Louisiana Voice

The relationship between the offices of Gov. Bobby Jindal and State Treasurer John Kennedy, if indeed a relationship ever existed in the first place, has deteriorated into a colorful exchange of pointed jibes and name calling—mainly by Commissioner of Administration Kristy Nichols who certainly knows how to use the terms “going forward” and “the reality is” to make her point.

Actually, the running feud between the two offices has been simmering for some time but this week took an ugly turn on the heels of a radio show appearance by Nichols and an op-ed column written by Kennedy.

“Imagine, God forbid,” Kennedy wrote, “that your boss just cut your salary by 25 percent because business is bad. Instead of reducing your spending or getting a second job, you elect to do the following:

• Take a cash advance on our credit care to pay your car note.

• Refinance your mortgage, but instead of choosing to lower your monthly payments, ask for the one-time savings up front to pay for your Disney World vacation.

• Decide reluctantly to sell your bass boat. It’s worth $2,500. You ask $10,000. You wonder why it doesn’t sell.

• Instruct your kids they must begin paying for room and board. When they ask where they’ll get the money, tell them to borrow it.

“Your plan may work—for a while. Then, as sure as ‘eggs is eggs,’ you’ll go broke, just like Louisiana eventually will if the legislature passes the Jindal administration’s proposed, yet again unbalanced budget for the fiscal year beginning July 1.

“Here’s how the administration plans to ‘balance’ state revenue and spending this time (with Nichols’ boldface response in parentheses):

• Pretend the state will have an extra $800 million to spend as a result of the yet-to-be-realized savings from leasing state hospitals to private hospitals, even though the leases have not been negotiated (With this point, Treasurer Kennedy reveals himself to be an opponent of reforming the old charity hospital model, not to mention that he apparently does not know how to read the budget.);

• Refinance the state’s tobacco bonds (good idea) but dump the $90 million one-time savings into the operating budget and spend it next year (bad idea) (The Treasurer insults Louisiana’s young people by comparing the state’s commitment to providing them a college scholarship to paying for a ‘Disney World vacation.’);

• Proposed to sell state real estate at inflated prices well above appraised value and spend the money before they sell (Again, the Treasurer exposes himself as a big government defender of the status quo who would rather keep underutilized property in government’s hands instead of downsizing the government’s footprint and returning the property to the private sector.);

• Borrow $100 million from the New Orleans Convention Center to keep our colleges open while promising to repay the loan with proceeds from future bond issues that will exceed the state’s constitutional debt limit (It was the Treasurer’s office itself that recently created a manufactured crisis over the state’s debt limit because of its inability to count. Thankfully, the Division was able to correct the Treasurer’s error.);

• Raise college tuition 10 percent for Louisiana students who already owe $900 million in student loans, despite the fact that education is the new currency of our global economy and 8 percent fewer Louisianans have a college degree than the rest of America;

“Call this budget what you like: a fond illusion or smart accounting,” Kennedy said. “The result will be the same: mid-year budget cuts for the sixth year in a row, because the budget is not balanced. Why should we care? Because making a college cut $10 million with six months left in the fiscal year is like a $20 million cut from day one. That shreds muscle, not fat.

“There’s a better way. It’s not complicated: don’t spend more than you take in, and when you do spend money, spend it on things you need, not things you simply want.

“Louisiana families know that. So do Louisiana businesses. Why can’t government figure it out?”
Because Jindal can never face up to a confrontation, he sent Nichols in as his proxy for this fight. Her response was almost immediate.

“We appreciate the treasurer’s opinion,” she said, “but given his long track record of half-baked gimmicks and his office’s recent miscalculation of the state’s debt, we will pass on his suggestion.”

Ms. Nichols, let’s clarify a point here: were you talking about half-baked gimmicks on the part of the State Treasurer or the Governor? It’s a little difficult to distinguish.

“The reality is that the budget is balanced,” she said.

Last week, when appearing as a guest on the Jim Engster Show on Baton Rouge public radio, Nichols said, “We have sufficient funding for construction projects going forward. The reality is we have many significant opportunities and may options in terms of how we finance construction going forward and do not have an issue with the ability to continue construction projects today and to move forward with construction projects going forward.”

Nichols told Engster that the Medicaid reductions “gave us an opportunity to look at the public hospital infrastructure and find ways to deliver services in partnership with local providers. The reality is once we made reductions to Medicaid, we were faced with $300 million in mid-year reductions,” she said.

To a caller who ask how the state would save money by having physicians see patients when under the Charity Hospital system, Nichols said, “The reality is as again, we moved forward with the challenge of reductions of federal Medicaid rates and we looked at ways to transform and continue to provide public hospital services, we looked at the cost structure of the public hospital system. As private hospitals take over services, by leveraging those economies of scale, we were able to reduce the cost of the same care provided in public hospitals and the reality is that same service in public hospitals was very costly on a per unit basis.”

When Engster asked about the Medicaid expansion as it relates to the Affordable Care Act (ObamaCare), Nichols said, “We balanced the budget irrespective of the Medicaid expansion. The reason we are not participating (in ObamaCare) is very clear. The way it is structured…the program in totality needs to be structured in a way to give the state flexibility to provide services in a way reflective of the state’s needs and reflective of the state’s budget. The reality is the state will be faced with coverage of half-a-million more people on the Medicaid rolls. That’s a 40 percent growth.”

When another caller from New Iberia asked about cuts of 45 percent to the University of Louisiana Lafayette budget since 2008, she said, “As we looked at moving forward past mid-year, we made a decision not to reduce the higher education budget. We are committed to that going forward. We are committed to not cutting budgets and to work with higher ed to consider options to increase revenue. As we move forward, we look at opportunities to raise revenue.

The reality is we’re certainly glad she cleared all that up as the administration moves forward.

Gov. Jindal couldn’t have said it better.