Here and There

Thursday, August 29, 2013

Miss. has much to be proud of on anniversary of civil rights speech, Hurricane Katrina

*First appeared in the August 29, 2013, edition of the Laurel Chronicle

As I considered the subject matter for this week’s column, a couple of things struck me as particularly relevant. Fifty years ago this week, Rev. Martin Luther King, Jr., delivered his famous “I Have a Dream” speech to a crowd of some 200,000 demonstrators in Washington, D.C. on the steps of the Lincoln Memorial.

I also realized that Mississippi has another anniversary August 29, the date on which Hurricane Katrina wreaked “utter devastation” on the Mississippi Gulf Coast eight years ago. Like so many Mississippians, I remember Katrina - and the mind-numbing aftermath - like it was yesterday.

As my mind wandered, I began to find parallels between the two anniversaries.

In August 1963, our nation was in the midst of a freedom movement to make good on Rev. King's “promissory note,” that proverbial check from the United States to citizens of all races for justice and equality. The speech was especially relevant to Mississippi, which was at that time under the leadership of an outspoken segregationist governor (Gov. Ross Barnett).

As a friend of mine noted, we tend to vaguely recall the “I have a dream” portion of the speech but overlook (or simply don’t know) that in his remarks, Rev. King cited our beloved state - the one with two humpbacks and twice as many crooked letters - as a hotbed of racial injustice...and opportunity.

“I have a dream that one day even the state of Mississippi, a state sweltering with the heat of injustice, sweltering with the heat of oppression, will be transformed into an oasis of freedom and justice,” declared an authoritative Rev. King in his historic remarks.

What Rev. King - the man whose being is synonymous with the civil rights movement - saw in Mississippi was a place where hatred existed, but so did a great opportunity for healing.

Rev. King’s remarks were not “an end, but a beginning” of a sea change in public policy and opinion. His comments, coupled with the courage of others who fought for civil rights in the years prior, changed hearts and minds…though not immediately. A year after the speech, three civil rights workers (James Chaney, Andrew Goodman, and Michael Schwerner) were slain in Neshoba County. Countless others were beaten, threatened, and even killed on their journey for justice. Yet progress prevailed at its slow, steady pace.

A 1963 Mississippi is not reflective of a 2013 Mississippi, a state which will celebrate the groundbreaking of the Mississippi Civil Rights Museum in late October; a state which welcomed Freedom Riders in 2011 to celebrate the 50th anniversary of their equality rides with events across the state and a formal apology from former Gov. Haley Barbour; a state which has the highest number of African-American elected officials in the nation. We are a state shaped by our past, but not defined by it.

And so it is on this eighth anniversary of Katrina that Mississippians of all races have again shown the world we are not defined by circumstances. Hurricane Katrina devastated homes and families; it destroyed infrastructure and fundamentally changed life as we knew it, particularly along our Gulf Coast. It did not, however, weaken the resolve of our people.

This mega-storm – the largest natural disaster in American history – struck Mississippi, a state rife with poverty and a shameful history of racism. Some thought that of all the states, we were the least prepared to handle such a disaster.

But like Rev. King’s speech, Katrina cast a spotlight on Mississippi. And, like fifty years ago, we had a choice: We could live up to their low expectations or seize this opportunity to change the way the world viewed the Hospitality State.

Mississippians banded together and made our choice. Blacks and whites, rich and poor, rural and suburban; none of these things mattered. Neighbors helped neighbors, regardless of race or economic status. Hospitality was extended between families whose antecedents fifty years ago might have refused to share restrooms. Our shared history made us a strong people – strong enough to recover from the devastating impacts of Katrina.

One could argue that our shared struggles uniquely prepared us to deal with Hurricane Katrina, in that we as a state are accustomed to overcoming seemingly impossible odds. The storm that fundamentally changed Mississippi, fundamentally changed the way the world views us…in the same way our progress in race relations has changed the way we view ourselves.

William Faulkner’s often quoted as saying “to understand the world, you must first understand a place like Mississippi.” Rev. King understood Mississippi as a place of great trouble but of equally great opportunity, and he was right. Today, I couldn’t be prouder that the state I call home has, in the face of great adversity, seized opportunities to create a place where we have come to realize that our destiny is tied up with others; that our freedom is inextricably bound to the freedom of others; and that, as the Rev. King said, “we cannot walk alone.”

Thursday, August 22, 2013

Bentz replacement should take long-term view of Mississippi energy

*First appeared in the August 22, 2013 edition of the Laurel Chronicle

This week, Southern District Public Service Commissioner Leonard Bentz officially resigned to begin his new role as executive director of the South Mississippi Planning and Development District.

While the PSC will meet again in mid-September, the timetable for replacing Bentz is uncertain. The responsibility to appoint a new commissioner rests solely with Gov. Bryant who has given no indication as to who he’ll appoint or when such an announcement would come.

This “in-between” period breeds a lot of speculation and pontification as to who should be picked; where they should come from; and the like. Naturally, I didn’t want to miss this opportunity to give my humble two cents.

While the position pays more than what most Mississippians earn (about $78,000), it also comes with a built-in controversy of sorts: the Mississippi Power coal-gasification plant in Kemper County.

Construction on the plant is nearly complete, but the project hasn’t been without challenges. Internal disagreement within the company coupled with unexpected construction costs resulted in major cost overruns and, frankly, some really bad publicity for Mississippi Power. Now, some fringe opposition groups (including the Sierra Club) are attempting to convince the next commissioner to pull the plug on the whole project.

While “I’m against raising electricity rates” may be a politically expedient talking point, I would caution the next Public Service Commissioner from such a blanket statement. Policymakers – including regulators – better serve the public when they take the long-term view.

Three things we know about Kemper: It’s needed, it’s expensive, and it’s good for Mississippi.

In 2009, the PSC determined that Mississippi Power needed to build a new baseload generation power plant to ensure the company could provide enough electric capacity to serve its customers reliably. In the last 40 years, every time the PSC has found a need for a new baseload power plant, whether by Mississippi Power or Entergy, construction of that plant has resulted in higher rates.

We know we need more power and that it’s going to cost us lots of money in the short-term. Long-term? Capital-intensive projects like power plants typically cause rates to increase, then to level off or decrease. When Entergy built Grand Gulf nuclear reactor, rates increased more than 50 percent; today, this same plant produces the lowest cost baseload electricity in Entergy’s system.

In Kemper’s case, customers are looking at a rate increase of 22 percent – significantly lower than the increase associated with Grand Gulf (a success story) and about two-thirds as much as Mississippi Power had originally projected.

We need the Kemper plant to ensure the lights turn on when you flip the switch, but the next commissioner would be wise to also recognize the often-overlooked benefits of building this new power plant.

First, the plant will use Mississippi lignite coal – a resource abundant in our state. Mississippi Power will pay lignite owners about $400 million for their coal, creating a windfall for Mississippians’ pocketbooks.

The next commissioner should be mindful of the creation of thousands of jobs needed to both build the plant (estimated at 2,000) and permanently run it (estimated at 1,000 if you count both direct and indirect jobs). More than 400 Mississippi companies have a significant role in the construction of the project. Even state and local coffers will reap the benefits in terms of new tax generation, estimated at $30 million annually for the 40 to 60 year life of the plant.

The Kemper County technology includes a carbon-capture and sequestration component, which is beneficial in two ways: First, Mississippi Power will be able to sell the carbon dioxide and other chemicals to the oil and gas industry for approximately $2 billion over the life of the plant. This revenue source will reduce customers’ bills by the same amount.

Second, capturing carbon emissions reduces Kemper’s carbon footprint, meaning this facility will have the same level of emissions as a natural gas-fired power plant. This is truly clean coal, y’all, and it will set the standard in the United States for clean coal electric generation. It will also create a model for China and India to copy this Mississippi technology to greatly reduce rising CO2 emissions in their countries.

Strident opponents say the next commissioner has to make the “difficult decision” to vote against Mississippi Power and for ratepayers, but I disagree. The next commissioner can and should vote to support reliable energy production with stable rates for decades to come.

My (unsolicited) advice to the next commissioner, whoever he or she may be, is simple: Remember to take the long-term view of projects like Kemper. We know that it’s needed; we know that it’s expensive; but we also know that it’s good for Mississippians in the long-term.

Thursday, August 15, 2013

Pension reforms about math, not politics

*First appeared in the August 15, 2013, edition of the Laurel Chronicle.

This week, the American Legislative Exchange Council released its new report, “Keeping the Promise: State Solutions for Government Pension Reform.” I’m a bit of a pension nerd, so I combed through the report with great interest.

Pension obligations can wreak havoc on state and local budgets, as we’ve seen with some high-profile examples (Detroit, for instance, which recently filed bankruptcy). The pension crisis cities and states face arose from decades of bad decisions, including not setting aside enough money each year to pay for retirement costs as well as increasing plan benefits without a corresponding increase in plan revenues.

Couple this with the 2008 market crash in which many retirement plans lost 20 percent of their funds…and it’s not hard to see how we got to the point where pension liabilities across the nation total up to $4 trillion. According to ALEC estimates, that’s enough money to cover a $60,000 salary and benefits package for 625,000 to 1.2 million new elementary school teachers for 20 years.

What struck me as especially poignant in the pension study were the following statements: “[The] pension problem need not be a political debate over the size or scope of government; it is a problem of math. The numbers of today’s pension plans do not add up, and observers on the right, on the left, and in the center agree on this point.”

I couldn’t agree more.

A few years ago, Gov. Haley Barbour tasked a group of business leaders, pension experts, lawyers, retirees, and legislators with looking at Mississippi’s state retirement system. The commission reviewed the retirement system with an eye toward ensuring its long-term health and sustainability, making reasonable recommendations to trim costs without jeopardizing retiree benefits.

But to hear Democrats talk about it, you would have thought that mean old Republican governor was trying to take Grandma Suzie’s retirement check and leave her destitute on the street.


Let’s examine the facts. The state’s retirement system is not on the verge of collapse, but the trends are worrisome. Because the Legislature increased benefits in the late 1990s and early 2000s but failed to pay for these new costs, the plan has become excessively expensive. The system is costing taxpayers close to $900 million this year (that’s more money than it takes to fund Medicaid), and plan actuaries forecast no taxpayer relief in the foreseeable future. The 2008 market crash only compounded the problem, meaning taxpayers are on the hook for skyrocketing pension costs unless changes are made.

That’s not my opinion; that’s just math.

Reining in the costs of a retirement system is one of the most important challenges facing lawmakers today because everyone has a stake in the problem. As the ALEC report notes, “workers and retirees have a stake. People who pay high taxes are affected, as are people who pay nothing at all. The problem touches all Americans…Why? Money that is obligated to pay for pensions cannot be used to reduce tax rates or fund public programs.”

That’s exactly how big-time Democrat and Rhode Island Treasurer Gina Raimondo sees it. She campaigned on pension reform, successfully pushed it through the state’s general assembly, and defended it as a moral imperative. When asked by a disgruntled employee about her views, she responded, “[Is] it morally right to do nothing and not provide services to the state’s most vulnerable citizens? Yes, sir, I think this [reform] is moral.”

(As an aside, I heard Treasurer Raimondo speak about pension reform during a Pew Center conference a few years ago. Her determination to put Rhode Island on solid financial footing was impressive, and I expect she’ll be on the political scene for quite some time.)

If we don’t rein in the costs of our own state retirement system, I fear we’ll be left without options. To paraphrase Mayor Rahm Emanuel, we’ll have to pick between pensions and police officers; pensions or paved streets; or pensions and public health. That’s not fair to taxpayers, and it certainly isn’t fair to retirees.

As the ALEC report indicates, fixing the problem of unfunded pension liabilities is a difficult task. Legislators must overcome both technical and political challenges; they must understand arcane financial concepts and respond to statutory law, case law, and even constitutional limits. But ultimately, the question of pensions is not just an “obscure topic of interest to actuaries and accountants. It is, rather, an issue with widespread consequences.”

I certainly hope Mississippians – legislators, retirees, state employees, businessmen and women, soccer moms, and even high school graduates – recognize the benefits and necessity of reining in the costs of the state’s retirement plan. Pension reform isn’t about cutting benefits, but rather ensuring retirees get the benefits they were promised. At the end of the day, keeping our promises means making tweaks to the existing program to ensure retirees, state employees, and taxpayers are treated fairly.

This isn’t about some conservative philosophy, nor is it aligned with Democrat principles. This is about protecting the financial security of our retirees, our taxpayers, and our state.

NOTE: Here is a link to the full ALEC report.

Thursday, August 8, 2013

Experts Agree: Reforming government no easy task

*First appeared in the August 8, 2013 edition of the Laurel Chronicle.

A few weeks ago, I set out on a mission to Jackson’s rare and used bookstore (for reference, google “Choctaw Books”) to find something truly unique. While I found something pretty special, I don’t know that I’d call it “unique.”

My purchase was the Report on a Survey of the Organization and Administration of State and County Government in Mississippi, a nearly 1,000-page bound report conducted by the Brookings Institution way back in 1932. (You may recognize this name, as Brookings was the first private organization devoted to the fact-based study of national public policy issues. Today, the organization is heralded as one of the foremost advocates for effective and efficient public service and government operations.)

In the early 30s, the Mississippi Legislature created a citizen-led Research Commission (which included Laurel-native Wallace B. Rogers) to conduct “expert investigation into, and study and analysis of all conditions of the state.” In turn, the Research Commission asked the Brookings Institution to study the state’s processes and make recommendations on reform.

I was reminded of all this last week when I read an editorial calling for state government to increase accountability, efficiency, and transparency. It’s a novel idea, but certainly not a new - nor a unique - one.

The editorial gave a few examples of areas that need reform, including the more than 200 agencies, boards, and commissions that are part of Mississippi's government largesse. Similarly, Brookings opined in 1932 that one of the chief defects in Mississippi's structure was the “scattering of related functions among many offices due to the creation of numerous independent boards and departments with little references to previously established offices...Mississippi finds itself possessed of a large number of more or less independent and uncorrelated agencies.”

Instead of consolidating boards and commissions, as Brookings recommended, eight decades later we’ve seen our boards and commissions grow by 150 percent than at the time the Brookings report was published.

Other recommendations from the 1932 report include converting elected positions, such as State Treasurer and Highway Commissioners, to gubernatorially-appointed positions requiring consent of the Senate.

Another novel, yet historically doomed, idea. Candidates, legislators, and lobbyists have been resistant to this concept.

Mississippians are used to voting on, well, everything. We may not know what the Treasurer does, but we sure as heck want to cast our vote for him or her. It gives us the feeling that "we're in control" but also drives up government costs. For example, our highway system is governed by three commissioners elected from their respective districts. This process can result in fragmented oversight and an apparent lack of accountability (which is likely why most every other state has transitioned to an appointed, not elected, highway commissioner system).

Of course, others have recommended major reforms as well. Especially with the onslaught of the recession, Gov. Barbour proposed major structural changes to the way government operates in order to reduce costs while increasing efficiencies. While some cost-cutting measures were adopted, most of these bold changes met great resistance in the Legislature.

They say the definition of insanity is doing the same thing over and over, yet expecting a different outcome. With that in mind, it seems those of us who believe government can be reformed have a touch of insanity.

But, I think there’s good reason to keep the reform mindset. Unlike when Gov. Barbour was in office, Republicans now have control of the Legislature and have promised real change. Lt. Gov. Tate Reeves appointed Sen. Nancy Collins to head up a newly-created Accountability, Efficiency, and Transparency committee to review creative reform ideas. The House of Representatives created a similar committee, and Gov. Bryant has voiced his support for government reforms.

So far, the Republican-led Legislature has made good on its promise, passing landmark legislation to consolidate certain struggling school districts and reduce the amount of vehicles owned by the state by prohibiting unnecessary car purchases. Together, these laws have saved taxpayer dollars while promoting efficiency.

Let’s hope our policymakers – legislators, agency heads, and government employees – heed the 1932 warning issued by the Brookings Institution that still applies today: “Mississippi can poorly afford to sanction worn-out methods, cumbersome organization, and diffusion of responsibility in its government simply because these conditions have prevailed for years.”

Thursday, August 1, 2013

Detroit bankruptcy ignites discussions on affordable government pensions

*First appeared in the August 1, 2013 edition of the Laurel Chronicle.

News of Detroit filing for bankruptcy protections shook the financial and political worlds, but I felt their "surprise" at this revelation was hollow. After all, the Wall Street Journal re-affirmed what I had previously assumed: That Detroit's demise has been long-coming.

The Journal recounted that "nearly 70% of parks have been closed since 2008, and four in 10 street lights don't work. The city has cut its police force by 40% in a decade...Detroit residents pay the highest property and income taxes in the state...About 40% of revenues go toward retirement benefits and debt, much of which was issued in the last 10 years to finance pension contributions. Payments on $1.6 billion of pension-related certificates of participation consume nearly every dollar of property tax revenue."

How the Detroit fiasco plays out could have huge implications in how governments deal with unaffordable pension obligations. Forces like unions and creditors have driven governments to a borrow-tax-spend cycle at the expense of taxpayers. As the Journal notes, a Detroit "bankruptcy shows the party is over, as it may also soon be for many other cities."

Oakland, Cali. has the state's highest crime rate yet recently laid off upwards of 100 policemen to fund retirement benefits and pension-obligation bonds. On top of this, the city borrowed another $210 million to finance pensions, putting the municipality in even worse financial straits.

To make up for years of short-changing its retirement fund, Philadelphia, Penn. is currently spending about 20 percent of its budget on pensions. The Journal points out that Philly has raised sales, property, and business taxes, yet the city council is currently discussing using revenues from a one-percentage-point sales tax hike in 2009 intended for schools to finance pensions.

Former Obama White House Chief of Staff turned Chicago Mayor Rahm Emanuel declared recently that "the pension crisis is no longer around the corner; it has arrived at our schools" after the city's public schools announced 2,100 layoffs. Although Chicago (supposedly) is planning to transfer 30,000 retirees on Medicare and the Obamacare exchanges in 2017, all its savings will go toward pension payments which will triple in 2015. The Democrat mayor warned taxpayers that this could mean a 150% spike in property taxes.

According to groups like the Pew Center and Boston College's Center for Retirement Research, pension obligations run into the trillions of dollars (the last estimate I saw was roughly $3 trillion). This means that many governments "have more than likely promised their workers more than they can reasonably expect to deliver," according to the New York Times.

Clearly, pension obligations have the potential to bankrupt cities and states, both large and small. Mississippi, pay attention.

Our state retirement plan is in better condition than these examples, but the trends concern me. Although taxpayers have put significantly more money into the system, its funded status continues to decline. In 2003, the system had a funded status of 79 percent; today that number has dropped to 58 percent. Pension experts consider healthy plans to have a funded status of 80 percent or higher.

These numbers are particularly gloomy, since taxpayers have seen their contributions to the system increase more than 62 percent in the last decade. In Fiscal Year 2013, the state (taxpayers) contributed about $835 million to fund a portion of the retirement system; this level could jump above $900 million in Fiscal Year 2014. That's higher than state financial support for Medicaid!

I don't believe Mississippi's retirement system is on the verge of collapse, but there are warning signs within the system that should be addressed by policymakers, retirement board members, and taxpayers. The current plan is too costly (see above) and puts too large a fiscal burden on taxpayers who are trying to build their own non-government funded nest eggs. Small but important tweaks can be made now to ensure an affordable and sustainable future.

The Economist recently featured an insightful piece on pensions in America, writing that "it may take a financial crisis [like Detroit] for states and cities to face up to the scale of their pension shortfalls. When a crisis occurs, public-sector workers are more likely to accept the need to sacrifice."

In Mississippi, I hope we'd take actions to avoid a crisis rather than let pension obligations escalate to an unsustainable level.