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Louisiana and New Orleans economy, jobs, smoke and mirrors

Written by  // Tuesday, 22 July 2014 14:10 //

BATON-ROUGE-SKYFor too often over the past six years or so, many of us have been told that the Louisiana economy is growing in leaps and bounds, that we lead the rest of the country in economic growth.

 

 Yet, during the same time period, the Louisiana government has been forced to balance the budget through smoke and mirrors.  We have borrowed from and depleted dedicated funding sources.   We have eviscerated our higher education institutions. Our budgeting practices have been so disfavored, that if we were a family paying our bills, we’d need immediate financial assistance and outside intervention.

 

Also, despite claims of billions of dollars worth of jobs coming into the state, you don’t have to reach for the razor thin employment section of the Sunday paper to see that, in reality, right now,  there are very few jobs available.  

 

Yet, why over the past few years have I been receiving so many press releases claiming another new chemical plant is breaking ground, the state’s export business  being at record high, and that Louisiana and New Orleans are now both rated higher and better by those in the know, than ever before.

 

In short, how and why is there such a disconnect between what government and economic development officials are saying and what we are seeing--with or without rose-colored glasses?

 

In a recent column, in fact, I made this very point.  I pointed out that despite the Presidential campaign claims by our current governor, over the past three years, our economy has severely paled in production, compared to the rest of the country.

 

Thanks to an interview with Michael Hecht, President and CEO of GNO Inc (Greater New Orleans Inc), I think I (hopefully we) have found the answer to the quandary.

 

Indeed, the almost daily press releases announcing tens, hundreds and even thousands of jobs is not propaganda nor a mirage.  They are coming.    

 

Here is the text of the Hecht interview which I believe explains the disconnect between what we are told and what we know about our economy better and more honestly than any I have heard or encoutered, for years:

SABLUDOWSKY: Let me ask you a question, i know i am going to be roasted for this, but some people I talk to around the state are saying, well, where are the jobs?  Where are the jobs?  I wrote a column recently that said the GNP has actually been almost like 45% or 1/45th of what it was in the US in the last three years. So, something seems to be inconsistent in terms of the Gross Domestic Product, please help me out with that.  Because i really, If i need to apologize, I'll apologize, to the powers to be but the last three years, that's what it says. The US is, was 1.8, Louisiana was .3.  Now I know that New Orleans is doing super. And I know the rest of Louisiana is doing great too, but these numbers don't show it.  So, please help me.



HECHT: There's a number of reasons and it's a great point, so let me give you my hypothesis is, and tell you what I am doing to prove it or not prove it.  What it really is, when we make an announcement, like the one yesterday, we announced 450 direct jobs and 2700 total jobs, there is a little bit of smoke and mirrors there because what that means is, the organization, the company has agreed that they are going to create that many jobs, typically over the next ten years.  So, let me give you a very specific example, so when we announced GE Capital, ok, two years ago, we announced 300 jobs but the fact is, those 300 jobs were agreed to over ten years.  So, as of today, they're actually up to 190 jobs, they're actually head of schedule, however, we're not going to see the full impact for a number of years so.  The announcements we are making today, we're not going to see the full tax benefits as a state for up to ten or more years.  So, there is a timing issue. But, let me tell you what I am doing, because I am getting tired of not having the real facts to answer this very fair question which is, how come we're doing better than anybody in the country, but, we're always running a billion dollar deficit.

There is a hole in the logic

 

SABLUDOWSKY: Sure

 

HECHT: A hole. So, what we're doing, we are working with Greg Albrecht, who is the lead economist for the legislature, we're working with Jim Richardson, who is on the Revenue Estimating committee and we're going to be doing a P & L  going back to 1990 and then projecting forward to ten years. So, we're going to see for any business, the sources of funds or the uses of funds and then we're going to be able to clearly see what actually is happening.

We don't have a particular philosophy going into this thing other than facts are good.  So, by the time we're done with this, we're going to have a fact-based, so when we're discussing this the next legislative session or next governor will actually be able to analyze this just like we would be able to analyze our own business.

 

SABLUDOWSKY: Sure, sure, i think that is a great answer and quite frankly that is the answer I've been given too, that the jobs are building, they're coming and there is a big difference, a major difference in the last ten years in terms of the announcements, the amount of the announcements etc.  So, there's no question, that's not smoke and mirrors, so I really do appreciate your explaining that

 

HECHT: Well, we don't explain, we make an announcement and say there's going to be a thousand new jobs, we don't explain it that those are a thousand new jobs that are going to come or we don't tend to lead with that, so you know,  it does need explanation some times.

 

SABLUDOWSKY: Well i know you've got to go, and thanks a lot, I really do appreciate it.  You're still number one in my books in terms of being a real salesperson for this area

 

HECHT: I like to think that not only are we selling, but we're not selling snake oil.  We would never want to confused the progress we've made with long-term success, we have a long way to go, there's some very real issues, but i would not want to be working in anywhere else in America besides Louisiana  and Greater New Orleans right now.  I think we're going to look back on these days, Steve, and say, the days coming out of Katrina and the years coming out of Katrina have been some of the most fun and productive that anybody could be blessed to be part of, so thanks for all you do as well.           

 

SABLUDOWSKY: Thank you, thank you, I really appreciate it, take care of yourself.

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