If one issue has unified Republicans and Democrats in the Legislature, it’s been wariness of, if not outright opposition toward, the sale of three state prisons in order to shore up the health-care budget. Seeing the votes were not there, Gov. Bobby Jindal postponed consideration of HB 545 to wait to see if the Revenue Estimating Conference projects enough revenue growth to replace the $86 million he was counting on from the prison sales. Prospects are good that additional revenue will be recognized at the four-member panel’s next meeting, likely in May. At its March meeting, administration and legislative economists were cautious to low-ball projections for personal income and sales tax collections, despite robust growth this year. Not only was the prison sale bill not gaining support, it lost its author earlier this month when Rep. Ernest Wooton, I-Belle Chasse, got off the bill, complaining that the administration kept changing it, and even doubting he could vote for it. Rep. Henry Burns, R-Shreveport, signed on as the new author.
— Fortunately for the administration, it does not need legislative approval to sell the state employee health insurance plan run by the Office of Group Benefits. Amid a torrent of complaints from apprehensive state workers and retirees, lawmakers got in their first licks on the plan at a Senate Retirement Committee hearing called today by Chairman Butch Gautreaux, a leading critic of the proposed sale. Commissioner of Administration Paul Rainwater pointed out that Louisiana is one of only two states—the other is Utah—that acts as an insurance company for its Preferred Provider Organization plan. He denied that privatization would lead to higher rates or lower benefits, though he was challenged on that point by, among others, former OGB director Tommy Teague, whom Rainwater fired last week. Teague and others said the main attraction for potential buyers is OGB’s $520 million surplus, which would allow a buyer to take over the book of business without having to put more capital into the reserve fund. Rainwater said the sale would “unlock value” in OGB, estimating a sales price of $150 million to $200 million. The administration did not include the prospective sales proceeds in the current budget. At the hearing, Rainwater also said the state had broken off negotiations with Goldman Sachs to help manage the sale, and that it would issue a new request for proposal for a financial adviser.
(John Maginnis will publish a daily update on the legislative session daily at 3 p.m., available to LaPolitics Weekly subscribers on the Subscribers Only page at LaPolitics.com. You can register your user name and password on the Lapolitics home page.)
