BusinessReport.com

What Democratic lawmakers describe as a hidebound decision by Gov. Bobby Jindal is viewed by business interests as smart policy. To be sure, when it comes to Jindal’s decision to refuse part of the massive stimulus package being offered up by the feds, the high-profile Republican has his critics and his fans.

New Orleans Mayor Ray Nagin suggested last month that Jindal might be grasping for headlines when he should be grabbing for dollars. Lt. Gov. Mitch Landrieu, meanwhile, has said Jindal should swallow his pride take any and all financial assistance offered to Louisiana. More recently, a group of state lawmakers held a teleconference to plot against Jindal. They want to go over the governor’s head during the upcoming regular session to create a soft spot for the money to land.

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 “The fact is that every law can be repealed.”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 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 Jindal’s original veto. A two-thirds majority from both chambers would be needed to usurp Jindal’s pen marks.

But lawmakers won’t only be fighting Jindal. Business and industry considers the idea a bad one as well.

Renee Baker, the Louisiana director of the National Federation of Independent Business, says Jindal is doing the right thing and is protecting small businesses. “This is a one-time shot in the arm that would cost Louisiana money in the long run,” Baker says. “Once the money runs out, in about two years, Louisiana would have to raise payroll taxes in order to fund the expanded benefits. That would make it even harder for small businesses in particular to afford the employees they have.”

According to the Louisiana Association of Business and 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 would receive this money only if they enact new unemployment laws, which only 18 state currently have done—none of which are in the South.

The stimulus package outlines four possible law changes, but states only have to adopt two of them to get their money. 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 change would allow individuals to receive an additional six months of benefits if they enroll in state-approved or federal workforce training. The final change would create 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 that are already are eligible might see their benefits reduced. “This is not free money,” Juneau says. “It comes at a price.”