Riegel: Realities of the Louisiana budget situation
The state’s current budget situation—as much as a $1 billion revenue shortfall come July 1—is troubling, not in the least because lawmakers have known it was coming for two years but didn’t take any meaningful steps to avert it through fiscal reform.
Equally troubling, however, is the disinformation campaign being waged by critics of Gov. John Bel Edwards—namely Republicans determined to thwart a Democrat at all costs—who are peddling the fiction that hundreds of millions of dollars in wasteful spending could be cut from the budget to help mitigate the crisis if only the governor would exercise some fiscal restraint.
It’s a problem of spending, not revenue, they keep saying. In an era where Fox & Friends passes as a trusted source of daily news by an alarming percentage of the so-called educated public, it’s really not surprising that mantra would stick.
The problem is it’s not true.
What is true is the hyper-partisan political culture that has come to define the way business is done in Washington now poisons Louisiana’s swampy backwaters, rendering it impossible to forge any sort of a compromise at a time when compromises are badly needed.
What is true is the hyper-partisan political culture that has come to define the way business is done in Washington now poisons Louisiana’s swampy backwaters.
The general public—and particularly the business community, which purports to want to move Louisiana forward—needs to recognize this. They also need to be aware of some basic facts. Among them:
• The $1 billion fiscal cliff that has been derided by critics of the governor—and those angling to succeed him—as some sort of red herring was created when this same Legislature passed temporary sales taxes in 2016 to avert what was then a $2 billion revenue shortfall created, in large part, by the fiscal tomfoolery of the Jindal administration.
• A task force created in 2015 by a joint legislative resolution produced a comprehensive series of fiscal reform measures to address the state’s chronic fiscal crisis. Had those reforms been enacted in 2016 or 2017, the state wouldn’t be in the mess it’s in now, or at least, not nearly as bad a mess. But lawmakers didn’t want to tackle the politically unpopular work of changing the tax code and shifting burdens around, so they punted.
• The total state operating budget—a proposed $28 billion for fiscal year 2019—has, indeed, grown over the years, which is how Edwards’ critics can get away with saying state spending has increased under the current administration. (The fiscal year 2013 budget, by comparison, was $25 billion). But the growth has come from the federal side of the state budget, which pays for programs like Medicaid. Federal dollars account for an increasingly large part of the state budget—roughly 40% today compared to 23% in 1982. The state general fund, on the other hand, which is $9.4 billion this year and would drop to just $8.6 billion in the post-fiscal-cliff doomsday budget, has not grown under Edwards. In fact, the 2018 fiscal year budget was about $1 billion less than it was in 2008, a year admittedly flush with post-Katrina recovery money.
• An important corollary is that the state general fund is the only place where spending can be cut, and of those general fund dollars half is off limits, dedicated to K-12 education, elections, the state’s ballooning debt service, supplemental pay to law enforcement and local governments. The other half includes health care, all of higher education and pretty much the rest of state government, and there is little fat left to cut within those departments. The Jindal administration and the Republican-controlled Legislature made deep cuts during his two terms in office, including devastating cuts to higher ed from which we’re still reeling. Louisiana today spends $700 million less annually on its public colleges than it did in 2008. Do we want to cut more?
• Savings could be found by doing away with some of the nearly $3.9 billion in statutory dedications, more than $2 billion of which are Constitutionally protected. But getting at that money isn’t as easy as it sounds and, anyway, that’s the job of legislators, not the governor. Similarly, the state could save money, at least in the long term, by closing or consolidating its many public colleges and universities. Again, that would fall to the Legislature, and no one has shown the stomach for taking on that fight.
Which brings up the next point: If there’s so much waste in the general fund, why haven’t lawmakers suggested cuts? The governor’s critics say it’s not their job. They’re just playing political games, betting Louisianans are either too ignorant, disinterested or blindly partisan to care.
Perhaps they don’t recall the early 1990s, during the era of another Gov. Edwards, who, unlike the current one, did play fast and loose with the state’s money. In 1993, then-Sen. Jay Dardenne and Rep. Chuck McMains, both Republicans from Baton Rouge, challenged the administration’s bloated spending plan with a much leaner version of their own, which cut $1 billion from specific programs. About half their cuts were ultimately adopted by their colleagues, who, back then, knew how to cross the aisle and compromise.
It’s difficult to imagine today’s GOP lawmakers exhibiting such leadership or political courage, which brings up a final point worth considering:
Whatever you may think of our current Gov. Edwards or Democrats, it’s important to remember that Dardenne is now the state’s chief budget officer. If anyone brings fiscal credibility and fiscal restraint to an administration, it would be he, who had a distinguished career as one of the Legislature’s fiercest fiscal hawks. He hasn’t changed his stripes. Those who would call themselves Republicans have.
It’s time we start trafficking in reality.