Megafund more vital now, Moret says

• By GARY PERILLOUX
• Advocate business writer
• Published: Jan 13, 2009 - Page: 1A - UPDATED: 12:05 a.m.

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An industry deal-making fund sought by former Gov. Kathleen Blanco in 2007 and ratcheted up to $418 million by the Legislature last year at Gov. Bobby Jindal’s behest looms more important now the economy has softened, said Stephen Moret, the state’s economic development secretary.

Moret’s comments come against a backdrop of legislators questioning the use of the fund in a tightening economy.

“It’s a huge difference-maker in whether or not we win projects,” Moret said Monday after addressing the Press Club of Baton Rouge.

The Louisiana Mega-Project Development Fund can be tapped by prospects who create 500 or more jobs and invest at least $100 million. By law, the state can give a prospect no more than 30 percent of the total capital investment.

Moret said five confidential prospects — two of them publicly identified by environmental or bond applications, the $2.1 billion Nucor Corp. pig iron mill proposed in St. James Parish and a $350 million chemical project proposed by French-based SNF Floerger SAS near Plaquemine — could deplete the fund should each of them materialize. The 10 largest projects being pursued by the state would bring more than 7,000 jobs and $8 billion to $10 billion in capital investment were they all to choose Louisiana, Moret said.

“My sense is (the megafund) is more important now because other states are more limited in what they can do,” he said.

In a wide-ranging talk at the Press Club, Moret broached the historical reliance of Louisiana’s economy on three vital forces:

• The land, for agriculture and oil and gas.
• The Mississippi River, for waterborne commerce.
• The petrochemical processing industries, through which corporations built the chemical base for the consumer economy.

Those strengths need to be harnessed in new ways, because traditional uses are leading to declining job numbers, Moret said. He backed those trends with charts of declining employment in the state and nationally for chemical manufacturing, paper manufacturing, farming, and oil and gas, though the latter sector spiked upward in much of 2007 and 2008 when oil prices were high.

“We really want to be around $60 or $70,” Moret said, for petroleum-based industries to thrive. Oil was trading at about $38 Monday.

Moret’s LED department is refining custom job training programs, a new Web site to speed business applications of all kinds, a business retention and expansion group, and a state competitiveness group to benchmark how Louisiana can improve its chances of winning business expansions and new companies.

Most of those efforts will be complete by mid-2009. And those efforts are critical, Moret said, because Louisiana’s late entry into the community and technical college arena and its deficit of tens of billions of higher-education endowment dollars, compared with Texas, means there are some hurdles it can’t climb against the opposition.

What Louisiana can do, he said, is make the most competitive business deals in areas where it can thrive:

• Nuclear power manufacturing, based on a new Shaw Group Inc.-Westinghouse Electric Co. initiative that will bring 2,900 new jobs to the state in the next decade.
• Digital media, based on the recruitment of Electronic Arts Inc. to Baton Rouge and the rise of other video game businesses.
• Specialty chemical and advanced manufacturing that play off the existing infrastructure strengths in pipelines, processing and transportation.

Those undertakings will benefit from the megafund, Moret said.

At the same time, Louisiana potentially faces $1.2 billion less in general fund money for the fiscal year beginning in July, and the Jindal administration is working through $341 million in budget cuts to stay balanced this fiscal year.

When the fund was established and enlarged, Louisiana enjoyed large surpluses from hurricane recovery dollars and higher mineral tax revenue. Both of those wells are much drier today than a year ago.