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Louisiana Progress Journal Progressive ideas and pragmatic solutions Louisiana Progress Initiative LPI is an independent, not-for-profit endeavor advancing progressive policy solutions to make the lives of Louisianans better. We promote bold ideas and positive dialogue to shape the public debate and strategically engage policymakers, advocates, and concerned citizens. TABLE OF CONTENTS (Page 2) Tobacco & Fat: How More Taxes Can Be Smart Politics, by Joshua Stockley, PhD (Page 6) Washington Gridlock Opens Up Opportunities in Louisiana, by Jim Brown (Page 9) Making Dollars and Change: Louisiana Should Promote Social Entrepreneurship Through Its Tax Code, by Daniel T. Smith (Page 12) Beyond the Recession, by Matt Allen, JD (Page 14) SPECIAL REPORT. Politics of Population: Progressive Answers for Louisiana’s Redistricting Dilemma, by Ryan Mick, MEd, JD (Page 19) MEDIA SPOTLIGHT. Haynesville

March 2010, v1.3 Contact the Louisiana Progress Initiative: Email: info@LaProgress.org Phone: 504.322.4702


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March 2010

Welcome to the Louisiana Progress Journal, version 1.3! Hello again, and thanks for reading our third-ever progressive policy journal! This edition features bold new ideas for progressive change in Louisiana as our State Representatives and Senators prepare to convene for the 2010 Regular Legislative Session on March 29, 2010. We are making efforts to share this issue directly with the legislators in the hope that it will be a resource and an inspiration as they consider policy changes for two months in Baton Rouge. We continue to tap into the wealth of knowledge and experience of our Louisiana authors to compile innovative ideas for progressive change, including many that urge breaking from the status quo to achieve effective solutions. We are proud to have your continued support in this effort. Enjoy, and as always, please print and share copies of this journal as you wish! - The Editors

Tobacco & Fat: How More Taxes Can Be Smart Politics By Joshua Stockley, PhD Discussions regarding raising revenue in the State of Louisiana are met with deep suspicion by legislators and statewide officials fearing retribution from voters. State legislators and governors are wary--rightfully so---about the impact of tax policies upon attempts to attract future businesses and residents. What makes taxation discussions even more problematic in Louisiana is Governor Jindal’s position that any increase in fees is equivalent to a tax increase that will be vetoed. Furthermore, Governor Jindal has insisted that any delays in implementing tax cuts are equivalent to a tax increase and will also be vetoed. Governor Jindal’s tax policy is the product of a rigid ideological philosophy regarding taxation and his future national political aspirations. The Governor, and his staff, is convinced that future opponents would use any delays in tax cuts or any increases in fees as political ammunition to portray him as a taxloving liberal or a hypocrite.

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Nevertheless, there are two proposals that Louisiana should adopt that will increase revenues, decrease non-discretionary state expenditures, decrease the number of cuts to state services, and increase the quality of life for Louisianans: increasing the tobacco tax and creating a fat tax. The tobacco tax Tobacco places an undue tax burden upon nonsmokers in Louisiana. Approximately 23.5 percent of Louisianans smoke, the 11th highest smoking rate in the nation. Louisianans spend $1.4 billion per year in smoking-related medical costs; the State spends $663 million per year on smoking-related Medicaid costs. Thus, smoking imposes a hidden tax of $197.86 per person per year on residents of Louisiana. Each pack of cigarettes costs Louisiana $1.72 in Medicaid spending; each pack of cigarettes sold in Louisiana results in an additional $3.83 being spent on health care.1 A tobacco tax would decrease the amount of hidden taxes paid by non-smokers.

1

Sustaining State Programs for Tobacco Control: Data Highlights, 2006, Center for Disease Control and Prevention.

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Tobacco taxes are overwhelmingly popular. Public opinion polls demonstrate that voters, whether smokers or non-smokers, support tobacco taxes. The tobacco tax is supported by low-income voters and high-income voters, Democrats and Republicans. In 61 polls conducted across 39 states, majorities of Democrats, Republicans, and Independents expressed support for increasing tobacco taxes and a preference for candidates who support an increase in tobacco taxes over candidates who oppose them. In Tennessee, 38 percent of Republicans said they would support a Democrat who supports a tobacco tax over a Republican who opposes a tobacco tax. Even in tobacco-dependent South Carolina, 71 percent of the voters expressed support for a $1 increase in their tobacco tax. 2 Tobacco taxes are popular with voters; voters will punish candidates who oppose tobacco taxes. Tobacco taxes are smart politics.

“Tobacco taxes increase revenue, reduce Medicaid expenditures, and lead to smoking cessation. Tobacco taxes behave like tax cuts because individuals who stop smoking pay less in taxes and have more money to spend on other goods and services.”

Tobacco taxes are supported by Republican lawmakers. Last year, Florida ($1), Hawaii (60 cents), and Mississippi (50 cents) approved tobacco tax increases. 3 Tobacco taxes were signed into law by Republican Governor Haley Barbour (Mississippi) and Republican Governor Charlie Crist (Florida). 2

Voters in All States Support Significant Increases in State Cigarette Taxes, Campaign for Tobacco-Free Kids, July, 2008. 3 Florida, Hawaii and Mississippi Celebrate Tobacco Tax Victories, Robert Wood Johnson Foundation, May 15, 2009.

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Tobacco & Fat – continued Mississippi raised its tobacco tax for the first time since 1985. Arizona, Colorado, Montana, Oklahoma, and South Dakota have all increased their tobacco taxes in recent years. Tobacco taxes are not regressive. Studies show that low-income smokers are much more likely to quit smoking because of tobacco tax increases than highincome smokers. Indeed, tobacco taxes increase revenue, reduce Medicaid expenditures, and lead to smoking cessation. Tobacco taxes behave like tax cuts because individuals who stop smoking pay less in taxes and have more money to spend on other goods and services. The tobacco tax in Louisiana is embarrassingly low. The average state cigarette tax is $1.27 per pack; however, in Louisiana the state cigarette tax is 36 cents per pack – 46th in the nation. Louisiana could increase the cigarette tax by 90 cents and still fall below the national average. Present law imposes a 36 cent per pack cigarette tax, 8 percent for cigars, 33 percent for smoking tobacco, and 20 percent for smokeless tobacco. Louisiana should increase the cigarette tax to match the national average ($1.27) and increase the tax rate assessed on cigars, smoking tobacco, and smokeless tobacco by 10 percent. This would generate over $300 million per year for the state of Louisiana; at least one percent of this revenue should be earmarked for antitobacco campaigns. The state could do a lot with $300 million. Alternatively, the legislature could give parishes the authority to raise tobacco taxes. Alabama, Illinois, Missouri, New York, Tennessee, and Virginia all allow cities or counties to impose additional taxes, ranging from as little as 1 cent in Alabama to $1.50 in New York City. To address any fears of voter backlash from tobacco tax increases, the legislature could allow cities or parishes to impose tobacco taxes contingent upon a vote of the residents of that community. This would increase parish and city revenues and reduce the demand for general revenue funds.

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Tobacco & Fat – continued

The fat tax Similarly, obesity imposes a hidden tax upon nonobese people and forces states to spend more money on services and programs like Medicare, Medicaid, and the State Children’s Health Insurance Program (SCHIP). Medicare spends anywhere from $1,400 to $6,000 more annually on health care for an obese senior than for a non-obese senior. The medical costs of treating obesity-related diseases soared to $147 billion in 2008, accounting for 9.1 percent of all medical costs in the United States. Obesity reduces the discretionary income of Americans by as much as $1,429 per year. 4 Obesity is a problem in Louisiana. Louisiana ranks 8th highest in the nation in obesity, as an estimated 28.9 percent of Louisianans are considered obese. Louisiana has the 7th highest rate of overweight youths, ages 10-17, at 35.9 percent.5 This forces Louisiana to spend more money on Medicare, Medicaid, and SCHIP. Obesity costs Louisiana money. Alabama tackles obesity. Alabama has the second highest obesity rate in the nation (over 30 percent of the population is considered obese) and spends $1,748 more in health care per year on obese citizens than on those who are not obese.6 To address this problem, the conservative, Republicandominated state of Alabama became the first state in the nation to impose a fat surcharge, telling state employees to shape up or pay more for health insurance. Alabama’s State Employees' Insurance Board, with the approval of Republican Governor Bob Riley, announced a plan in which state employees will be required to receive medical screenings for obesity, blood pressure, cholesterol, and glucose. Individuals failing these screenings will pay an extra $25 per month in health insurance

premiums beginning in January 2011. This rule will cover an estimated 37,000 people employed by the state, which already charges smokers $24 per month. For children, sugar-sweetened beverages increase their chances of becoming obese by 60 percent; adults who drink one or more sodas per day are 27 percent more likely to be overweight; women who regularly consume sugar-sweetened beverages have a higher risk of coronary heart disease.7 Forty states now have taxes on sugared beverages and snack foods, with Maine and New York recently imposing large taxes on sugared beverages. Public support for fat taxes is increasing. Polls show that taxes designed to promote the health of key groups, like children, are more likely to receive positive public support. Fifty-two percent of New Yorkers support a soft drink tax, and that increased to 72 percent when respondents were informed the revenue would be earmarked for children. A 2003 national survey found that 41 percent of Americans support a junk food tax.8 While not as popular as tobacco taxes, fat taxes are becoming more popular and are more commonly being used by states as revenue instruments. Much like tobacco taxes, fat taxes function as tax cuts because they reduce taxes and medical costs for those who reduce their health risks, allowing them more money to spend on other goods and services. A fat tax reduces the tax burden imposed on nonobese individuals by reducing the amount of money states have to spend on medical expenditures. Less money being spent on obesity-related increases in Medicare, Medicaid, and SCHIP means more discretionary budgetary flexibility for states.

4

“Costs of treating obesity soars,” Betsy McKay, Wall Street Journal, July 29, 2009. 5 “Mississippi has highest rate of obesity in nation; Louisiana holds steady in 8th place.” Times-Picayune, July 1, 2009. 6 “Extra pounds mean insurance fees for Ala. Workers,” Philip Rawls, Associated Press.

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7

Soft Drink Taxes: A Policy Brief, Rudd Center for Food Policy and obesity, Fall 2009. 8 Ibid.

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Conclusion Louisiana should adopt a sugar-sweetened beverage tax and impose an obesity surcharge on state employees. A one-penny-per-ounce soft drink tax would generate an estimated $112 million for Louisiana. If all sugar-sweetened beverages were assessed a one penny tax, then Louisiana would generate an estimated $222 million. A soft drink tax would alter consumer behavior, lower obesity rates, and save the state hundreds of millions of nondiscretionary dollars spent on Medicare, Medicaid, and SCHIP. A surcharge on state employees would also have the effect of better health and reductions in state health care expenditures. Fat taxes and tobacco taxes are smart politics; they create healthy communities and generate revenue needed during lean times.

Dr. Stockley is Assistant Professor of Political Science at the University of Louisiana at Monroe, a regular columnist for the Monroe News Star, and co-host of the weekly radio talk show, Political Incorrectness. He holds a Ph.D. from the University of Oklahoma.

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Louisiana Progress Journal March 2010, v1.3 Edited by Greg Granger, PhD Genevieve Pope, JD Matt Bailey, JD, Founder

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Washington Gridlock Opens Up Opportunities in Louisiana By Jim Brown It’s not just the winter storms that shut down Washington, D.C. This has been a winter of America’s discontent as gridlock continues in Congress. It’s been decades since Washington legislators have summoned the will to pass any major progressive legislation. So more and more, the buck is stopping at state capitols across the country. With Louisiana’s legislature about to begin a 60-day session, Washington’s inaction puts the ball back in Baton Rouge. There are a number of pressing problems that, in the past, might have been addressed and funded in Washington. But legislators, this year, need to focus on “state solutions” to a litany of issues where Louisiana has fallen behind. So to paraphrase Dickens, these could be the best of times and the worst of times in Louisiana. On the plus side, the Saints did win the Super Bowl, a new Mayor is off to a good start in the state’s largest city, and just last month, Louisiana was ranked as the happiest state in the country. Look, we will take anything we can get. But where does the legislature begin if it hopes to jump start the economic engines of progress that dramatically improves the Bayou State’s quality of life? A number of observers who monitor the Louisiana legislature are surprised that the present group in office has been reluctant to “think outside the box.” This could be the most educated group of lawmakers in the state’s history. But, with two years in office behind them, the knock is that there is little innovation and creative thinking coming out of Baton Rouge. So if there was a magic wand available, what might be suggested? First of all, recognize that the state has a lot of catching up to do. Every legislator should take the

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time to read Outliers by Malcolm Gladwell.9 A New York Times Best Seller for months, Gladwell talks about how one can “catch up” when behind in any given area. If a state lags in educational attainment and needs to make huge leaps as does Louisiana, it’s not just important to follow the lead of other more progressive states. Louisiana is behind, so there has to be a quantum leap forward. Gladwell follows the same reasoning put forth in Thomas Friedman’s The World is Flat.10 A kid in a small mountainous village in China has access to the same information as the student at a major American university, and thus has quickly closed the learning gap. Say “computers.” Basic laptops are being given to students in a number of states. Less than $100. And large numbers are being donated by both local businesses and foundations. Louisiana is not in this mix. Why not? Many school districts in other states have transformed elementary education into digital schools, with students being issued laptops instead of textbooks, with wireless access points in every classroom. And get this: a number of school districts out west are installing mobile internet routers on school buses enabling students to surf the web going to and from school. Wi-Fi access has transformed what was often a boisterous bus ride into a rolling study hall, and behavioral problems have virtually disappeared. The cost is about $200 per bus, and many parents “adopt the bus” and put up the money.11 Many Louisiana kids spent an hour each way on a school bus each day. Have you ever heard of such a program even mentioned in Louisiana? Affordable healthcare is high on everyone’s agenda, and here’s an area where the legislature could jump ahead of the debate that’s going on in Washington right now. Louisiana Governor Bobby Jindal offered a 9

Malcolm Gladwell, Outliers: The Story of Success (Little, Brown and Company, 2008). 10 Thomas Friedman, The World is Flat: A Brief History of the Twenty-First Century (Farrer, Strauss and Giroux, 2005). 11 Sam Dillon, Wi-Fi Turns Rowdy Bus Into Rolling Study Hall, New York Times (Feb. 11, 2010).

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package of ideas recently in a Wall Street Journal oped piece that included much discussed proposals such as pooling for small businesses, pay for performance, and refundable tax credits.12 So, go ahead Governor. Play this thing out on the street level and put your proposals on the table before Louisiana legislators. Whatever you think of the President’s plan, at least he is doing more than just proposing. Jindal has already missed the chance to gain much national traction by not calling a special session of the Louisiana legislature to implement his plan. The Republicans are offering little so far, and Jindal could make his proposals an alternative to the President’s solution. This also gets Jindal firmly back on the national stage in a more favorable light. He could score some real political points by setting out a number of his key healthcare proposals in the coming legislative session. And with tax dollars being scarce, this might be an excellent time to do some real streamlining on both the state and local level. Just how many boards, commissions, water districts, sewer districts, parish auditors, law enforcement offices, and a whole list of other special districts are spread throughout Louisiana? No one really seems to know. Some estimates are as high as 7,000. But can you believe no agency, public or private, can list all the public bodies that exist in Louisiana today? And if no one knows the number, then it goes without saying that no one knows the overlapping costs. Start with the 64 parishes. In the rural farming economy of the early twenty-first century, each parish served as the synergy of daily life in Louisiana. There was a need for local road and water districts to take care of rural needs. Government, by nature, was local. Police jurors and sheriffs ran their respective local districts like fiefdoms. When election time came around, rural voters were

12

Bobby Jindal, How to make Health-Care Reform Bipartisan, Wall Street Journal (Jul. 22, 2009).

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Washington Gridlock – continued enmeshed in electing local candidates who directly touched their lives. The sheriff was there to not just keep you safe, but to offer a ride to town for groceries or a doctor’s visit in many cases. The local police juror kept the ditches from overflowing and could see to it that a little gravel was spread on the dirt road leading to your farmhouse. Baton Rouge was often a two-day ride on horseback or an all-day trip by car over muddy dirt roads. What happened or did not happen at the local courthouse had a direct bearing on the daily lives of a majority of Louisianans. But that was in days gone by. Times have changed, and the state has assumed the vast majority of public duties including funding and administering highway construction, flood protection, healthcare, and an array of other public needs. Yet the local governing structure, with thousands of commissions, districts, and boards, hasn’t really changed in the past 75 years. Do we need 64 parishes? Would 45 work more efficiently and save millions? Do cities that take up the bulk of the parish like New Orleans, Baton Rouge, and Shreveport really need both a sheriff and a police chief? Some of the small, rural parishes have as few as nine thousand people per district judge. The average is more like 20,000 per judge. Should consolidation be undertaken? Why does every parish elect a coroner? Back in the 70s in my home parish of Concordia, the job was held by a local logger. Couldn’t this job be run by professionals on a regional basis? As demographer Elliot Stonecipher has pointed out in a recent study, Louisiana’s population is exactly the same today (4,410,000) as it was in 1985.13 Yet far from any reduction in local and state governmental entities, the numbers have significantly increased. Over the past century, little 13

Robert Morgan, La. May Lose Seat If Census Counts Illegal Aliens in U.S., Town Talk (Sept. 9, 2009).

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has changed involving how local government operates, and the system in place is still run by the same archaic institutions that were put in place before the invention of the telephone, light bulb, automobile, and of course the computer. On the state level, the same overlap and duplication exist. Four boards to govern higher education? How come states like California and North Carolina, where colleges rank at the top of all national lists, seem to get by quite well with just one board? And how about the slew of state boards and commissions that almost seem to make up ways to regulate where none is needed? If I go to Whole Foods and buy a dozen roses for my wife, do I really need a licensed florist, who has to be tested and certified through a floral board, to wrap them up for me? Or a board to oversee someone I hire to help decorate my office or home? Former NBC anchor Tom Brokaw discussed the problem and the opportunity: “Every state and every region of the country is stuck with some form of anachronistic and expensive local government structure that dates to the horse-drawn wagons, family farms and small-town convenience. It’s time to reorganize our state and local government structures for today’s realities rather than cling to the sensibilities of the twentieth century.”14 So where to begin? Let’s start with Boudreaux. He was a Cajun who always dreamed of winning the lottery. Every Sunday, he would go to Mass and pray: “God, I have been such a pious Cajun all my life. What would be so bad if I won the lottery?” But the lottery would come and Boudreaux wouldn’t win. Week after week, Boudreaux would pray to win the lottery, but the lottery would come and Boudreaux wouldn’t win. Finally, one Sunday at Mass, Boudreaux looked to the heavens and said: God, I have been so pious for so long, what do I have to do to win the lottery?”

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Washington Gridlock – continued And the heavens parted and the voice of God came down: “Boudreaux, give me a chance! Buy a ticket!” Yes, there are a lot of good proposals out there, but the Governor and legislators have to step up to the window, buy a ticket, walk the walk and not just talk the talk. What little financial help that was promised to Louisiana from Katrina and the stimulus package has come and gone. The buck stops in Baton Rouge. There are a number of public crises ahead, but conflict presents opportunities. If Louisiana is to really make a concerted effort to “catch up,” it’s way past time to begin.

Jim Brown was an elected official in Louisiana for 28 years, serving as a State Senator, Secretary of State, and Commissioner of Insurance. He is a talk radio show host and the Publisher of the Lisburn Press, which just issued the new biography of former Louisiana Governor Edwin Edwards. His weekly column appears in numerous newspapers and websites throughout the South. To read past columns going back to 2002, go to www.jimbrownla.com

14

Tom Brokaw, Small Town Big Spending, New York Times (Apr. 19, 2009).

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Making Dollars and Change: Louisiana Should Promote Social Entrepreneurship Through Its Tax Code By Daniel T. Smith When Kai Ryssdal of Marketplace interviewed Indra Nooyi, the CEO of PepsiCo, at this year’s World Economic Forum in Davos, Switzerland, he was hoping to hear from the head of a giant corporation about how it feels to bear the brunt of populist sentiment against big business and Wall Street banks. Instead, he got a lesson on the importance of social entrepreneurship in re-imagining the future of our economy. Real profit and loss, she argued, should be measured not only in terms of revenue less the cost of goods sold, but also less the costs to society. Corporations should learn to make stakeholders, not shareholders, the primary focus: I think the financial crisis came about because there was a maniacal focus on the shareholders. And everybody's now got a dose of religion and realizes that a maniacal focus on the shareholder will hit you up against the wall. So people are now beginning to embrace, faster than you'd ever imagine, that the stakeholder is the right person to focus on, because companies can do well, long term, only if the societies in which they operate also do well.15 An emphasis on stakeholders—anyone with an interest, financial or otherwise, in the activities of an organization—is the backbone of social entrepreneurship. Stakeholders include, for example, employees, customers, and those who live near an organization’s facilities and are impacted by its operations. By focusing on stakeholders and not merely shareholders, organizations can ensure that costs to society are no longer treated as market externalities to be absorbed by faceless consumers and collateral ecosystems. 15

“PepsiCo CEO: Redefine Profit and Loss,” Marketplace, http://marketplace.publicradio.org/display/web/2010/01/29/p m-davos-pepsi-ceo-q (January 29, 2010), American Public Media.

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The social entrepreneurship sector is relatively young, constantly evolving, and populated by innovators who borrow from both traditional nonprofits and the corporate world. They are willing to blend non-profit and for-profit activities to accomplish social or environmental goals. This blurring of sector boundaries is highlighted in the article “Convergence: How Five Trends Will Reshape the Social Sector,” published by the James Irvine Foundation: For example, as nonprofits increasingly develop profit-generating enterprises, corporations are becoming increasingly active in the social sphere—and out of this mutual crossing-over, new organizational forms are emerging. In the past, those seeking to create social impact were primarily driven toward a single model—the nonprofit. The future will bring a wider array of structural options and a greater willingness to experiment, as well as a heightened demand for accountability and compelling measures of social value. The driving question will be, “What do we want to accomplish?16 In Louisiana, however, social entrepreneurship has received limited recognition, and in some cases institutional barriers discourage new ideas in this emerging sector. The State should reverse this trend and begin to show leadership in encouraging and incentivizing the development of social entrepreneurship to improve social conditions while contributing to the sustainability of the economy as a whole. In 2006, Lieutenant Governor Mitch Landrieu created the Office of Social Entrepreneurship. According to its website,

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Focus, http://www.irvine.org/images/stories/pdf/eval/convergencerep ort.pdf (November 2009), 5.

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The Office of Social Entrepreneurship, in partnership with the public, private, and non-profit sectors, is committed to providing meaningful capacity building around tenets of social entrepreneurship, creating credible portals for financial and in-kind resources, and supporting improvements to public policy that enhance social innovation.”17 The Lieutenant Governor’s introduction of social entrepreneurship into state government is an encouraging first step, but more action should be taken by both the executive and legislative branches in Louisiana. The legislature has the ability to expand its role in promoting social entrepreneurship beyond budgeting for new and existing programs (such as those created under the Healthy Food Retail Act) and providing capital outlays to worthy NGOs. By codifying models of social entrepreneurship into law, Louisiana can educate, encourage, and incentivize the types of new business organizations that will be critical for competing in the new century’s economy. Take the New Orleans Food Co-op, for example. The need for the Co-op arose because retailers decided that it would not be profitable to operate grocery stores in certain areas of New Orleans, which deprived these areas of resources critical to the health of the communities. The New Orleans Food Co-op formed as a consumers’ cooperative, essentially a business owned by its customers, to provide food to these underserved communities.18 The Co-op, which now has more than 500 “memberowners,” is governed by a Board, elected by the members. All major decisions are made democratically, with each member having one vote, and all members having an equal “share” of the cooperative. Currently, the Co-op is finalizing the financing to open a cooperatively owned grocery store in the desperately under-served Bywater and St. Claude neighborhoods.

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www.crt.state.la.us/ltgovernor/socialentrepreneurship/ http://www.nolafoodcoop.org/

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Dollars and Change – continued The cooperative association is an old example of how the social entrepreneurial sector is providing goods and services in a way that benefits society on the whole. However, the hybrid nature of social entrepreneurism, where organizations seek both profit and to provide some social benefit, can often lead to an identity dilemma of sorts. For instance, the goal of the New Orleans Food Co-op is to make enough money to be a sustainable business, yet provide fresh food at an affordable price for nonmember patrons from the community. The complexity of this mission can be problematic, especially when it comes to financing and tax treatment of benefits. Traditional loans, forgivable loans, grants, and member investment have all been tapped to make the New Orleans Food Co-op’s vision a reality. Although members “own” the cooperative, and may derive extra benefits such as discount days or member refunds that ordinary patrons may not, cooperatives generally do not consider asset growth and member benefits as dividends or returns on investment. The tax implications of these benefits are far from clear. The complexity of the innovative models created through social entrepreneurship should not become a burden on such a critical new sector. Crucially, legislators and state officials should seek ways to clarify the state tax code as it relates to social entrepreneurs. For example, formally eliminating income and other taxes on member benefits from bona fide co-ops would incentivize the sector and provide much-needed education and confidence to the business community as a whole. An even more aggressive step would be to allow individual investors to utilize the Louisiana Angel Investor Tax Credit to provide fixed-rate financing for consumers’ cooperatives. Louisiana could go even further to encourage social entrepreneurship. Other states are far ahead of Louisiana in their efforts to incubate social entrepreneurs. Since 2008, Vermont, Michigan, Utah, Wyoming, and Illinois have passed laws

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recognizing a new hybrid business organization, the low-profit limited liability corporation (L3C).

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Americans for Community Development describes the L3C as “a for profit venture that under its state charter must have a primary goal of performing a socially beneficial purpose not earning money.”19 Essentially, L3Cs are LLCs that can access ProgramRelated Investments (PRIs), which are high risk and/or low return loans from private foundations that promote social or charitable goals and receive special treatment from the IRS. PRIs only constitute some of the financing for L3Cs, but can be designed to bridge the gap in finances for important social ventures and unlock other types of investment that would not typically be available to nonprofit entities.20

Thanks again for reading the Louisiana Progress Journal. We encourage you to share it, print it, distribute it at your next meeting, link to it on the internet, send it, or copy it – just make sure to share it with your friends and colleagues. We also hope you’ll visit us online at www.LaProgress.org, and follow the links to our Facebook and Twitter accounts. Check it out!

Faced with persistent “brain drain” and a system of zero-sum business tax incentives that create a dependence on large, out of state corporations, Louisiana must recognize the importance of developing the capacity of its human infrastructure and creating an environment that enables—and even rewards—its social entrepreneurs.

Daniel T. Smith is the owner of Tierney Program Management, a company focused on community planning and economic development. He graduated from Rice University in 2005 with a degree in Psychology & Asian Studies. He has lived and worked in China and served as an official state blogger at the 2008 DNC Convention. He currently lives and works in downtown Alexandria, Louisiana.

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http://americansforcommunitydevelopment.org/about.html http://foundationcenter.org/getstarted/faqs/html/pri.html

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This journal is the first step of a new initiative to promote more progressive policy ideas to move our state forward. All writing, editing, and coordination is done on a voluntary basis, and for now the journal is available online only. We are currently working on a plan that will allow us to print and mail future editions. You can receive updates by signing up at www.LaProgress.org/subscribe.

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Beyond the Recession By Matt Allen, JD This article was prompted by two converging trends. First, a recent survey by the Nonprofit Finance Fund indicated that U.S. nonprofit organizations are being hit hard by the economic recession, many anticipating suffering permanent damage.21 Closer to home, a survey by the Louisiana Association of Nonprofit Organizations (LANO) further shows that Louisiana nonprofits are also experiencing decreased personal giving, increased demand for services, and most importantly, decreased state funding.22 Second, recent actions by the Louisiana legislature indicate that many in Baton Rouge see eliminating (or severely limiting) nonprofit funding as a way to close budget shortfalls. For example, a bill was introduced in the 2008 session that would have completely eliminated state funding for nonprofits.23 Further, the Commission on Streamlining Government recently recommended putting burdensome requirements on nonprofits before they could seek state funding.24 Put simply, these requirements would essentially prevent most nonprofits from even attempting to receive state funds. This article will argue 1) that nonprofit funding is vitally needed during these tough economic times; 2) that cuts in nonprofit funding would have devastating effects on social services, quality of life, and the state economy; and 3) that there are more effective and productive ways to deal with the current budget shortfalls than to eliminate or significantly reduce state funding for nonprofit organizations.

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See www.nonprofitfinancefund.org See www.lano.org 23 HB 1207 of the 2008 legislative session. 24 “Streamlining panel rejects Kennedy’s plan,” The Times Picayune, November 4, 2009. 22

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The need Louisiana nonprofits fill vital needs in our communities: They educate our children, look after the elderly, provide shelter to the homeless, and provide medical care for the sick, just to name a few. Further, Louisiana nonprofits play a critical role in responding to disasters, both environmental and economic. For example, after Hurricane Katrina, Louisiana nonprofits provided much needed support to citizens that the state government was not in a position to provide. More recently, during the current recession, nonprofits across the state have provided a variety of services to those who lost jobs and homes. Again, the state government was not in a position to provide this relief. The effect of reduced nonprofit funding Elimination of (or even significant cuts in) state funding would have dire consequences for Louisiana’s nonprofits. A recent scientific survey indicated that further state funding cuts to nonprofits would result in program reductions and layoffs. Because in recent years, the state government has handed over much of the distribution of social services to nonprofits, the government would not be in a position to adequately fill the void left by these program cuts. Further, as Eddie Ashworth, director of the Louisiana Budget Project, recently stated to the Press Club of Baton Rouge, drastic cuts to nonprofit agencies would “impede [the state’s] ability to grow when the budget improves.”25 That is to say, the infrastructure nonprofits have established over the past years to deal with a wide variety of social issues would slowly decay while the legislature waits for the economy to improve to restore funding. This eroded infrastructure would take years to rebuild. Reduced funding for nonprofits would also affect the state’s economy. The nonprofit sector constitutes 11 percent of the American workforce (9.4 million employees), more than the auto and financial 25

“Think Beyond the Recession,” The Advocate, January 17, 2010.

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industries combined.26 The nonprofit sector is just as vital to Louisiana’s economy. As mentioned earlier, reduced nonprofit funding would certainly lead to layoffs in this large portion of the economy, which would have a negative effect on the state’s already fragile economy. In sum, significant reductions in state funding for nonprofits would further the negative effects of the recession in Louisiana. As one recent editorial noted, “All of this means Louisiana, already struggling to compete nationally and internationally, could emerge from this recession dumber and sicker than before the recession struck.”27 Another way In the upcoming legislative session, state legislators should seek alternative ways to close budget shortfalls other than drastically cutting nonprofit funding. There are many inventive ways to accomplish this goal, but here are just three suggestions. First, the legislature could delay implementation of the excess federal itemized deduction increase. A similar bill introduced in the legislature last year, SB 335, “would have delayed the increase of the excess federal itemized deduction from 65% to 100% scheduled to take effect in tax year 2009.”28 The bill would have resulted in $118 million in retained revenue. “This bill would not have increased taxes on any population of the state. It would merely have frozen the current deduction by delaying the effective date of the deduction increase until 2012.”29 Further, the legislature could adopt a proposal to increase the tobacco tax by 50 cents. A similar bill in last year’s session, HB 889, was defeated on the House floor. The revenues of this tax could be then

Beyond the Recession – continued used to offset any reductions to nonprofit organizations. Alternatively, the legislature could raise the top income tax rate to 8 or 9%. Currently, the top rate is 6%.30 As a comparison, California’s top rate is 10.5%. Lastly, the legislature could examine Louisiana’s long list of tax exemptions to determine if some could be eliminated. Again, these excess funds could stave off cuts in nonprofit funding. Conclusion The viability of Louisiana’s nonprofit organizations is vital to creating healthy and productive communities. Significantly reduced nonprofit funding by the state would adversely affect the lives of those who depend on these services. The state economy as a whole would also suffer. In sum, legislators should seek alternative ways to reduce spending or raise revenue; they should not balance the budget on the backs of Louisiana nonprofits, whose backs are already bowed by the effects of the recession. Louisiana must think beyond the recession.

Matt Allen is a native of Shreveport where he is currently a practicing attorney. He also teaches college courses in American Government, Philosophy, and Business Law. An alumnus of Texas A&M, he earned his law degree from Tulane.

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The Nonprofit Almanac 2008, The Urban Institute Press, Washington D.C, 2008. 27 “Think Beyond the Recession,” The Advocate, January 17, 2010. 28 LANO’s “2009 Legislative Session Wrap up” available at http://www.lano.org/Content/NavigationMenu/PublicPolicy/Pol icyUpdates1/LegislativeWrapup2009.pdf. 29 Id.

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“Cuts Hurt People in Need,” The Times Picayune, January 15, 2010.

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SPECIAL REPORT Politics of Population: Progressive Answers for Louisiana’s Redistricting Dilemma By Ryan Mick, MEd, JD "The polarization and poisonous atmosphere that have infected the House of Representatives for the past two decades or more can be traced in large part to the manner in which district lines are drawn in most states." - Les Francis, former Executive Director of the Democratic National Committee It is difficult to deny that the major population growths and shifts in our country as well as the tragedy of Hurricane Katrina will result in the loss of a Congressional seat for Louisiana in the 2010 census process.31 Not only has Louisiana lost population, but many residents who have remained in Louisiana have moved away from the once densely populated New Orleans region to other parts of the state.32 These changes in population no doubt make Louisiana’s likely redistricting process one that has the potential to be either highly politicized or highly progressive and transformative for the betterment of all Louisiana. Since the power of the redistricting process is principally in the hands of Louisiana’s legislators, it is their opportunity to shine as an example to others states or to remain an engine of politicking so reminiscent of prior redistricting efforts. Defining Characteristics of Reapportionment and Redistricting To understand redistricting, one must first understand reapportionment. Reapportionment is the process by which Congressional seats are 31

Public Affairs Research Council. “Redistricting 2010: Reforming the Process of Distributing Political Power.” PAR Analysis 317 February 2009. Can be accessed online at: http://www.la-par.org/Publications/PDF/Redistricting2010.pdf (hereinafter Redistricting 2010). 32 Steven Ward. “2010 Census Could Be Costly for Louisiana.” The Advocate. Jan. 31, 2010.

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redistributed according to census data. The United States Constitution and the 14th Amendment require that data be collected every 10 years so that “Representatives [will] be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed.”33 Redistricting, on the other hand, is the end result of the reapportionment process. The procedure of redistricting allows states to remap Congressional and state legislative districts to reflect population changes from the census data. States that experience significant population growth or loss will face the increase or loss in Congressional representation and thus will be required to redraw their maps to reflect the changes in population 34 The Practice of Redistricting in Louisiana So, how does the practice of redistricting occur in the Louisiana? Like 27 other states, Louisiana’s legislature is solely responsible for the redistricting process, which is loosely defined by state House and Senate rules.35 As one might guess, this system poses conflicts of interest and provides for very little accountability. What makes the situation even more corruptible is the fact that the public knows so little about redistricting and reapportionment. A relevant, but non-scientific example of this fact might help explain what I mean: Before drafting this article, I made conversation with a highly-educated colleague about the ramifications of redistricting. Unfortunately, she did not wholly understand the reapportionment or redistricting process or why this issue was significant to her as a citizen of Louisiana. She not only has a degree in political science, but also holds highly coveted master’s degree from a major public policy school. Though she is politically active, it seems the inner workings of the redistricting process remain reserved only for those

33

th

United States Constitution, 14 Amendment, Section 2 Redistricting 2010. 35 Id. 34

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savvy enough to be entrenched in our state’s politics. However, to say there is absolutely no accountability in Louisiana would be imprecise. Because of the state’s voting rights history, Louisiana and 15 other states must have their redistricting maps approved by the Department of Justice as codified in the Voting Rights Act.36 Moreover, the Voting Rights Act requires that Louisiana also include at least one majority-minority district within the state’s redistricting map.37 While this no doubt ensures minority voice, it also further exacerbates the political nature of redistricting, creating “token districts” or racial minority “lumping,” where those responsible for redistricting fit all minorities into one district without regard to geography or sensible district compactness.

Politics of Population – continued control of the state government in 2004. Republicans redrew the 2005 redistricting completed by a Democratic legislature, which resulted in the loss of two more Democratic seats in the 2006 midterm elections.38 Of course, Democrats are not blameless either: Under the leadership of Steny Hoyer, Democrats in Maryland used redistricting to oust two Republicans in 2002.39 Though the gerrymanding and protectionism are major concerns in providing fair and wellrepresented Congressional districts, it is the politics and pandering that might hurt the public most – and Louisiana is not immune. Early in 2009, the Louisiana Family Forum, a conservative interest group, released a redistricting plan based on its view of how Louisiana should be divided.40

Louisiana’s current Congressional Districts

Legislative Sole-Control of Redistricting Is Too Flawed To Continue Is the Louisiana legislature the appropriate body to determine its Congressional and statewide districts? I would argue that the current system of redistricting only invites protectionism, gerrymandering, and political pandering all at the expense of a fair division of the people of Louisiana. Concerning gerrymandering, it is evident that in states where the legislature has control of the redistricting process there are consistent efforts made to gerrymander districts, thereby eliminating districts controlled by the minority political party. In Georgia, this happened after Republicans took 36

The National Voting Rights Act of 1965 (42 U.S.C. § 1973– 1973aa-6). 37 Id.

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As Roll Call reports, the “map combines most of the majority-black 2nd district based in New Orleans with most the south-central 3rd district, which is currently represented by Louisiana’s lone House Democrat, Rep. Charlie Melancon.”41 On its face, the map appears acceptable; it fulfills the Voting Rights Act requirement of a majority-minority district and acknowledges the shifts in population caused by Hurricane Katrina. However, upon further scrutiny, it is easy to see the politicking of the Louisiana Family Forum. Here’s why: “Republican Rep. Anh “Joseph” Cao currently holds the 2nd district seat, but Democrats and most unbiased political observers believe the 64 percent black 38

See Fairvote’s redistricting website for more instances of gerrymanding: http://www.fairvote.org/redistricting 39 Id. 40 McArdle, John. “Louisiana Politicians Already Talking Redistricting.” Roll Call. Jun. 9, 2009. 41 Id.

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district will revert to Democratic control next cycle.”42 Simply put, this map combines a prospective Democratic (and majority-minority) district with the current Democratic District, thereby eliminating the possibility of a new Democratic representative for the state of Louisiana.

Louisiana Family Forum’s Redistricting Map is a perfect example of gerrymandering and politicking for the benefit of partisan interests.

It is the politicking of interest groups such as the Louisiana Family Forum that is the most unnerving. The organization has a strong voting bloc and can use this as leverage with a legislature that is solely in control of redistricting. Basically, fair and proper redistricting as it stands now in Louisiana is endangered by the gerrymandering protectionists on one side and political agendas on another. With this double-edged sword, isn’t it about time Louisiana embraces a new system?

Politics of Population – continued redistricting power to appointed boards or commissions, 8 other states use such commissions in an advisory or backup role, and one state grants the power of redistricting to nonpartisan legislative staff. These changes in the redistricting are not random, but part of a growing trend of states removing legislatures from the redistricting process. “Since 2005, 18 of the 28 states that use only their legislatures for redistricting have tried to create independent redistricting commissions or to expand the duties of existing state commissions (used for other purposes) to include the task of redistricting.”43 Many redistricting reform advocates cite Arizona’s redistricting reform movement in 2000 as the superior template.44 Under Arizona’s new system of redistricting, a commission is formed by appointments recommended by the judicial appointment boards in the state. “Commission maps are not subject to review by the Legislature or veto by the governor, although they may be challenged in the courts on Voting Rights Act grounds.”45 Arizona also has imposed strict rules on the redistricting commission: the new maps should favor competitive districts between parties and not consider places of residence for incumbents or candidates.46 Many states are now pursuing alternatives to legislature-based redistricting. Though Arizona’s model may appear to be an extreme solution to the problems of gerrymandering and politicking in the redistricting process, it no doubt ensures that new district maps are drawn with the public, not the politician in mind. So, how can Louisiana move forward with progressive redistricting reform?

Why Should We Reform Though Louisiana places its redistricting power with the legislature, other states use varied systems to remove some of the politicking from the redistricting process. Across the country, 13 states give 42

Id.

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Redistricting Report Americans for Redistricting Reform. “Editorial: A Fairer Way for Elections.” The Advocate. Oct. 26, 2008. 45 Id. 46 Id. 44

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Politics of Population – continued How it Should Be Done in Louisiana The Public Affairs Research Council (PAR) probably has the best recommendations for Louisiana with regards to redistricting reform. It outlined these recommendations in a recent report: “Redistricting 2010: Reforming the Process of Distributing Political Power.” Recommendations include:  Assign the task of congressional and legislative redistricting to an independent commission, whose powers, duties and redistricting principles are firmly established in law.  Require all commission meetings, documents, communications and work product to be subject to Louisiana’s open meetings and public records laws, as well as posted and archived on the commission’s Web site.  Begin the assignment of redistricting power immediately to ensure a ready and able commission for the next redistricting cycle.47

partisan politics that legislative control of the redistricting process so often creates. Second, the recommendations advocate for an open-door redistricting process. Redistricting is one of the most important governmental processes in ensuring the public is well-represented by the best political minds. On top of this, because the public has such a limited knowledge of redistricting, there is an even greater urgency to keep the redistricting process public; it will no doubt grow public knowledge on this important issue. Finally, PAR recommends taking action now so that Louisiana will be prepared for the upcoming process. Our redistricting process starts officially after we receive census data, which can be no later than March 2011. If Louisiana wants to have progressive change in its redistricting process next year, the legislature needs to act now. Conclusion

PAR’s recommendations hit our state’s redistricting problems right on the head in several significant ways. First, they task a body other than the legislature with developing a redistricting plan. This works to eliminate both the gerrymandering and

In researching this article, I came across an Internet game created by the Annenberg Center entitled “The Redistrcting Game.”48 In the game you are assigned the role of the redistricting coordinator for

The Redistricting Game is an entertainingly accurate depiction of the problems of legislative based redistricting worthy to be shared in every social studies class and with every politician alike.

47

48

Redistricting 2010.

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I highly recommend that any reader of this article or any person with interest in this important political process visit this game. It can be found at: www.redistrictinggame.org

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Politics of Population – continued your political party and are given a task to redraw your districts in specific ways: you’re either trying to gain a seat for your party, preserve incumbents’ seats from both parties, or create a seat for a new majority-minority district. As you play, you’re able to see the griping of representatives who may lose their seats and you might be sent back to redraw the districts if the legislature or governor does not like how you reapportion districts. To succeed in pleasing everyone, you typically have to mangle a Congressional district in such a way that your new districts may stretch across the state, or consist both urban and rural populations, or be comprised of only one race.

districts without regard to the social and geographic differences in our state. Will change be easy? Not necessarily. Even if Louisiana embraces a commission-based redistricting system, it doesn’t guarantee the commission’s success in avoiding legal challenges or partisan politics. It is, however, a giant step in the right direction.

At the final stage of the game, you are asked to complete the redistricting task without regard to the politicians or political parties. It is at this point that the game becomes simple. You only need to draw correctly apportioned districts. In doing so, you act without interference from the legislature or the governor, and are able to create districts that properly recognize geographic and social differences. The Redistricting game is both tedious and comical, seemingly a perfect parallel the politics of redistricting in America. This comedy is also the tragedy of the game; redistricting should not be a fit of fancy that requires plotting and manipulation to win. The true win for Louisiana is approaching redistricting with a progressive eye; one that looks beyond political protectionism and party lines, and instead focuses on what really matters: the people of Louisiana. We shouldn’t be creating Congressional districts that carve up urban areas like meat to be served, and we shouldn’t be drawing

Ryan Mick is a Louisiana educator. He holds a Master’s Degree in Research from Ohio University and a law degree from The George Washington University. Prior to teaching, he worked for the Redistricting Reform Project, a partnership of the Campaign Legal Center and the Council for Excellence in Government. More information on redistricting: Americans for Redistricting Reform: americansforredistrictingreform.org The Center for Voting & Democracy: www.fairvote.org Brennan Center for Justice: www.brennancenter.org

Disclaimer The views represented in the Louisiana Progress Journal are those of the respective authors only. None of the opinions, comments, or analysis by any author is necessarily attributable to any other author or the editors. For more information, visit our website at www.laprogress.org or email info@laprogress.org. Thanks!

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MEDIA SPOTLIGHT

Haynesville: A Nation’s Hunt for Energy

he weighs losing his land to an oil company’s offer to make him a millionaire. While tracking the effects of the find on these people's lives, Haynesville explores the current energy situation in the United States. The film takes a hard look at what the scale of the Haynesville (170 trillion cubic feet or the equivalent of 38 billion barrels of oil) could mean to the nation’s energy picture. In a never-seen-before on-screen discussion, environmentalists, academics, and oil and gas industry folks hash out the idea of trying to find cleaner energy sources, and how the Haynesville’s vast reserves of natural gas could possibly help provide an important part of the nation’s energy answer.

(The following is the synopsis of a groundbreaking new documentary focused on the Haynesville Shale, an underground rock formation in Northwest Louisiana containing one of the world’s largest natural gas reserves. The Haynesville Shale is expected to impact dramatically the regional and state economy as well as the lives of thousands of Louisiana residents. We applaud Gregory Kallenberg, the film’s Director and Producer and a Shreveport native, for so artfully telling the human story of this significant natural resource discovery. We hope that you will learn more and support this important film.) Haynesville: A Nation’s Hunt for Energy takes place in the Louisiana backwoods, and tracks the momentous discovery of the largest natural gas field in the United States (and maybe the world). Haynesville examines the historic find (a formation called the “Haynesville shale”) from the personal level as well as from the higher perspective of the current energy picture and pending energy future. As the Haynesville Shale boom erupts, the film focuses on three lives caught in the middle of the fervor: A single mom takes up the defense of her community’s environmental protections, an African American preacher attempts to use the riches to build a Christian school, and a salt-of-the-earth, selfdescribed “country boy” finds himself conflicted as

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(Courtesy of Gregory Kallenberg. To learn more, including details about the film’s premiere at the SXSW Film Festival and DVD release on March 16, visit www.HaynesvilleMovie.com.)

Our Next Journal Work on the next edition of the Louisiana Progress Journal has begun. We plan to include articles analyzing the Louisiana legislative session and the success or failure of progressive policy proposals. We will also seek to provide a look forward on the future of some proposals. Are you interested in writing for the next journal edition or the LPI blog? We are always searching for new ideas from a wider range of authors. Please send us a message at www.LaProgress.org and introduce yourself. We look forward to hearing from you!

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Louisiana Progress Journal v1.3  
Louisiana Progress Journal v1.3  

The third edition of the quarterly progressive policy journal

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