Our Views for July 27, 2009

• Published: Jul 27, 2009

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The state of Louisiana is offering $134 million in incentives to a car company in a deal that, by design, has a very thin paper trail.

This might be a wonderful deal for state residents or a boondoggle, but we don’t have enough information to know whether it’s the former or the latter. Very few documents concerning the deal are available for public review, which means taxpayers will have to rely on the assurances of Stephen Moret, Gov. Bobby Jindal’s secretary of economic development.

We have a lot of respect for Moret’s diligence and intelligence, but the state’s taxpayers deserve more information about this project than they’ve been given.

The Jindal administration offered the incentives to San Diego-based V-Vehicle Co., or VVC, to build cars in a vacant industrial building in Monroe. If the project succeeds, it could swell Louisiana’s wages by $1.9 billion in a 15-year period, according to an LSU economic forecast.

But neither VVC nor state officials will say what kind of car is planned for the Louisiana facility or how it will be sold. Moret’s department paid a consulting company $16,000 to study VVC’s business plan, and the consultant was largely favorable about VVC in a three-page letter that talks in very general terms about the car company’s business goals.

But no underlying documents for the review are available because the Department of Economic Development intentionally exchanged information by word of mouth to avoid generating documents. Moret said his department used this method to avoid disclosing any of VVC’s trade secrets.

We are familiar with concerns about revealing a company’s proprietary information when governments offer incentives to private industry. But we fear such concerns too often become a rationale for blanket secrecy about the use of taxpayer money.

We also worry about government-sponsored business deals in which critical details, as far as we can tell, are carried around exclusively in the heads of a few key people. Government officials come and go. Where’s the public accountability when key information isn’t recorded in writing?

We agree with Jim Brandt, president of the nonprofit, nonpartisan Public Affairs Research Council of Louisiana, that the current level of secrecy concerning many state-funded economic development deals doesn’t ensure enough public oversight and accountability.

Moret has emphasized that the state’s deal with VVC is designed to safeguard the state’s interests. He has mentioned that initial dollars provided to the project will be used for site improvements that would make it attractive to any future business tenant. Moret has stressed that state dollars on the project will be spent incrementally, and only after VVC meets certain performance benchmarks. If VVC defaults, the state would own the infrastructure it has helped develop for the site, Moret said, adding that he believes such a default is unlikely.

While such safeguards can help limit the state’s risk in this venture, we know that commercial ventures, by their nature, can never be risk-free. That is particularly true of the car industry, which has been in economic free fall lately.

The state’s taxpayers deserve more information on this deal so they can determine whether it’s worth the risk to taxpayers.

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