It appears Gov. John Bel Edwards will get to join all LSU fans and watch Leonard Fournette play football this fall. The short-term budget hole was filled to finish the current fiscal year with minimal cuts.
Of course, that came thanks to the Rainy Day Fund, BP money, some cuts to state government—and then raising some “sin taxes” and creating a new penny sales tax. (Sales taxes usually pass easiest because everyone pays.)
But while some of that will carry over to next year, it’s not enough, and a projected hole of $800 million remains to be tackled. Edwards told The Advocate it was “somewhat of a disaster” on the final day—but Sen. Jack Donahue said, “I’m not necessarily comfortable that I want [next year’s deficit] to be eliminated. We need to struggle some. That will force us to do the structural reform we need in the state. We need to struggle to solutions.”
Donahue’s point is this: Is next year’s deficit a problem or an opportunity? Does it keep the heat on for reform? Do we say, let’s hash it out since the decisions will be tough either way. And I think most believe that if you are going to tackle Louisiana’s sacred cows, statutory dedications, exemptions and the populist past in order to do real tax reform, it was foolish to think it could be done in a special session with limited options in the call—and any long-term reform won’t be done right in a short second special session.
We can only expect to cut the size of government and some patchwork revenues for a year or two in order to buy time and come back next spring with many new—and old—ideas for comprehensive reform to be debated.
The governor accuses Republican lawmakers of being obstructionists because they are more interested in private sector jobs than protecting government jobs, and also in deciding on priorities and shrinking government. They believe in small government and that is how many got elected. If business pays more taxes and then has to lay off these lawmakers’ constituents back home, voters won’t be happy.
And how does the loss of jobs help families or generate income or sales tax for the state? Fact is, folks like Sen. Karen Carter Peterson, who attack the Louisiana Association of Business & Industry and call them “hypocrites” for representing their members’ interests, is describing herself. She was the obstructionist the last eight years and does whatever she can to protect her constituents’ interest. That is her job. But she thinks it is a bad thing when others do it. Does she want jobs for her constituents?
The governor thinks when lawmakers go home and their constituents learn what “government services” they will have to do without that legislators may have a great sense of urgency to raise revenues. Maybe. But voters may tell them we want to keep our money and try “less government.” If you haven’t noticed, voters in America are angry and fed up with political speak, politicians and taxes.
When the budget is done, we should certainly protect the most vulnerable (so don’t roll out the wheelchairs for the TV cameras) and make educating our children and adults a priority. But taxpayers and legislators also want to see priorities set in areas like higher education and institutions held accountable for results like graduation. Voters want return on investment for their tax dollars and tuition. And don’t tell us that health care and higher ed are our only options because everything else is dedicated. Excuses. FIX the problem.
Locals should pay for their own services and stop depending on the state. The answers aren’t easy and the debate is far from over. But we can’t just keep trying the same old solutions and expecting different results. (Remember, Einstein said that is insanity.)
I am sure the legislators have lots of ideas and many have been presented in the past and the Legislature said “no.” Ideas like pension reform, merging SUNO with UNO, consolidation of the four higher education boards, consolidation or selling of prisons, removal of statutory dedications and exemptions, civil service reform, more privatization of services or departments, and others. It’s time to reconsider them all as restructuring is debated and priorities are set. Change is inevitable and long overdue because our current populist system is unsustainable—so let’s seize this opportunity.
STATE EMPLOYEES AND PENSIONS
If we are going to talk about how to deal with the budget deficits we need to always include the payroll and pensions. Governing magazine ranked states on full-time public employees per capita, and Louisiana was ranked sixth highest out of 50 states (based on census data from 2012). The good news is that was reduced more over the last four years. A total of 30,000 less state workers since 2008 (including privatization). And why not keep reducing until Louisiana is in the bottom 10 states per capita?
But this tradition of loading up the state payroll over previous decades caused us to spend unnecessarily and our state pensions cost to skyrocket—and we are paying for it now. Do you know, last year LSU paid over $150 million in a UAL payment for all retirement contributions. And higher education subsidized K-12’s share of UAL at about $82 million last year; LSU’s share of that was $40 million. Why should college students and faculty pay the unfunded liability for local schools’ retirement plan? This is outrageous and needs to be addressed in the current session or special session that follows. K-12 should pay its own bills. And it’s not just this area of pension reform that needs to be addressed.
Our current pension plans are archaic and need an overhaul fast or they will break the bank. This must be part of the fiscal reform. The opposition will be fierce.
QUOTES AND QUESTIONS
• Gov. John Bel Edwards on NOLA.com: “I hope this does not become Washington, D.C., but it’s quite possible that you just witnessed something that is evidence that we have taken a step in that direction. I will fight against it with every fiber of my being.”
Well, if Baton Rouge is becoming Washington, would that make the governor President Barack Obama?
• Former Sen. Robert Adley, chairman of the House budget committee during Buddy Roemer’s tenure and now an official with Edwards’ administration, on NOLA.com: “It’s a shame that here we are, years later, going through the same mess.”
He was referring to 1988 when Gov. Buddy Roemer faced a $1 billion deficit in a $7.5 billion budget compared to $2 billion in the current $25 billion budget. Adley has been at the Capitol for a total of 29 years in the House and Senate—and he’s now part of the governor’s cabinet. So Sen. Adley, why hasn’t it changed? What’s the problem—or solution?
PUBLIC VS. PRIVATE
Last Thursday, as storms rolled through Baton Rouge, I got two emails just minutes apart and the subject lines spoke volumes about the problem with government. One email was from the state office of the Division of Administration saying, “Additional state office closures effective Thursday at 1 p.m. through Friday.” The second email was from a popular restaurant and bar that said, “Rain doesn’t stop happy hour.”
There you have it. One has to perform to compete and continue to exist because its their money. The other exists on your money—and often wants more of it to grow, while it takes the day off.
CONGRATS ON 50!
Bill and Peggy Simon came to Baton Rouge from the oilfields of Oklahoma. Fifty years ago they opened an Esso service station. (Remember those days?) He later established his new location as Simple Simon Tires & Car Care and now has two locations. He and his employees had their best year ever in 2015 and now celebrate 50 years in business. Congratulations on that milestone.
Rolfe McCollister is publisher of Baton Rouge Business Report. Send your comments to email@example.com.