Saturday, May 25, 2024

Op-Ed: SB 234 is Bad for Business

by BIZ Magazine

By Jay Batt, Finance Chairman of the Louisiana Republican State Central Committee, former New Orleans City Councilman  

In my life as a public servant, an active member of the Republican State Central Committee and a business owner from New Orleans, cultivating and maintaining a strong business climate and furthering economic development in our state have always been my top priorities.

But I fear that some of the misguided legislation I’m seeing this session is anti-free market, pro-big government intrusion, and frankly, bad for business.

One bill in particular – Senate Bill 234 – could have disastrous and unintended consequences for businesses and Louisiana taxpayers.

SB 234 could reduce the number of financial institutions eligible to compete for and finance taxpayer-funded projects, like road construction, school maintenance, assets for first responders and healthcare.

This bill disregards even a basic understanding of economics: A competitive bond market is in the best interest of businesses, municipalities, and taxpayers, allowing towns and cities to innovate infrastructure development, create jobs, and develop an economic environment where businesses prosper. Without competition, rates increase, and taxpayers’ dollars will not stretch as far, potentially leading to increased taxes and more expensive – or even canceled – projects.

In 2021, Texas passed similar legislation that banned local municipalities from conducting business with specific financial institutions at the discretion of their attorney general. A recent study on the impact of this legislation found the state stands to lose nearly $670 million in economic activity, 3,034 full-time, permanent jobs and more than $37 million in state and local tax revenue.

Economists forecast that Texas needs to produce an extra $2.84 billion in Gross State Product to cover this expense and lost public sector revenue for legislation identical to SB 234.

There’s a ripple effect too. Texas taxpayers are inheriting all the bad and none of the good from this type of legislation, with skyrocketing property taxes so that local governments can pay off bond debt without the backing of large financial institutions. 

Oklahoma is also seeing similar repercussions. In Stillwater, taxpayers became the “underwriter” for street and water infrastructure improvement projects and upgrades to the city’s heating and cooling system when the state kicked out the financial institution that was prepared to take on the bond debt.

Further, the government oversight required to comply with SB 234 could lead to bureaucratic quicksand that handcuffs construction and balloons costs. The Legislative Fiscal Office says SB 234 could result in “indeterminable increase(s) in state and local governmental expenditures across all means of finance.”

SB234 may be meant to punish banks but the reality is hardworking Louisiana taxpayers, who want a quality education for their children and safe roads and bridges to drive on, will ultimately pay the price.

Louisiana ranked 5th in the United States for economic growth in 2023. We can’t let politics derail our progress and send Louisiana backwards.

If we want businesses and residents to prosper in Louisiana, we need pro-growth policies that benefit our families, businesses, and taxpayers.

I implore Louisiana’s lawmakers and residents to reject unnecessary government intrusion into the projects that will derail the state’s economy.

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