Last Modified: Friday, April 27, 2012 7:05 PM
Louisiana legislators who sit on the two budget committees have a front row seat every year when the governor and his financial advisers present their proposed state spending plan for the next fiscal year. Those are cherished positions because they decide where the money is spent.
Some of those lawmakers may now have second thoughts. They would probably be more than happy to trade places with anyone else. Bad news hit them square between the eyes last week when the Revenue Estimating Conference said the current year’s budget is short by $211 million and next year's by $304 million.
Taking $211 million out of state spending over the next two months could be crippling for higher education and health care. Those are the two major unprotected areas of the budget.
Speaker of the House Chuck Kleckley, R-Lake Charles, put the situation in perspective last week.
“I have McNeese State University in Lake Charles, and McNeese has made it very clear to me that there’s not a whole lot left to cut,” Kleckley said. “And I’ve had meetings with Secretary (Bruce) Greenstein at DHH (Department of Health and Hospitals), and he tells me there’s not a whole lot there to cut.”
A better solution could be to take money out of the Budget Stabilization Fund, better known as the “rainy day fund.” Legislators did that in 2010, and they could draw out another $215 million this year.
“I don’t know that there are a whole lot of options left at this point in time,” Kleckley said.
Fiscal conservatives don’t like that idea and continue to insist less spending and budget cuts are better solutions.
Rep. Hunter Greene, R-Baton Rouge, for example, told The Advocate, “I don’t think it’s raining right now,”
A reader of that newspaper had a completely different take on the situation: “... This state is drowning, but they expect us to believe that it isn’t even raining...,” she said.
Some people constantly talk about excessive spending and high taxes being the real problems in Louisiana. They may have a point where spending is concerned, especially when you consider the state is getting ready to spend $60 million on the Hornets NBA basketball team to keep it in New Orleans.
Tax Foundation tells a different story about Louisiana taxes in its state-local tax burden analysis for 2009, the latest available. The situation hasn't changed much because Jindal has been an anti-tax governor since he took office in 2008.
In 2009, the state ranked 42nd in state-local tax burden. No. 1 is the highest, and New Jersey holds that dubious honor. Total state and local taxes paid per capita (for each person) in Louisiana in 2009 were $3,037, and per capita income was $37,109. New Jersey citizens paid $6,751, and their per capita income was $55,303.
The biggest dilemma facing Louisiana is that less money is coming in than anticipated. Lower personal and corporate income taxes are the major problem. And fiscal experts say that’s because the state’s economy is weaker than we have been told.
Gov. Bobby Jindal doesn’t agree, of course, but that isn’t unusual. His administration tends to disagree with any reports of a negative nature.
State Treasurer John Kennedy touched on another problem. The number of state jobs has decreased by 7 percent over the past six years, he said, but $650 million more is being spent on salaries and benefits. Salaries are up by $397 million.
Newspaper readers in Baton Rouge sized up the financial situation in another way.
“When the Stelly tax plan was dumped — that is when the state revenue started it’s downward spiral...,” one reader said.
Another said, “... This problem was self-made; the deposed Stelly tax plan existed to stabilize revenue streams.”
The Stelly plan wiped out nearly $300 million in sales taxes on food and utilities and raised personal income taxes to make up the difference. It has been estimated by some of the state’s fiscal experts that the current financial plight could have been avoided if Stelly had stayed on the books. But you won’t have any problem finding anti-Stelly people who disagree.
Tax exemptions, rebates, credits and economic development incentives are other major drains on the state budget. There has been a lot of talk over the years about examining the cost of those concessions, but little has been done to determine just how costly they are. In fact, a number of bills are filed every year to grant even more tax exemptions.
Legislators just passed a measure that gives corporations and individuals general fund rebates for contributions they make to private organizations that give scholarships. No one is sure what that will cost.
Annual mid- and late-year budget-cutting has become standard procedure in Louisiana, and that makes it difficult to plan for the future.
You can’t blame citizens who must be telling themselves, “We deserve better than this from our state government.”