If Louisiana were an obscure island nation in the Caribbean -- which it seems to be in the view of many observers -- its dossier at the State Department would describe a country with a resource-export economy and a political structure roughly similar to that of southern Haiti. Long the province of energy barons and swamp-water populists, Louisiana has known good times and hard times, prosperity and chicanery; rarely has it known central planning -- or fiscal self-sacrifice.
But times have a way of changing. During its last session, the Louisiana legislature levied an estimated $900 million worth of new taxes from an electorate for whom, as one observer put it, "local government has been virtually nonexistent and the evils of property tax almost a religion." A portion of this tax increase will underwrite an economic-rescue plan as ambitious as any on file at the World Bank. Among the 15 economic development proposals are a constitutional amendment to free public funds for private investment; a cap on state spending (along with a stabilization fund to cushion against fresh recessionary cycles); a $6.5-million Science and Technology Foundation (projected endowment: $500 million) with major venture-capital powers designed to spur commercial application of such advanced research industries as biotechnology; an ambitious marketing program for native agricultural products; standardized tax credits for all businesses, large and small; a variety of banking reforms, including multiparish banking and multibank holding companies; and a plethora of educational reforms.
Small wonder that The [New Orleans] Times-Picayune columnist Iris Kelso heralded such "dream legislation" with the solemn judgment that "Years from now, this 1984 session of the legislature will probably be remembered more for the economic development legislation it passed than for the taxes it approved." Kelso and other locals no doubt remember that, as recently as 1983, Louisiana boasted a paltry $3.8 million in venture capital placements out of a $10-billion total nationwide. Indeed, except for a few manufacturing centers up near Shreveport, the state economy has always teetered precariously on the market whims of oil, gas, paper products, fishing, and petrochemicals -- all extraction-based, not value-added, industries. The difference is, of course, that the "value" is added to Louisiana pockets.
"Twenty years ago," says Kevin Couhig, assistant secretary of commerce and industry, "if you had a business looking to move to, or expand into, Louisiana, all I had to do was find you a site and help with the paperwork. Industrial recruitment was the only game in town. The fact that we could whip anybody's ass on energy costs alone forgave us a multitude of sins, but that sense of complacency caught up with us. Meanwhile, our 'best and brightest' minds were out migrating to Massachusetts and California."
Just as the 1980s oil glut killed most exploratory drilling -- notes Couhig -- so a 25% parish unemployment rate (in some areas), together with the realization that "crude wasn't going to hit $90 a barrel," killed an illusion. Louisianans awoke to the harsh reality that the state's one-note economy was fiscally off-key. "Now," says Couhig, "the whole gamut [of state support systems] from tax abatements to preemployment training must be presented factually and forcefully. Our choice is simple: We diversify or go backwards. We're not finished yet, but we certainly have a full plate."
Principal legislative table-setters include gubernatorial assistant Donna Irvin, commerce secretary Ronald Faucheux, state senator Tommy Hudson, and consultants Roger Vaughn and Beldon Daniels. Irvin, former director of policy studies for the Louisiana legislature, pulled Vaughn and Daniels into the picture early in 1983 and later oversaw matters during the transition from the outgoing David Treen administration to the regime of incumbent governor Edwin Edwards. Hudson, a senator from Baton Rouge, participated in the floor fight on the tax package. As for Vaughn and Daniels, veteran economic advisers to states all over the United States, they found themselves in the unusual position of not simply making recommendations but guiding their implementation as well.
"This is the first time since my days with [New York governor] Hugh Carey that I haven't just been drafting proposals," says Vaughn. "What surprised me, I guess, was the sense down there that something really had to lie done, even if it meant listening to outsiders. And I think the results bear us out. The Science and Technology Foundation, for example, with its outside paid experts and its focus on academic excellence rather than politics, is truly unique at the state level, and has the potential for being the most multifunctional, entrepreneurial entity anywhere in the U.S. By having competitive grants, financing is possible all the way to commercial application.
"We're very anxious to make this work practically, not just politically," he adds. "In Louisiana, the level of corruption and mismanagement has been staggering. Add to that a high illiteracy rate and a fairly uneducated work force, and you have big problems. Louisiana has a long way to go."
If Lousiana gets there, cheap energy should only sweeten the homecoming.