By Stephen Winham
Every day we hear the same thing: “If we could just get rid of those dedications, we could fix the budget and not have to always hit higher education and health care so hard when times are tough. There are plenty of things we could cut without hurting anybody or anything.”
It sounds so easy. You hear, in very broad terms, how the budget has grown and how out-of-bounds spending has gotten. Our current budget totals about $25 billion, of which $10 billion is federal. I will focus on state funding in the official revenue forecast – about $10.4 Billion in the current year, with strongest emphasis on the $7.9 Billion in state general fund spending we can most readily control. The official forecast numbers for next year are $10.4 billion and $8.2 billion, respectively.
We hear about $4.3 billion in dedicated funds ($3.5 billion in the currently-proposed FY 2016-2017 budget) that could be eliminated and go a long way toward fixing our budget problems. What we rarely hear about is the additional $4 billion in the state general fund that is allocated and/or protected by the State Constitution.
For starters, almost a half billion dollars comes directly off the top of the general fund, but IS NOT APPROPRIATED. That’s right, you don’t see or hear much about this money because it is not appropriated – rather, it is a direct draw on the state’s general fund.
If you go to page 177 of the FY 2016-2017 Executive Budget, you will find Schedule 22, Non-Appropriated Requirements. This schedule allocates $496.5 million from the state general fund in the treasury, pursuant to the State Constitution, for the following:
$404.8 M – General Obligation Bond Debt Service
[IMPORTANT DIGRESSION: G. O. Debt service is increasing by over $211 million (109%) next year due to one-time savings utilized in the current year from defeasance of debt – In other words, this is part of the one-time “fix” in the current budget that has to be covered next year.]
$90.0 M – General Revenue Sharing – goes to local governments as a partial offset for local property tax revenue lost due to the State Homestead Exemption
$ 1.7 M – The Interim Emergency Board – provides emergency funds during the budget year
Now I ask you, which of these would you be willing to vote out of existence? Eliminating or changing them would require constitutional amendments and a vote of the people.
The one of these three I would not cut, for sure, is our $405 million in debt service. Defaulting on our debt would cause immediate loss of a marketable bond rating and send a message to the rest of the country that we are truly bankrupt.
Cutting the other $91.7 million in non-appropriated items would have very serious implications, particularly for local governments. Even if you think local governments shouldn’t get the revenue sharing, how do you think they would make it up, if they didn’t?
In addition to non-appropriated allocations, the State Constitution also mandates general fund spending for a number of appropriations. The state’s Minimum Foundation Program for public elementary and secondary education is required by the constitution and has a $3.4 Billion state general fund appropriation. You might be inclined to cut administration and other programs in the Department of Education, but are you willing to vote for a constitutional amendment eliminating basic state support for our public schools, or even allowing for substantially reducing it? You may not directly use public education, but you have to agree we absolutely have to have it and it should be funded at no less than its current level. The education provided by our public schools is vital and is finally improving. We can’t afford to lose the ground we’ve gained.
So, between just the General Obligation Bond debt service and the MFP requirements for next year, we have $3.8 Billion of General Fund (46% of the total) expenses it would be simply stupid to cut.
In addition to the MFP, another $600 million of our general fund expenditures are currently required by the State Constitution. State supplemental pay for local law enforcement alone is $124 million of this. Also included are salaries of statewide elected officials and the costs of elections. You might not be happy with the salaries of your statewide elected officials, but we have to pay them and I don’t think you could possibly support not having the money to hold elections. If you think locals ought to fully fund the salaries of law enforcement personnel, where do you think they might get the money to do so?
[Digressing again and focusing on local government funding for a moment, what if we decided to cut it all? Except for capital outlay projects, we indirectly fund recurring local services, so we would, in essence, be shoving our problem down to the local level – and we all live somewhere. If local governments were unable to raise local taxes to support the services, they would be eliminated or significantly degraded. If they were able to raise local taxes to support them, how would the taxpayers see a difference?]
What other general fund expenditures, currently considered mandated should we consider cutting? How about the $130 million in appropriated debt service (in addition to G. O. Debt)? How about the $400 million plus it costs to incarcerate adult inmates in our state prisons? Or, the $157 million we pay local sheriffs to house state inmates? The $27 million we pay in District Attorney and assistants’ salaries? How much of the $73 million legislative and $160 million judicial general fund appropriations are we and the legislature willing to cut? How much of the $848 million in general fund we consider sacrosanct because of federal mandates should we cut and what will happen if we do? How much can we realistically cut from our Medicaid program and still attempt to meet the health care needs of our citizens?
Finally, how about the elephant hiding behind the sofa, our annual payments via the state payroll system toward the Unfunded Accrued Liabilities of our state retirement systems? I’m no actuary, but using the actuarial reports generated by the Legislative Auditor, I estimate annual payments toward this liability, in state funds, is no less than $600 million and growing rapidly because of the way the amortization is structured. The State Constitution requires this debt to be liquidated by 2029.
We often hear that 67% of our general fund budget is non-discretionary. Let’s pretend we don’t have to do a lot of these things and, just for the sake of argument, say only 55% should not be touched. That still leaves only $3.7 billion of state general fund on the table subject to cut and we certainly aren’t going to cut over half of that to solve a projected $2 Billion problem next year. And, by the way, remember that any of the current year deficit not liquidated this fiscal year will, by law, have to be added to that problem.
Take a look at John Bel Edwards’ first Executive Budget. It is balanced to the official revenue forecast of general fund revenue. Look at what is cut and where. Look closely.
http://www.doa.la.gov/opb/pub/FY17/FY17_Executive_Budget.pdf
For more details, look at the supporting document:
http://www.doa.la.gov/Pages/opb/pub/FY17/FY17ExecBudget.aspx
Now, finally, let’s get back to those dedicated funds. The Legislative Auditor has just released a comprehensive document detailing these dedications. He points out there were 370 dedicated funds in Fiscal Year 2013-2014 (the last year for which complete documentation is available), 344 statutory and 26 constitutional. Let’s see which ones of these we want to eliminate.
How about the $1.4 Billion Transportation Trust Fund? Our roads are in great shape, right? Plus, we blow part of this on public safety rather than roads and public safety certainly isn’t important, is it?
How about the $159 million in Lottery proceeds? Surely we can find a better use than education for that money. The $184 million in the Medicaid Trust Fund for the Elderly? We only have to change a statute to cut the old folks off. The Oil Spill Contingency Fund at $52.7 million? We never have oil spills, do we? And, why should we share $39 million of our severance taxes with the parishes where the minerals are severed? TOPS is draining us dry, so let’s free up that money and spend it elsewhere.
I’m being facetious, but, seriously, don’t you think there is a constituency for every one of those 370 dedications (except maybe the 21 that have no revenue or expenditures)? How many times have dedications been studied and how many have been eliminated so far? The Joint Legislative Committee on the Budget has reviewed 25% of these dedications every other year since 2009, but has made no recommendations for modifying or eliminating any of them.
Whatever we do with dedicated funds can’t and shouldn’t be done overnight. Many of them support local governments, but the Transportation Trust Fund is the largest of them all and, in addition to the Department of Transportation, other state departments and agencies derive substantial operating funds from dedications, most notably the Public Service Commission, the departments of Environmental Quality, Wildlife and Fisheries, Economic Development, Agriculture and Forestry, Natural Resources and Public Safety Services.
Shouldn’t we look at each dedicated fund in depth to determine it source, its purpose, and the extent to which collections exceed needs? Isn’t this just what the Joint Legislative Committee on the Budget should have done? Wouldn’t it have made a lot more sense to examine the historical inflows and outflows of each of these dedicated funds before creating a $442 million Overcollections Fund from their balances in FY 2014? This was yet another statutory dedication and a big reason statutory dedications spending rose so much. Worse, we then used the Overcollections Fund to pay for recurring expenses elsewhere – a significant part of why we are in our current mess.
Obviously, some collections in excess of needs should revert to the general fund. Others, justifiably, should not. In many cases, these funds are created from fees people pay for which they expect certain services. Some dedications to locals are used to service bonds.
Should we continue to look at potential modifications or eliminations of statutory dedication as a partial solution to our problems? Absolutely, but given our history and the realities of today, should we place an inordinate amount of blame for our current problems on them, or expect a miraculous cure to emerge from further study? I frankly don’t see why we would.
I urge you to look at the Legislative Auditor’s report here:
http://app.lla.state.la.us/PublicReports.nsf/0/13D9277344A19B9086257F560076E83A/$FILE/0000CAA1.pdf
It will give you a much better understanding of the dedications and is formatted in such a way as to drill down from a relatively high level to a very detailed level, so you can stop where you’d like and still gain valuable insight.
Let’s face it, as Gov. Edwards has said, if it is so easy to cut the budget, why has it not been cut to size long before now? This is particularly true in light of the fact we had a governor who travelled the United States for the past 8 years professing to be a budget cutter extraordinaire. If he actually cut expenditures to meet revenues and wrought such an economic miracle why do we find ourselves so out of whack? No, Virginia, it’s not just oil prices.
State Treasurer John Kennedy and others point to things the administration should do to eliminate fraud, abuse, and waste in state government. Who can disagree? To the extent these occur, we are all losers – the biggest are the intended beneficiaries of the services.
It is important that citizens believe their tax dollars and fees are being spent as wisely as possible or, at the minimum, that somebody is consistently and comprehensively trying to ensure this is the case. In my opinion, the accountability for this lies with the administration, not the legislative auditor or anybody else.
The administration has not yet provided specifics or even examples of what it plans to do about specific contracts that make no sense, bureaucratic structures that may be bloated, and more effective and efficient delivery of health care services. Gov. Edwards has said he will do something about these things, but he is yet to provide even anecdotal evidence like Kennedy and others to support his claim.
The executive branch needs to hold its appointed officials to the highest standards and demand they investigate dedications and everything else in the departments they are paid well to manage toward doing everything they possibly can to make our government as efficient and responsive as it can be. The public needs to know this is being done. They should not have to see an increasing succession of negative findings by the Legislative Auditor or, worse, disturbing reports of mismanagement and abuse in the media and elsewhere that go largely unanswered.
But, all that said, can these efforts bear fruit overnight? Can they come close to eliminating the gap? Look deeper than the rhetoric and you have to answer “no” and “no.”
One more link is below – an excellent presentation by the Louisiana House Fiscal Division done just a month ago. Check it out:
http://house.louisiana.gov/housefiscal/0112_16_OS_FiscalBriefing2.pdf
There is a lot of really good information out there from a variety of sources inside and outside government. Our decision-makers need to use it.
Mr Winham approaches the problem using only the concept of cutting out the items. Way back when Randy Ewing was president of the senate and we were first starting to whack 10% at a time of health and education, he told me if they could evenly distribute the shortfall across the entire budget, each category would take a hit less than 1%. Doubtless more now, the principle should still work.
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Sadly, even if it was possible to cut everything funded by the state funds forecast by the Revenue Estimating Conference (Taxes, licenses, and fees) by 1%, it would only get us 5% of the way toward closing the $2 billion gap we will ultimately face next year – A 19% cut would be necessary. Looking at only the state general fund, a 24% across-the-board cut would be necessary. Think of what such a cut would do to your own personal budget.
As ever, Mr. Winham, your post presents facts unknown to most citizens, concerning the realities of state budgeting, as only the voice of experience can do. Sadly, most legislators appear clueless as well, when it comes to understanding the details of how the state budget works.
Are legislators required to attend briefings on the state budget, operations, fiscal management, etc. (or even offered optional sessions) before they begin directing staff to draft legislation (voters don’t know that staff does that, not the legislators they elect.) and calling the shots? Too bad we can’t require all the leges to read (and actually comprehend) this post. It might be very illuminating – to them.
Thanks for bringing us a measure of understanding of what we are up against. This needs wide circulation in mainstream media, for the benefit of well-meaning but uninformed commenters who throw out unworkable solutions to our current fiscal crisis. The JBE administration should bring you in to consult on developing commonsense solutions.
Finally, I hope people read this. This post should be required reading for the legislature. Unless I missed it, you did not even mention the various funds that various industries pay into. The payees expect that money to be used for its intended purpose. Not to fill budget holes. A good example of this is the Artificial Reef Fund. Oil and gas companies pay into this fund with the belief that it will be used to create and maintain artificial reefs.
Good point, Clifford. I did mention this in passing: “In many cases, these funds are created from fees people pay for which they expect certain services.”. but could have given it greater emphasis. Earthmother amplifies this point in her comment below. Tnanks to you both.
“The $184 million in the Medicaid Trust Fund for the Elderly? We only have to change a statute to cut the old folks off.”
Wasn’t that one of the many trust funds and reserves that jindal raided and possibly drained? If so, and it is statutorily protected, who is going to be held legally accountable? What other pots are we going to discover looted?
It is, along with the one Clifford55 cites and many others. Answer to who will be held accountable: Apparently nobody.
Apparently the current Governor.
Excellent article, Mr. Winham. Sadly, too many LA citizens don’t understand that the State (we) can’t solve our budget problems through cuts. There is both a revenue problem and a management problem. Wise management of existing revenue and additional revenue streams are both required. Many will not want to recognize this as a possible solution to the problems as no one wants to pay more taxes, but if we want services, they must be paid for. There is no free lunch.
We also don’t need Washington style obstructionist politics in Baton Rouge now, this is too critical a time for games as usual.
Keep educating us on interpreting the budget, Mr. Winham, this information is sorely needed by all.
No free lunch? What the hell do you call able-bodied, 18-49 year olds with NO dependents being told that they need not work, get job training, or do volunteer efforts for a charity in order to receive food stamps? Where I come from, we call that a free lunch, and that was this clown’s TOP priority upon taking office!!
That was NOT his top priority and your saying so exhibits your tunnel vision. You are locked in on one area. No one, repeat, NO ONE has told “able-bodied 18-49 years olds with no dependents” that they need not work. Show me where anyone ever said that. When you focus on just your one obsession, you obviously have lost sight of the big picture. You want your garbage picked up, you have to pay taxes for that. You want a road to ride on, you have to pay taxes for that. You want police and fire protection, you have to pay for that. You’re starting to sound like Rubio–repeating the same talking points over and over. For your information, there are a lot of 18-49 year old able-bodied people out there who desperately want to work. You may not believe that, but it’s true. Unfortunately, our Republican leaders have encouraged manufacturers to relocate overseas where they can buy cheap labor at 25 cents an hour—and avoid paying taxes here. It’s a win-win for them but a lose-lose for us. We not only have increased unemployment but the middle class has to make up for it with increased tax burdens. Thanks to people like Bobby Jindal, the highest income individuals pay the least in taxes. Do your homework and stop tossing out rhetoric. I don’t like taxes either, but after all the corporate tax breaks have depleted our state treasury, some hard decisions have to be made. You obviously want easy solutions and there aren’t any.
Again, I ask that you show me in black and white where anyone, anywhere, at any time told able-bodied 18-49 year olds they need not work. I never block anyone from making comments here, but until you can show evidence of what you’re saying, you are only sounding like Ted Cruz or Donald Trump. And that’s not a compliment.
Mr. Reynolds, I have to agree with Tom Aswell. The SNAP(food stamp) program is a federal program, thus, those are your and my federal tax dollars. But, like you, I do have issues with the program. There are people that are truly in need of the assistance and as a middle-class citizen, I know it is I and others like you and I who carry this tax burden. However, right now we are talking about my and your state tax dollars. You talk about “able-bodied, 18-49 year olds”. Lets talk about an able-bodied millionaire. You need to let someone, with a detailed knowledge of state finances, walk you through the deals with Tom Benson regarding the Saints and the Pelicans. The incentives that the state gave Benson to convince him to keep the Saints in NO and buy the Pelicans are probably a drop in the bucket in the scheme of things. However, I see it as corporate welfare.
All I know is that there is a program to require it (put in place by Clinton I think), and, when unemployment is above the national average (as Louisiana’s slightly is), a governor can ask for a waiver of the work requirement. Jindal never did, and he refused to do so on behalf of Edwards instead telling Edwards he was going to have to wait until he was governor to request a waiver. Edwards applied for the waiver immediately upon taking office, and It was granted by the Feds. When you waive a work requirement, how is that not telling folk, “We’re not going to require that you work (OR get job training, OR volunteer at a charity) for your benefits?”
Tom,
Actually it’s the Dems pushing the trade agreements but the Repubs love it. NAFTA was a Clinton project as TPP and TTIP are Obama’s projects. Call them ConservaDems or DINO’s, however you like, they’re all in the thrall of a conservative mindset paid for by the corporations and banking interests that will benefit.
Further evidence of my point.,,,,Plenty of time to go protest, but no time to volunteer at a charity: http://www.nola.com/politics/index.ssf/2015/12/john_bel_edwards_snap_benefits.html.
Look, I know people in Amite who voted for Edwards who were furious with him over this, but as I’ve said before, “It’s his funeral. Keep it up!”
Since your focus seems to be on national politics right now, let’s see how JBE’s popularity in this state stands up to having to appear beside Hillary or Bernie to help her (him) defeat the Republican nominee. He’s already sunk to 42 in no time flat. Photo ops of him beside Hillary or Bernie (which he BETTER not decline nor decline to voice his strong vocal support for whichever one emerges as nominee) ought to put him on a par with Jindal (high 20s) for popularity. He will have accomplished it in only a few months, however, whereas it took Jindal years (about six to be exact).
Chris Reynolds – The rapid sink of JBE’s popularity is further evidence of the stupidity of many Louisiana people. They voted jindal in despite the warnings of many who were witness to his first disastrous foray into state government under Foster. Voted him back in for a second term after budget deficits and severe cuts to vital state services during his first term. When the chickens came home to roost, people finally opened their eyes and his ratings sank.
Then JBE is elected to clean up the mess, which turned out to be much larger than even the Legislative Fiscal Office knew, due to the lies and deception of jindal and minions right up to the very end. So now that JBE has the duty to tell the truth and ask the legislature (which, BTW, is at least as much to blame as jindal for the economic crisis) to work with him to right the ship, he incurs the wrath of people who can’t seem to figure out that they are partially responsible for the crisis.
Ooooh, if JBE had not mentioned the possibility of fall football going the way of academics he might have been okay. People also can’t understand that sports are an add-on to academics, and under NCAA rules, no academics means no sports.
So now, the Louisiana recession is Edwards’ fault and he must be recalled. Lt. Gov. Nungesser then moves into the mansion and the capitol fourth floor. DO YOU SERIOUSLY THINK THAT HE CAN WAVE A MAGIC REPUBLICAN WAND AND MAKE THE BIG HOLES IN THE BUDGET GO AWAY? Then when y’all are done recalling or impeaching him, you move on to the next governor, and the next, all the while bitching about the need for additional revenue, while expending all your energy on griping and replacing, while the deficits remain, state offices close and state services disappear. And the stupid ones continue to gripe and bitch.
I’m trying very hard to stay here in my beloved Louisiana instead of moving to Colorado where my adult children now live.
The only thing harder than speaking truth to power is speaking truth to stupid.
Laf! Chris, when reaching for something to bolster your argument, try to pick something other than the weakest straw.
Chris, it appears we’re not going to agree on this but I would ask that you take an unbiased look at the “free lunch” given Wall Street in the form of the bail outs, the “free lunch” given all the corporations in the form of tax incentives, exemptions, and breaks in return for few, if any, new jobs. There are your real “free lunches” and if you run the numbers you will see that their “free lunches” are thousands (yes thousands) of times more costly than SNAP, welfare or any other social programs. Seriously, if you want to cut back on welfare, you could save a LOT more by cutting corporate welfare.
And while you point out that Clinton instituted the waiver that John Bel signed off on, it was the Reagan and both Bush administrations that stripped away all the regulations on Wall Street that plunged this country into recession in 2007 and 2008. The safeguards that prevented banks from risky investments came back to bite us. You won’t hear Cruz or Trump say much about that but (as Jindal is fond of saying) that is the reality at the end of the day. You can focus on welfare all you want but while you do so, the big pharmaceutical companies, big oil, Wall Street, and other special interests are picking your pocket and you don’t even know it—or won’t admit it.
Yes, there are “free lunches,” and the fat cats are getting fatter and fatter from them. So you go ahead and pile on the low-income while you continue to pay far more than you should for prescription drugs and while your tax money bails out the banks that were “too big to fail.”
By the way, I read that the SNAP program had been in place for 19 years. Checking my calendar, it appears SNAP was first implemented during the first year of the first term of Mike Foster. And during his first 7 1/2 years in office, Jindal had no problem continuing the program and apparently, neither did any of the Republicans. I don’t recall one state Republican legislator, State Treasurer, U.S. Senator, or U.S. House Member ever complaining about SNAP during the last 19 years, that is, until John Bel Edwards decided to reapply for the program. Someone please tell me why SNAP is suddenly such a bad idea, especially in the face of a rapid rise in our unemployment rate!
Patrick,
Defund the left, make govt. so small you can drown it in a bathtub, reduce taxes for the rich….it’s all the conservative neo-liberal agenda. Take your pick. Vitter got in on some of it by introducing and getting passed legislation to strip temporary funding by Soc. Sec. for the disabled which is repaid to Soc. Sec. by their own funding program. Attacking helpless children, the disabled, poor mothers, the elderly is how they earn their conservative brownie points. I’m tellin’ ya, these people are evil, their philosophies be dam*ed.
Earthmother, it’s just this sort of calling those who disagree with you “stupid” that emboldens them to harden their positions.
Having said that, we all know Jindal was trying to sandbag Vitter because they can’t stand one anorher. When the handwriting was on the wall that Edwards was going to win, Jindal added insult to injury by timing his withdrawal from the presidential race mere days before the election for governor. That gave everyone fresh evidence of him being a total failure.
I don’t see how you can blame Jindal for the fact his plans to sandbag Vitter went awry by Edwards winning the election. We don’t even know for a fact that Jindal voted for Edwards even though conventional wisdom is that he did. So now he’s supposed to be held accountable for the fact Edwards got sandbagged (perhaps even as “friendly fire”) instead of Vitter? Edwards can’t claim ignorance to what all was going on and the very real possibility that he would end up with Jindal’s mess even though the intended target was Vitter. If he does want to plead ignorance, what kind of an excuse is that?
Leekhoury, thank you for voice of compassion and your reminder that people are not always as they seem to those who don’t know them. I grew up poor, and I will never forget the humiliations. We had extended family who kept our heads above water, but some who are troubled in mind and body have no family to turn to. The measurement of how a society values the common good is how it cares for the vulnerable among us.
SNAP is federally-funded. It’s not costing the state government anything. However, cutting off SNAP would mean that not only would more people go hungry and potentially die, grocers in Louisiana would lose that much more money. Why would we not want to keep our federal tax dollars here in Louisiana?
SNAP covers food only and that at a very low level. Not housing. Not utilities. Not transportation. Not clothing, Not medical. Not dental. So the lie that receiving SNAP means that a person does not have to work is just that — a lie. And a stupid one, at that, presented by someone who has not bothered to do even the minimal research.
The word “Medicaid” only referenced twice with one open query of how much can be saved. According to Kennedy, around $900 million a year! The number of social media pages touting Kennedy now is unreal, and he was on nationwide CBS evening news: http://www.cbsnews.com/news/louisiana-budget-crisis-leaves-conservative-state-stark-choice/
The online Edwards recall petition is going to reach 25,000 in no time flat, and they’re organizing well to get the highest number of folk actively involved in gathering signatures, including establishing business signup locations. The fact that Bill Cassidy lent his name to the effort whether to actively support or provide guidance on the steps to fulfill helps tremendously.
People are fuming mad at these proposed tax increases, and Edwards is a dead duck in terms of credibility and effectiveness even if the 970,000 signatures can’t be corralled in.
Chris, The Medical Vendor Payments program (Medicaid) budget may be found here:
Click to access 09A_Department_of_Health_and_Hospitals.pdf
Scroll down to page 96 to see its budget summary. Note that, as proposed by Gov. Edwards, it is even larger than the number John Kennedy talks about – it is recommended at $10.664 Billion, of which $2.150 Billion is general fund and $7.851 is federal.
If ALL fraud, waste, and abuse equals 10% as Kennedy states, and it was ALL eliminated overnight (a noble goal that should remain our goal in perpetuity), we would save $215 million. We have a $2 BILLION dollar problem. Therefore, we would have solved 10% of the problem.
Look, I’m not trying to be an apologist for John Bel Edwards or anybody else. I am just trying to present the hard facts. I wish he would do a better job of defending himself, because, as you imply, and as shown by the most recent public opinion poll, John Kennedy is, far and away, the most popular elected official in the state and Edwards has the lowest approval rating at this stage of having assumed office of any governor since EWE.
But, the numbers don’t lie. We can also look at elimination of optional Medicaid programs, but I’m not going to belabor that point. These programs are considered for chopping every year. As my friend Bo Ackal used to say, “You know it, and I know it.”
I tried, in my column, to do somewhat like John Kennedy and present the things in our budget we absolutely should not cut. Medicaid, as you say, was NOT one of them. Think about it.
From my understanding (apparently an ignorant one by Tom’s chariterization of me as a talking head of Rubio or Cruz), do the Feds not pay the state to administer the Medicaid program and it is thus a state program funded with federal dollars? Hence, if a state permits waste, fraud, and abuse to transpire, it is not the state’s money (after having taken possession of such funds) that gets wasted? If that’s not correct and the money is paid in arrears rather than in advance, then the Feds ought to slap a HUGE penalty on the state for flushing U. S. taxpayer funds right down the toilet.
Chris, there is a convoluted funding mechanism and Medicaid is a federally reimbursed program, but the state has to match the federal funds (not the proposed expansion for the first 3 years, but, in general). The state funds are what I am talking about in my piece. In the case of programs like Medicaid, the federal funds would go down automatically as the state dropped optional programs.
To your main point, yes, once we get the federal reimbursements, we treat the money as if it is state money (because we are technically being reimbursed, though the cash flow is continuous). And, yes, if we are sanctioned, we have to pay the money back to the feds and it comes out of our treasury. Therefore, when that happens, it makes any budget problems we have WORSE, not better.
A final note on Medicaid: We can opt out of optional programs in Medicaid as I indicated earlier, but we CANNOT opt out of mandatory programs UNLESS we want to opt out of Medicaid altogether – which we can do, though we have no fallback if we do. That is really what I was talking about when I touched on Medicaid in my column, thought it may not have been clear.
This whole budget thing is a puzzle and the parts don’t always fit precisely. I know of no person in his/her right mind, who believes we should willfully fund waste, fraud, and abuse except those who profit from it. I have made it as clear as I possibly can that I believe we are not doing enough about it. But, as I have also tried to make clear, the numbers simply do not bear out the contention that is the whole solution to our problem.
Chris,
Beware of those conservative talking points. They rarely have a basis in reality. Their intended goal is to lighten the burden of those making far more than you at your expense. It’s propaganda.
For instance, if the millionaires and billionaires actually paid as much or more tax as a percentage of income as their secretaries, your issues with taxes would be largely alleviated and you wouldn’t be wasting time making these arguments.
You have got to be kidding me. People want to recall Edwards for telling the truth? His words did not create this budget mess. It exists, regardless of who is governor.
What I hear you saying is that you all preferred the lies, smoke, and mirrors of the Jindal administration. The draining of funds, the use of one-time money, sale of state property, the defeasance of the debt . . . is this how you manage your personal funds? Hold a yard sale to pay the utilities? Take out a second mortgage to make the house payment, then ask for an extension on repayment? Cancel the health insurance to save on premiums? Sell the car to make the credit card payments and take cabs instead?
Are you out of the loop, or what?:
https://www.facebook.com/groups/RecallJohnBelEdwards/225062824505529/?ref=notif¬if_t=group_activity
&
http://www.kctv5.com/Clip/12216126/group-pushes-to-recall-la-gov-john-bel-edwards#.VsVxjV38Z5o.facebook
He’s got to go!!
Chris, it’s time for you to go away. Just my opinion, because this is not my blog, and I don’t have a say about comments. You are now campaigning for the recall of a governor who has been in office for just over one month, which is way out of line and hardly in the spirit of civil discourse.
And being referenced as “stupid” by Earthmother and now Suzanne is regarded as civil discourse on my prior comments? It’s easy to see why there is so little voice of dissent here. It borders on a cult!
I might also add that Earthmother is off-base in that Nunguesser would NOT assume the controls of power. Edwards would continue to be governor and could run to keep the position (just as Walker did). Of course, I’m sure nobody wants to read comments from stupid people, so with this, I am leaving, but just remember that about half the comments on this post are attributed to me or people arguing against points I made. You folk enjoy the site. As you request, June, I’m gone!
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[…] Source: Dedications: Does eliminating them give Louisiana an easy way out of the state’s fiscal crisis… […]
Stephen Winham – Please refer to paragraphs 3, 4, & 5. Is a correction warranted regarding “million” and “billion”?
Laura, unless I am going blinder than I thought, or seeing what I want to see, I don’t see your point. The numbers appear right to me. You might check the source documents, or give me a hint as to why you question the numbers. Thanks.
Thank you, for helping me understand the rather complicated state budget. I fail to see where a recall petition is going to solve our financial crisis.. It doesn’t matter who is governor whether they be a Democrat of a Republican, the situation is not going away. It needs to be dealt with sooner, rather than later.
John Kennedy is running for higher office, he is also using some rather deceptive tactics, in describing our budget.
I don’t have all the answers, but I do know this the day of reckoning is here, we can bitch, moan, groan, and cuss, we can shame, blame recall, but it wont fix the problem, we have the same majority in the legislature that helped get us to this place, we have a former governor sitting on the couch, in his brand new 900,000+ home,probably using up his campaign money…hoping LSU football doesn’t cease to exist, so he can purchase his season tickets….
I am all for efficient government, cutting wasteful spending, but I am also willing to pay a few cents more in taxes. I find so many times those in government preaching about waste, don’t practice what they preach.
Charmaine:I agree with your comments 100% Thanks for your post.
Ditto!!!!!
Well done. That said, we should be ranking services and programs based on both need and prior budget slashing exposure. Echoing what Gov. JBE said Sunday in opening the special session, healthcare and higher education need to be given priority.
As a short-term response, reinstitution of tolls on all Mississippi River bridges seems to be in order — and especially the project to tear out the toll booth foundations at the Crescent City Connection in New Orleans needs to be halted (for an immediate savings of $3-5 million).
I was on the legislative staff end of that mess, bradthunograd. There were only two bridges that had tolls on them, the CCC and the Sunshine Bridge. At this point, only the people, by vote, can place the tolls back on the CCC.
Stephen,
Are there any efforts made by the legislative budget staff to follow financial trends? In particular, the percentage debt to state GDP? Or anything else of which you’re aware that would shed light on the subject in the way of monitoring the credit cycle.
If so, I am not up on it. Clifford?
Not, that I am aware of. As you know Stephen, the budget is prepared by the administration
Well, that’s the budget. What about forcasting?
Yes, the legislature’s economist, Greg Albrecht, should have that answer as should the administration’s economist as well as Jim Richardson, Loren Scott and others. I don’t.
Stephen is correct. The Revenue Estimating Conference, which met last week, depends upon some of the forecasting by those people Stephen named.
If you view everything John Kennedy says in the context of his campaign for the Senate, in which he must secure the support of the tea party, the extreme right wing of the GOP, perhaps you’ll understand that everything he says and does now is directed toward his goal to be elected to the Senate. Though I once respected him, I no longer believe Kennedy is speaking and acting in good faith. I see him undermining a newly elected governor who faces a difficult situation he inherited from Bobby Jindal, who is probably the worst governor in the history of the state. For shame, John Kennnedy!
If there is a recall and another election (which will cost money that the state doesn’t have), the next person will have no magic wand that will make the enormous budget gap go away. The mindset that the elimination of waste, fraud, and abuse will close the budget gap is the same mindset that leaves Louisiana at or near the bottom in measures of quality of life and at or near the top in measures that reveal our low quality of life.
I’m all for elimination of welfare for the able, but lets first examine the giveaways to the wealthy, rather than focus on abandoning the poorest and most vulnerable citizens among us.
Stephan, thank you for your enlightening and informative post.
June, like you I once respected John Kennedy, but also believe he is acting like Jindal: same song, second verse, running for his next desired office rather than effectively fulfilling the duties of the one he has.
Your suggested solution is absolutely the crux of the problem at hand: giveaways to the wealthy while deliberately abandoning the poorest and most vulnerable citizens among us. Precisely what jindal did, according to the grover norquist conservative agenda.
As I always suggest, a read of Naomi Klein’s The Shock Doctrine, describing disaster capitalism at its worst, is very illuminating.
Earthmother, the swiftness in the change from the old Kennedy to the new Kennedy caught me off guard, but I should have seen it coming when he endorsed David Vitter for governor. I wonder if Vitter is Kennedy’s mentor in his run for the Senate.
I’ll check out Naomi Klein’s book.
I’ve read every post, and I’ve yet to see a fact-based challenge to the waiver of the SNAP work requirement when I “put up” when Tom instructed me to “put up or shut up.” All I read is philosophical political beliefs, including that folk like me are “stupid” (though I voted for Jindal only once, in 2003, the only year in which he lost). There is not even a rebuttal from Tom himself (though perhaps he hasn’t had time to address the facts I presented on the SNAP waiver in an effective way).
At least Stephen did attempt to address my Medicaid funding question. He says the funding and reimbursement is “convoluted,” thus not making it unclear whether it’s federal or state tax payments being wasted. As someone who pays HEAVILY to both, I’m not sure I much care whether my federal tax dollars were wasted or my state tax dollars were wasted. It changes not the fact they were wasted (and continue to be wasted) on a massive scale on our Medicaid program. Being honest, I don’t much like the attitude of “if it’s federal money, who cares?”
“Unclear” above should be “clear.”
“I’m not sure I much care whether my federal tax dollars were wasted or my state tax dollars were wasted.”
I agree and I used to try to make that point all the time back when we were accepting federal grants for things that didn’t make much sense to me. A federal grant that has questionable efficacy is a waste of tax dollars even if there is no state match. As I noted in my column, with regard to shoving program funding responsibilities to local governments, taxes are taxes, no matter who they are being paid to and nobody would argue we don’t wan’t the best bang for our tax bucks we can get.
I, for one, am making no value judgments about you. I am also not making a political argument or statement of any kind. I am simply trying to present my best analysis of the budget. I have no vested interests beyond those of any other citizen of this state and my sole reason for doing the research and making my argument about what the numbers say to me is to attempt to present the truth to the best of my ability and knowledge.
“I don’t much like the attitude of “if it’s federal money, who cares?”” Chris, I’ve never heard that and if some people have that attitude, they need to wake up. “Federal money” is federal taxes paid by the same people who pay state taxes. Which is why it befuddles me when the state refuses to take those same monies when offered back through various federal programs.
My point, Clifford is that you can’t have it both ways. You can’t say only $2 billion of Medicaid is state funds, so that caps savings at $200 million, as Stephen said was the case. Kennedy made it clear that CMS says 10% of the TOTAL Medicaid budget, or $900 million, is abuse. That’s a figure Edwards hasn’t challenged.
Hence, in some combination (Federal or state funds), $900 million is being wasted. If you only want to cap state savings at $200 million, there’s an implicit acknowledgement that the $700 million in wasted Federal funds isn’t of concern. At this point, I’m not at all prepared to concede that the state doesn’t own that $700 million, thus making it state funds notwithstanding the original source. Maybe it does, and maybe it doesn’t.
Tom, I take it from us “not agreeing,” that you now concede I succeeded in “putting up” the evidence you wanted, but now you only wish to argue that corporate welfare is thousands times more. You may well be correct, but my challenge of “no free lunch” when it comes to this SNAP waiver is irrefutable, and you have implicitly acknowledged as much. Perhaps I’m not as “stupid” as alleged by a few readers on this blog.
Chris, I frankly give up. I have clearly failed to explain my point about Medicaid, using the best math I know, and I’m out of options for doing so. I firmly believe I am right and you are wrong, but we will apparently just have to agree to disagree. It happens.
Just to be clear, since I’m obviously (and others of the same persuasion) being portrayed as heartless toward the underprivileged, if Edwards’ plan is to get Medicaid provider reimbursement rates up to a level to where Medicaid patients will be encouraged to go to private-care clinics and save all of us a ton of money and provide the patients with better and more ailment-specific care and not interfere with ER operations, I’m all for it. So far, however, Edwards has been incredibly vague on whether they have plans to do so and, if so, how much that such increases are going to cost and whether or not the Feds will cover any of it.
Chiris, my last comment in the chain above this one was intended to be in response to it.
Chris, this will be my last word on this. You can put up your facts and figures and I can put up mine. You’re trying to deny assistance to those who truly need it by painting all aid recipients with the same broad brush and you simply cannot do that. You apparently have never been unemployed or sick with no medical insurance. You probably have never been hungry with nothing in your house to eat. There are people who are truly hurting and Jindal wanted to deny all of them. I don’t like those who take advantage of the system any more than you do. I also don’t like bad cops, bad judges, bad teachers, bad lawyers, etc. But they are always going to be there, try as we might to weed the bad apples out. It’s a fact of live. You are demanded a utopia that does not, cannot exist. And you’re blaming a man who has been in office all of one month. I haven’t heard you say squat about Jindal. I, too, voted for him in 2003 and I even voted for him in 2007, but by 2011, I had learned a hard lesson.
I’m with you on going after those who perpetrate fraud and corruption, be they welfare cheats or bureaucrats who manipulate the system to their advantage. But again, you have to give John Bel a chance. If I see that he’s screwing up, I’ll turn on him in a heartbeat and he knows that. But I’m going to give him a chance to show me his cards first.
I take it you were for one of the Republicans in the race and that is your right and I would never take that away from you. But Edwards won, he’s governor, and he has a monumental task ahead of him brought on by a Republican governor and a Republican legislature. Be fair.
Chris, we can argue semantics all we want, we can say its all this one or that ones fault, but JBE needs some time to try to work this mess out,
My late husband had a saying, he used when things were tough….and it comes to mind, for JBE, “when you are up to your a$$ in alligators, its hard to remember that your primary objective was to drain the swamp”
It has been a non stop barrage of bad news, and it is going to take some time to sort it out, I like you and everyone else want to weed out the waste, and fraud, from bottom to the top…but I also know first hand how some of the social programs are a life saver.
The SNAP and Medicare programs serve many thousands of seniors, veterans,the working poor, mentally and physically challenged, dialysis patients on and on, NO one likes the fraud and waste,it does a disservice to the many thousands who depend on the life line these programs provide….it is also unfair to stereotype, Ive heard it on a daily basis, so I know what it is. Lets just “chill”and see how the Legislature, goes about fixing it.
For many years I worked for Volunteers of America in S.W. Louisiana assisting folks with persistent and severe mental illness in a comprehensive day hospital program. We provided comprehensive life skills programs from basic to clinical, such as preparing meals, filling out job applications, applying for food stamps and disease relapse prevention education and medication management classes. Many of the patients were living with a diagnosis of Paranoid Schizophrenia and most were homeless. I assisted many in applying for Medicaid because their disease prevents them from functioning at a job skill level that employers expect. If you have ever tried applying for Medicaid you know that its not easy to fill out the paperwork and especially for many who have been homeless. Many do not have family support(and many do) Nevertheless, appeals process took close to 3 years. I would walk them through the process and even attend their fourth appeal which required meeting with a judge. All the while, every patient had to release all medical records and be evaluated by the mental health professionals required by the government. Once they made it to that level it was obvious to anyone even those who lack clinical skills that this person was disabled.
Just because you cannot see it doesn’t mean that they are able to hold down a traditional job. Through tax incentives, some companies hire them and more tolerant when doctors appointments and counseling sessions are a critical part of functioning in society and successfully managing their illness. It was quite some time ago when I had that job though I will never forget the life lessons learned and what compassion as a Christian really means.
Most people who are quick to criticize these adults have no idea what it’s like to apply for housing, medical treatment, food and jobs and maintain a sense of dignity without having to wear a sign of a mental illness. Please schedule a tour of VOA and meet those who work tirelessly to help those in desperate need. You will see Medicaid, food stamps and funding for those struggling with mental illness in a very different light.
Leekhoury – thank you for your heartfelt description of what mental health patients go through, trying to survive. Perhaps this will shed some light on the difficulties involved in securing treatment and the basic necessities of life for people least capable of caring for themselves. Thanks, also, for your service, which can take a heavy toll on those in the helping professions.
Leekhoury, I posted my reply to you in the wrong place. Thank you for your voice of compassion and your reminder that people are not always as they seem to those who don’t know them. I grew up poor, and I will never forget the humiliations. We had extended family who kept our heads above water, but some who are troubled in mind and body have no family to turn to. The measurement of how a society values the common good is how it cares for the vulnerable among us.
I want to address this statement regarding shifting local costs back to local governments, “If they were able to raise local taxes to support them, how would the taxpayers see a difference?” I don’t know what the state restrictions are on how that money is spent, but I’m sure that there are all kinds of regulations. So, they might see a difference financially as local government negotiated with local businesses and contractors for those services.
But more to the point, local citizens would have to face the reality of what those services are costing them and make local decisions about what those services are worth to them. Currently, there is an attitude throughout this state that “the state” is some kind of sugar daddy with endlessly deep pockets. It’s a sort of paternal populism championed by Huey Long. It’s what is behind all of these calls from ordinary citizens and rural lawmakers to “find the money,” to “cut wasteful spending.” They don’t know where the money is coming from or going, but, like spoiled children, they know what they want and Big Daddy better give it to them.
Suzanne, Stephen’s post mentions supplemental pay and revenue sharing as two sources of monies going to local government. Supplemental pay is that portion of the salaries of local law enforcement personnel paid by the state. Probably something the state should have never started, but the faucet is on and you can’t turn it off. If the state turned it off, our sheriffs and local governments will then have to ask the local citizens to pay more taxes to replace the lost state funds. Are we willing to pay more taxes at the local level? Then there are Nongovernmental Organizations(NGOs) which receive state funding. I am not sure how much the state pays out to these local organizations. Now, that is one thing I can agree with Kennedy on, that these organizations deserve more scrutiny and accountability. Capital Outlay for the locals. Want to turn that faucet off? Capital outlay, payments to NGOs is how the legislators bring the bacon home. That’s not going anywhere. Ask the proponents of waste cutting to stop making capital outlay requests for their areas. Wait and see how many will do that. I think you are right in that us local citizens need to decide what is important to us and decide whether we want to pay more local taxes to fund local services. However, a decision to pay more taxes at the local level does not guarantee a corresponding reduction of state taxes that we pay.
Excellent points, as usual, Clifford, particularly about bringing home the bacon.
Something I didn’t mention in my piece – I believe we are still the only state in the nation that supplements the salaries of local law enforcement personnel. But, if we didn’t, this would be high among the list of things locals would have little choice but to pass taxes to replace.
Suzanne M. Lambert: I just read the comments you posted this morning and would like to say you are a true treasure. I wish we could magically inject your insights and knowledge into the minds of millions of our voters. You get it. Thank you for these wonderful comments. .
P. S. I would also like to thank the many others who have commented on this and other LouisianaVoice postings, both the regular contributors and new ones. Like Tom said to me a couple of times recently, it shows people are thinking and thinking is good. Thanks to you all. I would mention the others I appreciate the most, but the list would be too lengthy and I wouldn’t want to leave anybody out.
Those who post here with dissenting views offer us all an opportunity to further defend our positions – a healthy exercise. Even if our views are rejected, it makes our convictions stronger and forces us to look even deeper at why we have them.
Let’s never give up. Things like happenings at the capitol over the past few days can be very discouraging and infuriating – the pretension of ignorance by elected officials who have no excuse is paramount among them. Let your elected officials know how you feel – all of them. The opposition is certainly doing so.
Well said, Stephen, especially your acknowledging those with opposing viewpoints. Like you, I think their input is just as valuable as those who agree with us.
Winham’s article reveals to me how badly the fiscal health of LA has been managed. Between Foster and Jindal, we have cut the state’s throat and now we cannot stop the blood letting. The Republican Party’s continual cutting of tax revenue and Federal moneys to solve fiscal problems is like the 18th century doctor who drew blood in an attempt to cure medical problems. The patient perks up just before dying from the lack of blood. Let’s stop this b.s. and implement a reasonable tax for all. We need to lay aside the partisan politics and work for the betterment of the people of state.
http://www.nola.com/politics/index.ssf/2016/02/bobby_jindal_budget.html#incart_river_home
It may be worse than we thought. Using proceeds from a bond sale to pay current expenses?
Be sure to read the comments to the above Times-Pic piece. The comments – none by me or anyone else in this thread, apparently – will really hurt his feelings.
And, where is the State Bond Commission located in state government?
ding, ding, ding, ding, ding…The State Treasury
And, who is the State Treasurer and member, by law, of the State Bond Commission?
ding, ding, ding, ding, ding…Why, it’s our old pal, John Neely Kennedy, champion watchdog of wasteful spending, of course.
Actually, the bond money was not directly used to pay for recurring expenses, but it may as well have been. Bonds were defeased (at a premium, as cited by the legislative auditor), and the one-time money generated was used to pay annual debt service – An equal amount that would have ordinarily gone to annual debt service was instead used to fund recurring operations. The increase in general obligation bond debt service that results next year is noted in my column above and is, of course, a big part of the $2 Billion problem we face.
In addition, we will have to pay an additional $165 million in interest over time as a result of not using the defeasance savings to do capital outlay projects in the backlog, rather than issuing additional debt. As an added bonus, funding the backlog will be a problem because we are reaching our legal debt capacity.
And the fun doesn’t end there. The Wall Street Rating agencies have finally stopped drinking the Jindal Kool-Aid and awakened from their slumber. If we don’t do something really quickly and they have any integrity at all, they will reduce our bond ratings, and we will have to pay more interest on any future debt.
Mr. Kennedy, where was your outrage when this was happening?
Oh, you are going to blame this on the governor and the legislature, according to NOLA.com. Hmmm…looks like shirking, followed by scapegoating on your part to this casual observer with a healthy dollop of hypocrisy over it all. In addition to waste-buster, aren’t you also the guardian of the state treasury?
And, what about your comments on WWL Tuesday? It would seem Lamar White has found something mighty suspicious about them:
Thanks for getting me fired up, again, earthmother. And, you’re right, the comments are great and could hurt our former governor’s feelings – if he had any, that is.
[…] Source: Dedications: Does eliminating them give Louisiana an easy way out of the state’s fiscal crisis? Is… […]
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Steven, This is great information that is hard to find and even harder to find in a form that can be easily understood.
I think two more general points are very important to keep near the forefront of any conversation about the budget:
1 – Taxes on businesses and the wealthy have been cut drastically during Jindal reign. If we simply restore taxes to 2007 levels, I don’t consider that an increase in taxation, we will go a very long way toward solving the budget problem.
2 – Jindal cut every expense he could and it is absurd to think that there are significant expense reductions available, with the possible exception of some contracts, that wouldn’t have a significant impact on providing services to Louisiana citizens. This can be particularly true where federally matched funds are cut and federal funds, as you noted, make up about 60% of our spending.
Thanks, and YES and YES.
http://theadvocate.com/news/14920394-123/louisiana-paid-corporations-more-from-credits-than-was-paid-in-taxes
This has been reported in various places over the last several days, but its implications don’t seem to be sinking in with some people.
It’s as if they hoped nobody saw that.
Yep. Bob Mann in NOLA.com today:
http://www.nola.com/opinions/index.ssf/2016/02/the_gops_investment_in_illusio.html#incart_river_home
It occurs to me we could write a book about what is wrong with the premise we can cut our way out of the problem – Unfortunately, the ideologues are not interested in reality.
The ability of our elected officials and many others (most of whom are Trumpsters) can simply turn their backs on cold, hard facts. They will use things like the Channel 9 report last night on expired airline tickets and claim the elimination of such waste will solve our problems when simple math (such as $2,000,000,000 – $200,000 = $199.800,000 in the case of the ticket thing).
Let me hasten to say for the umpteenth time, we should not tolerate things like the ticket thing and you would think SOMEBODY in the position of managing such things could have caught this as they should have every other thing like this we read, but mathematics is mathematics and I am not talking about the theory of relativity.
Pardon my grammar errors above. Haste and frustration can lead to such things as, and Tom pointed this out to me recently, can advanced age 🙂
In today’s Advocate there is an article about the AG finally moving into the office space in Benson Towers. Yes, it is a waste, if the state is paying for occupied office space in New Orleans and Kenner and unoccupied office space in Benson Towers, as mentioned by a legislator. But, no one questioned the extortion arrangement between Benson and the state. I wonder why the AG was renting office space in Kenner? I wonder who owns that property.
You may have noted the House Appropriations Committee is proposing a cut of $44 million this year in what is reported as the MFP. If you read the article closely, you will note this $44 million is not part of the $3.4 billion general fund ($3.7 Billion total state) funding for the MFP formula that is protected by the constitution. In recent years, the legislature has played around attempting to skirt the spirit of the MFP’s constitutional protection and this $44 million had been appropriated as an adjunct to MFP funding, not part of it.