Guest Column
By STEPHEN WINHAM
The long-awaited Jindal administration proposal to balance the Fiscal Year 2013-2014 budget was released yesterday (February 22). The most surprising thing about it was its almost complete lack of surprises. Once again, we were presented with a budget that uses one-time money, contingencies, and outright conjecture, along with increased college tuition, to create the illusion of a balanced budget that does little or no harm.
Perhaps the most surprising and indefensible part of the presentation was revealed in Melinda Deslatte’s AP wire story late yesterday. Deslatte reported that commissioner of administration Kristy Nichols defended the use of patchwork funding in the budget on the grounds that not doing so would result in “needless reductions to critical services.” Think long and hard about what that means.
The governor is happy to tout his refusal to increase state taxes. He is also happy to talk about his successes in reducing the size of government and refusal of additional federal support. He is very direct, if not necessarily consistent, when it comes to holding the line on these things. Although there is no second half to his current plan to eliminate income and franchise taxes, he assures us that, if he actually ever presents a proposal for the other side of the equation, it will be income neutral.
If Nichols’ testimony is to be taken at face value, we can only assume it is not possible to maintain critical services with our current level of recurring revenue. So far, the governor’s approach to reducing state government has been to gradually strangle it through continued submission of unrealistic budgets intended to give the impression everything is okay. The legislators adopt these proposals and congratulate themselves on another successful year.
In reality, everything is not okay. The governor knows it. Ms. Nichols knows it. The legislators interested enough to pay attention know it. As long as projected revenues from reliable, stable sources do not equal projected necessary expenditures, things will NEVER be okay. Governor Jindal has not submitted, nor has the legislature adopted, such a budget during his entire administration. This is proven by the mid-year cuts that are always necessary in adopted yearly budgets and the never-ending projections of deep holes for every future year.
Governor Jindal has been quoted repeatedly in the national press saying we all have to learn to live within our means. If he really believes this, why does he not present budgets that allow the state of Louisiana to do so? I think Ms. Nichols has made the answer quite clear – because we simply cannot live the way we want to within our present means. Presenting a truly balanced budget would result in an outcry from even the staunchest fiscal conservatives who would immediately begin to cry, “Why don’t you cut the fat, not the meat?” They would never accept there isn’t enough fat left to leave the meat alone.
A group of legislative “Fiscal Hawks” [a term coined by respected blogger C. B. Forgotston] has attempted to solve the perennial problem of unbalanced budgets by forcing the governor and the legislature to simply comply with the clear spirit of the state’s existing constitution and statutes as they apply to the budget.
Regardless of how complicated some might attempt to make these laws, their intent is plain common sense: we should do our best to project recurring revenues and adopt a budget that balances expenditures with them. If one-time revenues are used, they should only be used for clearly one-time expenses because doing otherwise automatically creates holes in future budgets. We shouldn’t budget on contingencies and conjecture because if the revenues fail to come in we will have significant trouble paying for or cutting the services they were supposed to fund.
Could anything be simpler or make more sense? If the governor and the legislature know we cannot live within our means why don’t they do something as simple as following the intent of existing law? The governor doesn’t propose budgets doing so because, like Ms. Nichols, he knows it is impossible without making unpopular cuts to essential services. Cutting taxes is popular. Cutting needed services, or raising taxes, is not.
The legislature doesn’t demand we live within our means for the same reason and also because of their collective belief that their constituents are only interested in the extent to which they bring home the bacon. Legislators believe not bringing home the bacon equals not getting re-elected. Although they already have a history of funding local services to the detriment of state programs in the past, we have now reached a critical stage.
If essential state services are cut at the same time purely local projects are funded, there might actually be a backlash for individual legislators. They might learn that their constituents benefit from the critical state services to which Ms. Nichols refers and actually care about the future of the state in which they live as much as their local neighborhoods.
Why can’t our state’s leaders just be honest about this and do the right thing? Understanding and dealing effectively with the budget dilemma requires a level of knowledge that can only be gained through fairly intimate involvement with, and knowledge of, the state’s budget and fiscal status. It is unreasonable to expect individual citizens to educate themselves at the detailed level necessary to make the right decisions about how to fix things even if they could. When we elect our governor and legislators, we do so with the reasonable expectation that they can and will take care of these things in our behalf.
It is certainly easy to understand why it is difficult to make hard cuts when cash is, or even may be, available to avoid them. But willfully allowing gross fiscal instability to continue indefinitely is a violation of the public trust. It serves no one well and doesn’t even allow the ability to isolate inefficiencies and make rational cuts in spending where they actually need to be made.
Only by facing reality can our state’s leaders make the necessary changes to move us forward. The administration has admitted the current gap cannot be closed by cuts alone. We should support those legislators and other elected officials who have the courage and conviction to make responsible decisions about our future even if they include additional taxes.
(Stephen Winham is the retired Louisiana State Budget Director)
Louisiana Voice 
I’ve read that the tax incentives given to movie production and other corporations would fill the budget gap. Is this true? Why don’t we ever hear about how much taxes we should or could be collecting from big businesses that come in and use our resources and leave a mess behind? Business as usual in Louisiana.
I have posted numerous blogs on the loss of taxes because of exemptions, incentives and rebates to businesses and corporations. Numerous. The figure is about $5 billion per year that we lose to corporate incentives, etc.
I would be less averse to exemptions or incentives if the money given away was somehow replaced by those businesses, corporations or whatever in another form. It seems with Bobby though that we give away so much in so many forms that these businesses never return anything to the state.
This hits the nail on the head. The problem is the corporate welfare the state doles out to big business, i.e., Jindal supporters.
And don’t talk to me about so-called “fiscal hawks,” because they support all of those giveaways of tax money with no accountability. They want to complain, but they won’t address the fundamental problems with this state’s current policies, because they like them. A more accurate title for them would be “fiscal chicken hawks.”
I hate to question the man who should be the expert, but Louisiana Voice has previously reported Billions in Corporate Welfare (incentives and tax breaks to attract or retain businesses) with no documented benefits because the “ethics Governor” seems to be afraid for the citizens to know how pitifully little Louisiana has received for those Billions. Based on that Louisiana Voice reporting, I believe that there is NO budget crisis except what Piyush has intentionally created each year to provide an excuse to make the unconscionable cuts he has made in state employment and services.
Some of his cuts have been so unethical that they should be reversed. As a two state worker household, we estimate that Piyush is redistributing over $1500 of income we should have had EACH MONTH to his corporate buddies. Cuts to mental health care, K-12 and higher education, Medicaid, the LSU hospital system and many more cuts should be reversed. It is also unethical for $6 billion per year of oil shale gas to be extracted, a resource owned by the citizens of Louisiana, without a single dollar of state taxes to compensate us for the permanent loss of that asset.
I hate to question the man who should be the expert, but Louisiana Voice has previously reported 5 billion a year in Corporate Welfare (incentives and tax breaks to attract or retain businesses) with no documented benefits because the “ethics Governor” seems to be afraid for the citizens to know how pitifully little Louisiana has received for those billions. Based on that Louisiana Voice reporting, I believe that there is NO budget crisis except what Piyush has intentionally created each year to provide an excuse to make the unconscionable cuts he has made in state employment and services.
Some of his cuts have been so unethical that they should be reversed. As a two state worker household, we estimate that Piyush is redistributing over $1500 of income we should have had EACH MONTH to his corporate buddies. Cuts to mental health care, K-12 and higher education, Medicaid, the LSU hospital system and many other state services should be reversed. It is also unethical for $6 billion per year of oil shale gas (a resource owned by the citizens of Louisiana) to be extracted without a single dollar of state taxes to compensate us for the permanent loss of that asset.
I don’t see a conflict between your comments and mine. Your suggestions would all increase taxes and many people would agree with you. I’m simply saying the budget is broken and needs to be fixed.
Needless reductions?
The annual mid-year budget cuts are needless?
I have an idea. Legislators should amend the budget and move the one-time contingent funds to fund the executive departement and DOA. That way higher ed is not held hostage for the 6th straight year of the terrible administration. That way the legislature can really attack the worst performing department of state government!
Makes way too much sense.
Well said, Mr. Winham, and the legislators will not pay any attention to logic nor common sense, they are totally controlled by Jindal, but we must not give up. ron
Reblogged this on The Daily Kingfish and commented:
Jindal Admin doesn’t want to cut critical services, also doesn’t want to pay for them.
This budget (and supporting documentation) proposes savings through a number of consolidation schemes — (IT services, Fiscal services, Legal services, back-end operations, etc.) with no regard to implementation costs. While consolidation and outsourcing supposedly save money, there is always additional costs in making the changes. Making all these changes at once will costs more than it will save for many years to come.
[…] cut the state services to the point where basic necessary needs served by the state go unmet. This includes the State Patrol which I would assume even Republicans find a necessary expenditure. That’s not preventing him from going on national TV and telling a completely […]
Many of the so-called midyear budget cuts are a complete sham.
Look at Alcohol & Tobacco Control Commissioner Troy Hebert’s statements that he is “returning” a million dollars to the state thanks to cuts he has made.
Problem is, Alcohol & Tobacco Control is self-funding and self-generating.
How do you return what was never there?
He isn’t the only incompetent that Jindal has appointed to a department or agency so I would bet the same thing is going on throughout state government.
Jindal is all about “consolidating and outsourcing,” which sounds good, right? In practice it means that necessary tasks aren’t completed because they’ve cut staff and equipment so much that important tasks aren’t done, and then services suffer.
But you won’t hear the truth about such things in the news. It’ll be reported like the $9 Million in bridge tolls that went uncollected. Jindal’s predictable response was that the task should be outsourced.
Do you see the plan? Cause problems by cutting departments until they cannot function, report the problems, then propose outsourcing as the solution.
Regarding outsourcing, it’s extremely expensive, takes far longer than insourcing, produces an inferior product (if a usable product is delivered at all), and usually after all the money has been spent, state employees have to come behind the “expert” contractors and clean up their mess.
I know. I’ve spent many years redoing the work that high paid consultants screwed up. I work harder than they do, produce far better products (that actually work), in a fraction of the time and for a fraction of the money.
But nobody ever talks about the many millions of dollars wasted on contracts because somebody appointed by Jindal signed those contracts and paid those bills.
At least somebody in a responsible position is willing to admit to reality:
Budget committee chair cautious on ending corporate income tax
After days of budget hearings last week, the chairman of the Joint Legislative Budget Committee has concerns about the wisdom of doing away with the state’s corporate income tax, which is one of the tenets of Gov. Bobby Jindal’s proposed tax reform plan. Sen. Jack Donahue, R-Mandeville, who also chairs the powerful Senate Finance Committee, tells Daily Report he’s not convinced it makes sense to do away with hundreds of millions in revenue the corporate income tax generates at a time when the state is facing a $1.3 billion shortfall, including $800 million worth of cuts to health care. “We got $250 million from corporate income taxes this year, which helped us finish off the year,” says Donahue. “We keep cutting and cutting and cutting and looking at all the money we give away. … I don’t want to raise taxes, but I do want to look at all the options and sources of revenue.” Donahue points out that with so much industrial construction and expansion under way in the state, Louisiana is in better shape than many states, and yet is still faced with a tremendous hole in its budget. While the Jindal tax reform plan is supposed to be revenue neutral, Donahue says he is not sure the Legislature will be willing to take that risk. “I like the idea of making Louisiana more competitive,” Donahue says, “but there needs to be a little balance; because if we get rid of the income taxes and things don’t work out, we’ll never get them back.” —Stephanie Riegel
Reprinted from Baton Rouge Business Report Daily Report a.m. 2/25/2013
The dirty little secret is no secret at all. The 1974 Louisiana Constitution is outdated and grossly amended. Had the governor truly wanted to govern in a way that best serves the interest of his state that would have been his first priority. The current constitution leaves health care and higher ed most vulnerable to budget cuts. One can only speculate that this approach would take a lot of hard work and would not put someone on the fast track to national prominence.
Also, Louisiana citizens would probably be shocked to know how much money is paid to consultants, many of whom live in other states. Yes, the number of state employees has dropped, but there is a direct parallel with the increase in consultant contracts. Who honestly believes consultants, especially those who have to travel to return home to another state, work for less money than state employees? Really?? Tour state office building parking lots and garages and check out license plates. For the rest of the story, hang out at the Baton Rouge Airport on Fridays. Those consultants usually rent cars that can be found in those same parking areas.
Yes we do have budget problems, but they are covered in hyperbole. I appreciate Stephen Winham. He always offers constructive, insightful information and has the experience to back up his writing.
Steve, thank you for your usual thoughtful and sage opinion.
You are correct.
Hey Steve (aka Dr. Win’em) !
As always, your thoughts are dead on. Of course, that’s also why they’ll continue to be ignored by the people in power. With the new term limits really in effect, you’d think we’d all have a better chance of seeing real reform in how things are run. Of course, since we also have rules set up to make our Governor more powerful than any other in the country, things will usually continue to go however the “Sitting Guvnor” wants it to go.
At least, being retired allows us to see what is happening (and know what’s behind the scenes) without being in danger of having a stroke.
— Wesley Smith