Cutting the budget sounds a lot easier than it is, especially in Louisiana, where only $2.9 billion out of a $26.7 billion state budget is discretionary.
That’s why one of the places many look first is to the $1.73 billion in statutory dedications (click on chart on left)—money obligated by state law to specific programs in both state and local government. An additional $2.15 billion is tied up in constitutionally protected dedications.
When Gov. Buddy Roemer faced a fiscal crisis in 1988 as bad, if not worse, than the current one, he abolished more than 120 “stat deds,” freeing up an estimated $589 million, which, then, was more than 8.5% of the total state budget.
It worked well at the time, but in the ensuing decades the Legislature has gradually put new stat deds back on the books each year. Currently, there are nearly 400.
In his proposal for fixing this year’s fiscal crisis, Gov. John Bel Edwards has called for a much smaller cut to statutory dedications—a 10% reduction across the board that is expected to save around $160 million.
Critics say that’s not nearly enough. They not only want to cut dedications but get rid of them altogether.
“I’d abolish every statutory dedication in the special session and I’d look at every level of responsibility of local government,” says Dennis Stine, who was commissioner of administration under Roemer.
LABI has also called for abolishing all statutory dedications; or, at least gradually phasing them out.
LABI also advocates for making it more difficult to create new dedications and strengthening the review process for statutory dedications and fees.
While those are long-term reforms that may free up more state money in the future, they won’t help plug the current fiscal crisis.
The Public Affairs Research Council, however, is preparing a report that will identify several places to look for immediate savings. They include:
- Freezing merit pay raises. The state budget assumes every year that employees will automatically get a 4% pay raise—but they don’t have to.
- Citizen’s Insurance reimbursement. All homeowners pay an assessment to help fund the state’s insurer of last resort then receive a credit back from the state. Doing away with the credit could save hundreds of millions.
- Implement certain group health reforms. Studies have shown better utilization of health services could save upwards of $1 billion. Those projections may be overly optimistic, but if even a fraction of the savings materialized it would go a long way.
- Curb spending to local governments. Local governments get some $150 million from statutory dedications. They receive hundreds of millions more from allocations in the state general fund. While some of those programs are needed, there’s a growing consensus that the state shouldn’t be footing so much of the bill for local governments.
- Cap the Tuition Opportunity Program for Students. As suggested by the Sen. Jack Donahue in 2015, the legislature should decouple the popular TOPS program from tuition increases at colleges and universities so TOPS does not automatically go up when tuition does.