Treasurer John Kennedy has played a supporting role in two of the state's major policy debates of early 2001: the sale of the multi-billion dollar tobacco settlement and the tax break for Harrah's New Orleans casino. Yet his job description gives him little to do with one and nothing to do with the other.
Many elected officials -- including those who will have to vote on both matters -- would rather avoid such a pair of such controversial issues. But when Gov. Mike Foster appointed Kennedy to the respective task forces, it put the state treasurer on the point for both. And both the tobacco settlement and Harrah's issues demonstrate the unique position that Kennedy holds in state politics -- one that could launch him into the 2003 governor's race.
Kennedy got out front on the tobacco issue in the 1999 race for treasurer, making the case for converting at least part of the long-term payout plan into a lump sum payment: "If your rich uncle died and left you $4.4 billion, all of it in Philip Morris stock, what would you do? I would diversify."
He approached the highly charged question of Harrah's tax break more adroitly. Faced with the difficult question, Kennedy raised another question. He suggested the state demand stock in the parent Harrah's company in return for the tax reduction. Though the governor called the idea interesting, it was rejected out of hand by Harrah's and never formed part of negotiations.
Since Kennedy's election in 1999, Foster has involved the treasurer on major policy issues beyond the limited constitutional realm of that office, far more so than any past governor has done with an elected treasurer. It's a relationship that has proven useful to the governor and empowering to the treasurer.
"People respect John. They listen to him," says Foster, acknowledging that Kennedy, as the chief elected financial officer, can affect public opinion on administration fiscal policy, from selling off the tobacco settlement to refinancing the retirement system debt.
"l think the governor understands that as treasurer, and given the way I am, that I've got strong feelings about money issues and that I will speak out," says Kennedy.
Kennedy's position affords him a doorway through which to come and go from Foster's political kitchen, depending on the heat and what's cooking. He can make public statements and adopt positions, but, unlike a legislator, he doesn't have to vote and acquire a voting record. He can play on the governor's team, but unlike a top aide, he does not have to follow marching orders. If either the Harrah's or the tobacco initiatives fall apart, Kennedy can back away and let others pick up the pieces.
The relationship between Mike Foster, 70, and John Kennedy, 49, has evolved, to say the least. In 1988, Kennedy, as part of then-Gov. Buddy Roemer's staff, was assigned to lobby then-Sen. Foster of St. Mary Parish. "They butted heads many times," recalls Roemer. "I won't tell you the comments either said about each other."
One of the most bitter disappointments of the Roemer administration was the defeat of the single board of higher education bill, which fell one vote short of the two-thirds majority when Sen. Foster, who Kennedy thought was in their column, went against it. But that misunderstanding was nothing compared to the 1995 governor's race. "You have to start from Point A. We were mortal enemies," Foster says. "He ran the campaign of the guy who gave me the toughest time of all."
Foster is referring to Kennedy's role as campaign manager for Roemer's comeback bid. With Foster overtaking Roemer in the polls, the two candidates clashed bitterly in a series of public forums. "[Kennedy] was the enemy, but my philosophy is to try not to hold grudges and have respect for people with opinions different from mine," says Foster. Indeed, during his transition, the governor-elect, having difficulty filling the job of revenue secretary, rescued Kennedy from political oblivion by asking him to take the Cabinet post.
Foster's choice was as shrewd as magnanimous. While Foster built his electoral base on rural conservatives, he took office without a strong connection to urban conservatives and moderates -- those affluent, well-educated voters who found a political voice in Buddy Roemer. With Roemer vanquished, Kennedy could serve Foster as a link to a constituency whose support he needed.
When he won his first election in 1999, ousting incumbent state treasurer Ken Duncan, John Kennedy was hailed as a political newcomer. Hardly. His first win came eight years after a close, heartbreaking loss as a candidate for attorney general, and four years after being campaign manager for Roemer's failed comeback bid for governor. While the first loss was formative, the second setback would have ended Kennedy's political career, had the victor not made him a survivor.
John Neely Kennedy grew up in Zachary, a picturesque small city that is located in East Baton Rouge Parish but has more in common with the rustic, rolling Felicianas Parish just to the north. His father was a contractor and real estate developer, his mother a homemaker. He went from Zachary High to Vanderbilt University, where he was senior class president and a magna cum laude graduate, and then to University of Virginia Law School, where he was executive editor of the law review, and finally to Oxford in England, where he was a first honors graduate.
Kennedy met his wife, Becky, another attorney, when he was working at the New Orleans law firm of Chaffe McCall. (They now live in Madisonville, on the north shore of Lake Pontchartrain, with their 5-year-old son Preston; Kennedy commutes to Baton Rouge.) In 1987, Kennedy was drawn to the Roemer Revolution, signing onto the campaign as issues manager. Later he joined the new governor's staff and helped develop and pass tort reform legislation and the landmark campaign finance reform act of 1989.
When Roemer made his doomed re-election bid in 1991 against Edwin Edwards and David Duke, Kennedy, at age 40, struck out on his own to run for attorney general in an open-seat election. The six-candidate field included then-District Attorney Richard Ieyoub of Lake Charles, the favorite of many Democratic politicians and black leaders; state Sen. Ben Bagert, who was endorsed by the Republican Party; former insurance department official Winston Riddick; and James McPherson, who was campaigning alongside David Duke for governor.
Like his former boss Roemer, Kennedy was caught in the middle in a polarizing election. Ieyoub ran first with 31 percent, ahead of Bagert with 22 percent. Kennedy finished a close third at 20 percent, missing the runoff by 25,000 votes. Ieyoub smothered Bagert in the general election. Kennedy returned to Chaffe McCall, but four years later, he agreed to manage Roemer's comeback campaign. (His wife, Becky, would also leave the law firm, when Kennedy returned to public service, to avoid any possible conflict. She now works as a hearing officer and law clerk in the 22nd Judicial District.)
Reinventing himself as a hard-core conservative, Roemer started with a wide lead in the polls, but, as in 1991, he faltered in the stretch as rural voters identified Mike Foster as the real right thing. Relations between the two Republicans soured late in the race as Roemer tried to beat back Foster's late surge. The governor still derisively refers to the former governor as "that little guy."
By election night, Kennedy seemed to be as finished in politics as Roemer. He admits he did not look forward to seeing Foster at the next board meeting of the Louisiana Workers Compensation Corporation (LWCC). "The governor-elect came in with the state troopers with him. I just kind of hunkered down. Halfway through the meeting, he motioned to me: 'I need to talk to you.' I thought, 'Oh hell.'" But instead of having a bone to pick, Foster wanted to talk politics, and later offered him the revenue job. The governor would later say the workers comp insurance company was part of his change of heart. Kennedy had favored legislation to create LWCC, Foster's brainchild, when Roemer initially did not.
Kennedy recognizes his debt to both his past masters. "I disagree with [Roemer's] politics but I will never speak ill of him because he brought me to the dance," he says. "By the same token, I will never speak ill of Mike Foster, because he kept me at the dance."
Some wondered if Foster was really doing his old enemy a favor by making him the head tax collector in a state whose citizens are so averse to personal taxes. Yet the new revenue secretary quickly showed a talent for realizing the full potential of his office and the creativity to think outside of it.
Kennedy discovered that an obscure duty of his office is to be custodian of unclaimed property -- the millions of dollars in closed bank accounts, stock certificates, and tax and utility deposit refunds that belong to citizens and businesses who have moved and/or forgotten about those assets. The most efficient way to get the money back was also the most politically advantageous: a come-and-get-it promotion that included a hotline, pages of newspapers ads with columns of names of unclaimed property owners, and even trips to malls by department employees with laptop computers for curious shoppers to test their luck.
In all, Kennedy's shop returned $22 million in unclaimed property to 50,000 citizens and businesses. The state's tax collector became best known for putting checks in the mail, an unbeatable image normally reserved for public service commissioners following utility rebates.
Kennedy was also aided by good timing, at least during Foster's first term. The state's strong economy and the administration's fiscal management produced a string of budget surpluses. But when deficits loomed at the start of Foster's second term, legislators turned up the pressure on Kennedy's hand-picked successor, Brent Crawford, and demanded an accounting of past-due tax collections. That eventually led to Crawford's resignation and the replacement of Kennedy's old senior management team within one year of his leaving that office.
"You can always do a better job in terms of collections," concedes Kennedy. "I'm not saying then or now the department was perfect. But the problem with the budget is not a collection problem, it's a spending problem."
As part of Foster's revamp of gaming laws, the revenue secretary became an ex officio member of the Gaming Control Board. Though Kennedy had no vote, he clearly used his voice. Serving with board members with little political experience, Kennedy often took the lead in questioning casino officials on newsmaking issues, such as his excoriating riverboat operators for their lax enforcement of the 21-year-old age limit.
One of Kennedy's last acts as revenue secretary was to ask the Legislature to drop the "T" word ("taxation") from his office title. One of his first acts as treasurer would be to draft a bill transferring the unclaimed property office to his new shop.
By the summer of 1999, Kennedy decided to give the campaign trail one last try. It did not appear to be a good year for challengers, with all statewide elected officials running for re-election. Worse, Kennedy's relationship with the popular governor seemed neutralized when Foster signed a neutrality pact with the seven other statewide incumbents, pledging not to campaign against each other.
Kennedy really wanted to run for attorney general again, as he told this reporter that summer. But Richard Ieyoub, cleared of an FBI investigation over use of campaign funds, had firmed up his base among traditional Democrats and refilled his campaign war chest with trial lawyer money.
Finally, Kennedy settled on running against one-term incumbent state treasurer Ken Duncan. Duncan had run a competent, scandal-free administration, but he bore the baggage of early snafus, including a bid to build a private bathroom in his Capitol office and the hiring of a chauffeur for state business trips.
As a challenger, Kennedy was shut out of the fundraising sources in the financial community that an incumbent has access to. He staked his campaign with $205,000 in personal loans, which the campaign has since repaid to him.
The pundits expected the Kennedy campaign to go negative. But his own polling showed that his name recognition was higher than the incumbent's, though as he ruefully noted at the time, "A number of people think I am the dead president's dead son."
Some commercials produced for him seemed to foster that notion. On one radio spot, state Sen. Cleo Fields, a former congressman, said, "I have been a friend of the Kennedy family for years," and "John Kennedy is a name you know." The Duncan campaign rushed commercials onto the air that said: "We can warn our friends that this John Kennedy isn't the same family of the great president. He just wants to fool us."
The finishing touch was another piece of misdirection that looked like an endorsement by the officially neutral Gov. Foster. A Kennedy commercial produced by Roy Fletcher, also Foster's consultant, used a clip of the governor in an early 1999 press conference lavishing praise on his revenue secretary. As far as the viewer knew, the governor was directly endorsing candidate Kennedy. Duncan publicly protested and called upon the governor to set the record straight. But Foster remained silent, Fletcher increased the ad schedule, and Kennedy won going away to become the first challenger to knock off a statewide incumbent since 1991.
John Kennedy has made the vital quantum leap from political appointee to statewide elected official. He has his own staff and second-floor Capitol office, complete with a vault. But the power of the office does not match its trappings. While the treasurer chairs the bond commission, he has only one vote on a body that is controlled by the administration.
With fiscal issues dominating Foster's second administration, Kennedy's opinion cannot be taken lightly by the governor. Yet the great freedom of elected office to speak out and be quoted can also be dangerous the more one's public opinions drift beyond one's official capacity. Kennedy himself overreached from the bully pulpit last year when he said the Department of Health and Hospitals (DHH) should negotiate bulk discount purchases for prescription drugs, the fastest-growing cost in the state Medicaid budget. DHH Secretary David Hood, who has earned a reputation for stretching shrinking health budgets to the max, shot back with a list of practical and legal reasons why Kennedy's plan would not work. In the exchange between the career health care manager and the elected state treasurer, and with no cover coming from the Fourth Floor, Kennedy got a mild comeuppance.
He now acknowledges the breach of protocol. "In hindsight, I should have talked to David and his folks first," says Kennedy. "I have apologized to them for that." Yet he still maintains that his prescription discount concept, used by the Veterans Administration, could be applied in Louisiana. "You can criticize me all you want for raising the issue as the treasurer, but no one has come up with a better idea yet."
The very minor flap did catch the attention of columnists, who connected it to Kennedy's way of approaching controversial questions by posing new ones. In an opinion column, Baton Rouge Advocate writer Carl Redman noted Kennedy's "history of throwing little bombs that cause a flurry of discussion but little in the way of results."
"I disagreed with that," says Kennedy, denying he ever seeked to cause controversy for its own sake and defending his raising of new if unconventional ideas. "Change makes people uncomfortable, but I don't know any other way to make progress than to discuss new ways of doing things when the old ways don't work."
Kennedy's election immediately placed the new treasurer in a short field of Democrats positioned to run for governor in 2003, including Lieutenant Governor Kathleen Blanco, Attorney General Richard Ieyoub and former Senate President Randy Ewing. Then there is U.S. Sen. John Breaux, who, though currently enmeshed in Washington politics, is not closing off his gubernatorial options. Yet they all face the possibility that a black candidate could capsize the Democratic field, as occurred in the last two governor's elections.
The center has been a dangerous place for white Democrats during and since the Edwards era. The more candidates veer toward the center, and away from the base of Democratic voters, the more likely a well-known black candidate will enter the race to fill the void. Mainly as a result of that dynamic, both of the governors Kennedy has served under were Democratic converts to the Republican Party: Roemer never won an election after he changed parties and Foster never lost one.
But rather than change parties himself, Kennedy hopes some attitudes in and out of the party change. "It's time for Louisiana to elect a black man or woman to statewide office," says Kennedy. "People don't seem willing just yet to elect a black man or woman governor, but I do think they are ready to elect a lieutenant governor, secretary of state or treasurer or other statewide office. The party ought to work it out."
To which Roemer responds, "Lotsa luck, boys."
The treasurer's official line on 2003 is: "I plan to run for reelection. Could that change? Sure. Politics is a changing process, but it's early. The next round isn't for three years. A lot can happen in three years."
Well, two years anyway, by when the race will be on. Until then, John Kennedy is well-positioned as a known Democrat with a supportive while still independent role in advancing a Republican governor's bipartisan agenda. To the degree that agenda succeeds, it will favor Kennedy. And if the Foster administration falls short on answers, John Kennedy is sure to raise more questions.