But then Bobby Jindal saw a way to undercut premiums in his privatization scheme which allowed the state to be obligated for less in its share of matching premiums so that Jindal could rake in some extra cash to cover his backside, aka budget deficit.
The result, as just about everyone who follows this sham of an administration knows, was that the $500 million reserve fund was all but wiped out.
Bobby Jindal, after having first jerked $40 million in funding for state colleges and universities, reversed himself again by taking $30 million from a federal hurricane recovery fund.
Bobby Jindal has shrunk the state’s rainy day fund from $730 million when he took office to $460 million and a $450 million fund to subsidize companies for investing in the state has evaporated as is the $800 million balance in the Medicaid Trust Fund for the Elderly.
And after giving away billions of dollars in tax breaks, incentives, rebates and exemptions for business and industry in an effort to spur economic development, we learned today (March 18) that Louisiana’s unemployment rate was third highest in the nation. http://www.politico.com/magazine/story/2015/02/bobby-jindal-campaigning-114948_Page2.html#.VQoeJ005Ccw
The one constant in all this is the Louisiana State Lottery, which since a 2004 Constitutional amendment has dedicated proceeds to the Minimum Foundation Formula (MFP) for public education.
Since the lottery’s approval by voters in 1990 and its implementation in 1991, the lottery, which is mandated to transfer 35 percent of proceeds to the state treasury, has contributed $2.8 billion to the state.
In 2014, sales were $450 million and $161 million of that was transferred to the state.
Also, 2014 marked the 13th consecutive year that the lottery has transferred more than $100 million to the state.
Why do we tell you all this?
Well, only because the administration of Bobby Jindal is currently entertaining the notion of selling bonds that guarantee future State Lottery profits in order to raise some $467.7 million in one-time money to help plug a $1.6 billion hole in the state budget.
Wait. What? Sell the State Lottery?
State Treasurer John Kennedy tells LouisianaVoice that the administration is “seriously considering” two separate proposals to take over the lottery and to pay the state one time money.
The two proposals were from Wall Street banking firms Goldman Sachs and Citigroup. While Citigroup did not specify an amount, Goldman Sachs said, “Based on lottery revenue growth of at least 1.5 percent annually, the state could raise approximately $428 million and preserve a minimum contribution to the MFP of $160.2 million.” Goldman Sachs Presentation – March 2015
With 13 consecutive years of receipts of more than $100 million and total receipts of $2.8 billion since 1992, $428 million in quick cash appears to be a terrible deal for the state—not that Bobby Jindal gives—or ever gave—a flying fig about this state.
Let’s first take a look back at the history of lotteries in Louisiana.
In 1868, the Louisiana Lottery Co. was authorized and granted a 25-year charter after a carpetbagger criminal syndicate from New York bribed the Legislature into approving the lottery and establishing the syndicate as the sole lottery provider.
Because it was an interstate venture, 90 percent of the syndicate’s revenue came from outside Louisiana. Because it was so profitable, when efforts were made to repeal the charger, bribes to legislators ensured the effort’s failure.
Ten years after it was approved, Louisiana had the only legal lottery remaining in the company. When Congress passed a prohibition against operating lotteries across state lines, the Louisiana Lottery was finally abolished in 1895. When it was disbanded, reports of ill-gotten gains and bribery surfaced.http://www.library.ca.gov/crb/97/03/chapt2.html
But even more worrisome are the histories of the two Wall Street banking firms who submitted proposals for taking over the Louisiana Lottery.
And even though Kennedy said Commissioner of Administration Kristy Nichols has said the lottery won’t be sold, the mere fact that two proposals for just that scenario have been simultaneously submitted by Goldman Sachs and Citigroup cannot be considered as coincidence. Both investment banking firms pointed that similar actions have been taken by Oregon, Florida, Arizona and West Virginia.
And what about the integrity and professional ethics of the two companies?
That’s a fair question, so let’s look at the records.
- Goldman Sachs received some $12.9 billion in federal bailout money from American taxpayers in 2008 and promptly fired 1,000 U.S. workers and shifted their jobs to the cheaper Singapore market.http://thinkprogress.org/economy/2011/06/28/255724/goldman-sachs-outsource-1000-jobs-singapore/
- After receiving that $12.9 billion as a reward for helping wreck the U.S. economy and plunging the nation into a deep recession, Goldman Sachs doled out $111 million in bonuses to top executives.http://www.dailymail.co.uk/news/article-1339220/Goldman-Sachs-pay-111million-bonuses-despite-taking-billions-bailout-money.html
- Six years after the bailout, in 2014, Goldman Sachs agreed to pay $1.2 billion for its failure to disclose risks on the mortgage bonds it sold before the financial crash. http://www.wsj.com/articles/goldman-sachs-close-to-settling-fhfa-lawsuit-for-more-than-1-billion-1408737438
- CitiGroup received two emergency infusions from taxpayers—$20 billion and $25 billion—to help prop up the reckless bank.http://www.bloomberg.com/news/articles/2011-01-13/citigroup-45-billion-rescue-based-on-fear-of-the-unknown-barofsky-says
- But there was an untold story behind the Citigroup bailout.http://wallstreetonparade.com/2012/08/the-untold-story-of-the-bailout-of-citigroup/
- The Financial Industry Regulatory Authority fined Citigroup $15 million for its failure to adequately supervise its research analysts’ interactions with bank clients. http://dealbook.nytimes.com/2014/11/24/citigroup-fined-15-million-for-failing-to-properly-supervise-analysts/?_r=0
- Citigroup last year agreed to pay $7 billion as part of a Department of Justice settlement for the bank’s role in the sale of risky, mortgage-based securities.http://www.usatoday.com/story/money/business/2014/07/14/justice-citi-7-billion-dollar-settlement/12616741/
So now the administration suddenly receives “unsolicited” proposals for the sale of the Louisiana State Lottery from two Wall Street banking firms with checkered backgrounds. (But admittedly, it would be difficult to find a Wall Street bank—or banker—these days that is not under a similar cloud.)
A Division of Administration (DOA) source said Bobby Jindal feels that, unlike his desire to sell the remainder of the tobacco settlement in yet another desperate effort to raise one-time revenue, he would not need legislative approval to sell the State Lottery. “We feel legislative approval would be required, but the governor apparently feels otherwise,” Kennedy said.
The State Treasurer added that he felt if Bobby Jindal does intend to sell the State Lottery, “he will wait until after the legislative session has adjourned and then direct the Lottery Corporation to take the action.”
The nine lottery corporation members are appointed to staggered terms by the governor. Kennedy serves as an ex-officio member. Three members, Christopher Carver ($2,000), Heather Doss ($1,000), and Lawrence Katz, combined to contribute $8,000 to various Jindal campaigns since 2003.