOPD, and could dilute NOPD’s pool of officers. However, even with the addition of supplemental pay, annual pay differentials between these forces and equivalent NOPD officers would be about $7,500 for levee police, $2,900 for harbor police, and $2,500 for bridge police. Further, the number of positions affected is small in comparison to the size of the NOPD (approximately 44 officers for the levee district, 27 for the harbor police, and 17 bridge authority police). Therefore, even though there is likely to be some competitive effect, it would be limited.

There is an argument in favor of moving non-municipal police forces toward the level of NOPD pay: it would facilitate the consolidation of police forces in the future, should that become desirable. A 1997 BGR identified pay differentials among different law enforcement organizations as a barrier to consolidation.

BGR is concerned about the broadness/vagueness of the amendment. It does not strictly define who qualifies for state supplemental pay. This opens the door to extending supplemental pay to hundreds of other law enforcement personnel under the state civil service uniform pay plan, costing the state several million dollars annually. However, companion legislation would limit the effect of this amendment only to the agencies cited above. Future broadening of the supplemental pay benefit would require additional legislation.

# 6. Donation of state highway asphalt to local governments. (Act 1396)

BGR Position:

Oppose both amendments.

Explanation of Amendment:

Amendment # 5 would allow state and local public safety agencies to donate or exchange movable property among them.

Amendment #6 would allow the donation of used asphalt form the state DOTD to local governments. The present practice is for road contractors to retain half the old asphalt when a road is resurfaced, and the state has the contractor deliver the other half to a state maintenance yard. The old asphalt can be recycled.

Rationale for BGR Position:

The need for the amendments is questionable. While there is existing constitutional prohibition on the public giving away items of value, movables already are often transferred between public safety agencies for nominal amounts. Similarly, contractual arrangements between the DOTD and local governments for utilizing used asphalt could be worked out under existing law without resorting to donations.

Both of these amendments are so detailed and have such limited monetary impact that it would be inappropriate to clutter the constitution with them. If exceptions are desirable (and many are already in the constitution) the issue should be addressed by enacting constitutional guidelines and by delegating authority to the legislature to enact statutes implementing the exceptions within those guidelines.

# 7. Maintain university funding when a community college begins classes nearby. (Act 1397)

BGR Position:

No position.

Explanation of Amendment:

This amendment would prohibit reducing state general fund appropriations for public institutions of higher education located in a parish where a community college begins holding classes, or in a contiguous parish, until four years after the community college classes begin.

# 8. Limit automatic pardons to certain first time felonies. (Act 1398)

BGR Position:

No position.

Explanation of Amendment:

This amendment would make automatic pardons available only to persons convicted of a non-violent crime, or convicted of aggravated battery, second degree battery, aggravated assault, mingling harmful substances, aggravated criminal damage to property, purse snatching, extortion, or illegal use of weapons or dangerous instrumentalities.

# 9. Repeal authority for a separate school district in part of Rapides Parish. (Act 1399)

BGR Position:

Support.

Explanation of Amendment:

This amendment would remove the existing (but dormant) constitutional authority for Wards 9, 10, and 11 of Rapides Parish to create a separate school system.

Rationale for BGR Position:

Although this amendment does not affect the New Orleans metropolitan area directly, BGR believes that it is bad policy to Balkanize Louisiana’s school districts, and the authority to do so should be repealed from the constitution wherever possible. Allowing sub-parish school districts sets bad precedent, and could invite similar initiatives throughout the state. (For the same reasons, BGR is opposed to another amendment on the November 20 ballot which would allow the Zachary community to carve out a separate school district in East Baton Rouge Parish.)

# 10. Tax assessment freeze for restoring blighted residential property in New Orleans. (Act 1400)

BGR Position:

Support.

Explanation of Amendment:

This amendment would allow blighted residential property over 40 years old to enjoy a five-year tax assessment freeze similar to that available to property in a downtown, historic or economic development district. It would be limited to properties used for residential purposes. This amendment would utilize the current procedure for approving the freeze, which requires approval by the state Board of Commerce and Industry, approval by the Governor, and approval at the local level.

Rationale for BGR Position:

This amendment impacts only Orleans Parish. In 1995, BGR supported two constitutional amendments to reduce the time allowed an original owner to redeem blighted property, and to allow the city to donate blighted property to nonprofit organizations that agreed to renovate. The position recommended here supports BGR’s prior positions.

This amendment would provide an incentive to renovate properties that otherwise would be demolished. It would encourage renovation in older neighborhoods not under the protection of historic district status. It applies to blighted properties, not just old properties. To be declared blighted, a property must go through a statutory process of inspections, hearings, and a formal adjudication of its blighted status.

Although BGR generally opposes the practice of granting new property tax exemptions (which is essentially what the proposed assessment freeze is) the incentive to upgrade blighted residential properties has substantial benefits to New Orleans. The tax loss is likely to be limited, considering that the properties involved are not likely to contribute more than their blighted value to the tax base. The fact that the incentive applies only to residential housing and not to commercial properties will moot the criticism sometimes directed at existing assessment-freeze provisions. That criticism contends that developers get a windfall for projects that would succeed on their own without a tax freeze.