Louisiana has “stopped the bleeding,” but political observers point out that the financially strained state still has several major spending problems.
In recent years, Louisiana has bounced from one budget crisis to another, with a decade’s worth of short-term fixes barely keeping the lights on, Governing reports.
As the current fiscal year approached, the state faced yet another fiscal showdown, with revenue sources expiring and a shortfall threatening deep cuts to hospitals, nursing homes, and colleges and universities, as well as the possible elimination of the food stamp program entirely.
But a week before the fiscal year began in July, legislators agreed on a repair package that shifted $46 million in oil spill recovery money into the operating budget and preserved part of a sales tax increase that was set to expire.
“By working together, for the first time in a long time, Louisiana’s budget will have the kind of stability and predictability we need to bring new business opportunities to our state and grow our economy,” said Gov. John Bel Edwards, who was applauding a sudden upgrade from Moody’s, the credit rating agency.
There’s no question that the legislature managed to avert a set of painful spending cuts. But while the budget deal enhanced revenues, it did little to address the state’s chronic spending problems.
Daryl Pupera, the state legislative auditor, has warned that the Medicaid program is “pretty broken right now” and lacks proper oversight.
State Treasurer John Schroder, argues the state needs to cut spending.
Schroder fears that extending the sales tax for seven years may have removed the incentive to tackle difficult structural issues. He warns that lawmakers will be tempted to wait “six years and 364 days” before they take a serious swing at the spending side again.
