By Stephen Winham
Guest Columnist
The 2017-18 budget was enacted in a ball of confusion that allowed an escalation of the blame game. There was less back-slapping than usual when the latest unnecessary special legislative session ended, but perhaps more back-stabbing.
I heard Gov. Edwards on the radio blaming the legislature for not using recommendations of the latest blue-ribbon committee (Task Force on Structural Changes in Budget and Tax Policy) to formulate a plan for resolving the “fiscal cliff” facing us in 2018-19? I was surprised nobody asked him, “Well, governor, why didn’t you?”
Surely the governor does not believe we have already forgotten that the centerpiece of his tax reform proposal was the previously unheard of and dead on arrival Commercial Activity Tax? While his proposal did incorporate some of the task force proposals, his brand-new Commercial Activity Tax constituted $832 million of his $1.3 billion proposal.
When Gov. Edwards first talked about the Commercial Activity Tax I thought, “Oh, no, here we go again with another sham like the one Jindal put up in his his one and only stab at tax reform in 2013.” Then, when Gov. Edwards put his CAT proposal in writing and balanced it with things that made sense, I thought he was proposing something he seriously thought would work. By the time the CAT was introduced, however, it had already been severely watered down and it was subsequently amended beyond worth before the whole package was withdrawn – In other words, just like Jindal’s ersatz proposal, it never got out of the starting gate – And I came full circle to my original take on it.
Then Representatives Cameron Henry and Lance Harris began the drumbeat we have heard now for many years – “We don’t have a revenue problem. We have a spending problem.” That premise was picked up by legislators representing constituencies that believe it to be true (in the absence of a credible contrary argument), and the focus shifted to cuts. Or did it?
Most of the things everybody considered critical, like full TOPS funding, higher education, and critical needs at corrections seem to have been funded, based on press reports. State employees were even given a modest pay increase. Yet no taxes were raised. Since the Governor proposed an Executive Budget that left $440 million in what he considered priority needs unfunded, how is this possible? I am still trying to find the answer to that seemingly simple question.
As you already know, state law requires the governor to submit an Executive Budget proposal balanced to the official forecast of revenues. The legislature is also required to pass a balanced budget. Although the original appropriations bills are based on the governor’s proposal, the legislature is under no obligation to pass a budget that matches what the governor has proposed. In fact, there are states where the legislature pretty much ignores the governor’s proposal and starts and ends with its own ideas. We must never forget that the legislature holds the power to appropriate and enact the budget, not the governor. Our governor has veto power, including the power to veto line-items, but he does not make the law. He is responsible for administering the enacted budget in accordance with law.
So, who really is to blame for the abysmal mess in which we find ourselves: the governor, or the legislature? That’s an easy one – both.
Although the process has become significantly perverted, there should be only one way to balance our state budget on a continuing basis – match projected recurring revenue with projected expenses. It is possible to do this and to do it in a way that is clearly understood. At the end of the budget process we deserve a budget we can understand and live with – I am unconvinced we have either.
Governor Edwards did present a balanced budget proposal. But was it clear and honest in its portrayal of our needs? The Executive Budget presentation showed a general fund (tax-funded) need of $9.910 billion versus and official revenue forecast of $9.470 billion, leaving a gap of $440 million in unfunded needs. All constitutional requirements were fully funded. Here’s how the Governor said he balanced the budget:
- Carrying forward most of the cuts made in FY 2016-2007 ($120 million)
- Cutting general fund to the Department of Health ($184 million)
- Across-the-board cuts in general fund of 2% ($48 million)
- No funding for inflation
- Funding TOPS at 70%
- No funding of deferred maintenance and other infrastructure
If we got additional revenue, the governor proposed restoration of the cuts in hospitals and the across-the-board cuts. In addition, he recommended full funding of TOPS, pay raises for state employees, technology enhancements, additional funding for prison contracts, match funding for DOTD, a 2.75% increase in the MFP for elementary and secondary schools, and other enhancements.
Fast forward to the budget ultimately enacted last week. No additional revenue was raised. TOPS is fully funded. State employee pay raises are there. Nobody is publicly claiming devastating cuts have occurred and the governor says he is happy with the budget. We mullets (as the late C. B. Forgotston called us) are left to scratch our heads over how this is possible. How is it possible to go from needing $440 million in additional money for a minimally adequate budget to needing ZERO while making most people happy? What got cut? How will the cuts affect people and businesses? Until somebody answers these questions, we mullet mushrooms are left in the dark – and that is apparently where our “leaders” would as soon we stay.
We deserve better – all of us. None of the following are unrealistic demands. We need to start making them of our elected officials:
- An Executive Budget proposal that the governor truly believes in and is willing to fully defend. If, for example, 100% funding TOPS is not a high enough priority to be included in his base recommendations, then he should stand behind continuing the FY2016-2017 level of 70%.
- An Executive Budget proposal and an enacted budget that avoid across-the-board cuts. Across-the-board cuts only make sense if all programs are of equal value. That is certainly not the case. Further, after successive years of across-the-board cuts, the result can only be greater mediocrity and ineffectiveness.
- An Executive Budget proposal and enacted budget that make clear, concrete cuts anybody can understand with clear explanations of exactly how services are going to be reduced or eliminated.
- A progressive tax system that matches recurring revenue with recurring needs after all cuts possible have been made.
- Elected officials willing to hold their appointees to the highest standards possible with zero tolerance for the waste and abuses reported almost daily.
- Elected officials willing to put partisan politics aside in furtherance of the greater good.
Governor Bobby Jindal portrayed himself on the national stage as a budget-cutter par excellence. If he was, why did he rely on tricks to “balance” annual budgets and leave Governor Edwards (and us) with a huge budget hole?
Why has Gov. Edwards not yet offered up a balanced budget he is willing to stand behind? Why has the legislature not enacted a budget that makes sense and is sustainable in the future? Is it a lack of courage, or is it an unwillingness to face reality? It must be both, plus the partisanship that has recently made a political game of everything.
The governor and the legislature have competent staffs who have clearly defined our problems for many years. A series of blue-ribbon panels and well-paid private contractors have studied the problem and recommended solutions for decades. It is difficult to find evidence either individuals or businesses are overtaxed in Louisiana. It is very easy to find low rankings of our state on infrastructure and quality of life issues important to both individuals and businesses.
We are mere pawns in the blame game – but we don’t have to be. Let’s let our elected officials know we will no longer accept being held hostage to an incompetent and unresponsive government. We want solutions, not the cop-outs and excuses we have been getting for way too many years.
—Stephen Winham spent 21 years in the Louisiana State Budget Office, the last 12 as Director. He lives in St. Francisville.
Louisiana Voice 
Bring back the Stelly Plan with dedicated funding and pool for special projects and programs.
If the half of Stelly that was repealed had not been, we would have manageable problem today rather than a cliff and some economists believe we would have no problem. Stelly’s was the best fiscal reform package enacted in my lifetime. It was stupid to keep the reductions in sales taxes and eliminate the corresponding increases in income taxes. And, now, look at our sales taxes.
One of the shames of the century.
That would solve a lot of the fiscal problems.
We would all be well served if we became so familiar with what Mr. Winham has described and proposed that we could discuss it with clarity and in detail with our legislators. Thank you Mr. Winham.
John, I worked for the House for almost 30 years, even I could not discuss the budgeting process in the manner in which Stephen just did. Also, even if you or I could discuss it in such detail with our legislators, many of them would not be able adequately participate in the discussion. That’s ironic. Ironic, because that’s who we depend upon to make the hard vote and hard decisions.
Well written and thoughtful post Stephen.
Although this was a side note to the main point, it’s important to correct the misunderstanding that all state employees will get a raise and that higher ed was considered critical by the leges and gov. Neither are true because the raises are for classified employees and no funding was restored to higher ed per se, only to the TOPS tuition waiver program. No professor at LSU will get a raise. Those who are left will continue to leave in droves. LSU students will get TOPS to attend a former research university and be taught by instructors who are not international leaders in their respective fields. That’s if the buildings don’t fall down around their ears. The genius leges and gov are handing out free tickets to attend a show in which the actors are leaving, the theater is falling apart, and the director is wondering why he ever left sunny southern California to come to this swamp and be forced to watch mediocre football.
Excellent points!
Correction: The LSU Board of Supervisors just passed a fee increase effective of nearly $300 per student, dedicating the funds to merit raises for profs and management staff. It’s expected to raise about $14,000,000.
Can you give us a review of the history of budgets and deficits over the last decade or two. Is this new, or just same old, same old.
What happened to Stelly?
The data on the state budgets since 2003-2004 may be found here:
http://www.doa.la.gov/pages/opb/state-budget.aspx
The specific information you are asking for may be found in the first column of the first table in each of these documents (at around page 13 or so). This table is the COMPARATIVE STATEMENT. Look at the “Funds less Expenditures line” for each of the three columns – They show the most recent audited final budget, unaudited prior year budgeted, and Appropriated for the coming year.
In a way this is the same old/same old in that it has been a very long time (I would say since the 1st year of the Jindal administration when he inherited a surplus of close to a Billion$ by anybody’s reckoning) since we have had truly balanced and honest budgets based on the factors I cite in my column.
The basic reason we face a Billion$+ gap in FY 2018-2019 is that over a billion$ in temporary taxes expire June 30,2018. The temporary taxes were put in place last year to give the governor and legislators an opportunity fully study the issue and make a decision by now on what to do to address the cliff so planning could begin now. That, of course, did not happen and at least one more special session will be necessary between now and July 1, 2018 to figure out how to balance the budget.
Our “leaders’ had ample time and ample information to come up with something by now, but they lacked the collective will to do so and are masters of never doing today what can be put off till tomorrow..Many legislators are uninformed and, unfortunately, many of them don’t want to be informed, particularly if the information contradicts their ideologies.
Sorry I forgot to answer this: Stelly had 2 parts – a reduction in sales taxes and a roughly equal increase in income taxes. The sales tax reduction remained while the income tax provisions (both of which were recommended for consideration this year) were eliminated. The purpose of Stelly was to have a fairer tax system that was also more in sync with growth in our economy, i. e., as expected income taxes rose tax collections rose at a faster rate than sales taxes. It was utterly stupid to repeal half of it, but what else has been new in managing our budget lately? Note that the taxes expiring June 30, 2018 are SALES tax increases. So, now we have the worst of all possible (well, maybe it could be worse) worlds.
Oh, and the first part of the income tax increase was repealed under the Blanco administration and the second part under Jindal. Interestingly enough, Jindal at first didn’t go along with the repeal, but subsequently jumped on the bandwagon and claimed it as one of his victories – He never met a parade he couldn’t try to get in front of.
I couldn’t agree more with Harold. There will be a handful of faculty left who are international leaders, because we’re too close to retirement to consider moving. I have been contacted twice over the past 5 years about applying for directorships at other universities, so it’s not my own estimation of my reputation. Although, if either one had been in one of the areas we plan to retire to, I would have made a different decision.
In any case, it is step 4 “A progressive tax system that matches recurring revenue with recurring needs after all cuts possible have been made” that is the core of the problem. The majority in this state believe that, as long as state government is spending any money at all on any program that does not benefit them directly, there are still cuts to be made.
Suzanne, your last sentence cuts right to the heart of the problem. Too many people watch Fox News and regurgitate the rhetoric that nothing good can come from any government program “that does not benefit them directly.”
Exactly, Suzanne and Buck. But, there is also a problem with those who do benefit directly or indirectly, but who still follow the rhetoric.
Likewise Suzanne. The citizens of Louisiana and their elected representatives have decided that this state should not have a public research university. Sad.
Excellent article! and comments, especially Suzanne. The Republican controlled Congress controls us and the ratf—ckers are willing to destroy our Democracy, partisan over patriotism, so it will take a while to fix it, Trump and the GOP are working hard and doing a great job and once they get the tax cuts for the rich, all will be great again. love always ron thompson
Thank you, Stephen Winham! Thank you, thank you, thank you! I’ve tried convincing people that this state is NOT overburdened by taxes, by pointing to data showing that our per capita spending of state general funds is BELOW the national average of state general fund spending. People think I’m from outer space! It is nearly impossible to reason with people who depend on an intrenched ideology to make sense of all politics.
I agree that services like public higher ed should be funded by taxes, which is what makes them public, a service, and affordable to the majority of citizens for the general good of our society. But if the majority of citizens and their elected reps believe so strongly that the private sector can do better than government, then please do privatize public higher ed and get it over with. LSU would welcome it. LSU could double tuition and fees, drop student enrollment by about a third by raising admissions standards, and come out way ahead. Not only would LSU have more revenue, but the quality of students would go up, they could be taught in fewer classrooms in fewer buildings, the number of profs could be reduced, the remainder could be paid salaries that would be competitive with Texas, Alabama, and so on, thus rebuilding their quality. Who would lose? The average citizens who have voted for the politicians who would love to see such a scheme. Average students from Baton Rouge would have to go to Northwestern, LSU Eunice, ULL, Southeastern, McNeese, etc. Above average students would be admitted to LSU and be able to benefit from learning at a research university, but they would need to pay tuition and fees much higher than at present. LSU would prosper. Louisiana would continue to decline further.
Greatly written. But a condensed version should be published by the Advocate and other papers across the state as well as delivered to the likes of PAR. In the latter it would support my couple communications to executive director Robert Scott as a member of PAR, that a proposed budget should reflect what our potential should be, Maybe with an addendum to catch up, to compete with the likes of states with renown education, robust infrastructure and health care reaching well above 90%. Is this not the state we deserve to live in. Walk outside a moment and tell me we should have a 5 times the chance of being killed than the leading state or that parents should have to make the choice to recommend to their children to live else where for a better quality of life or live here with less. Its long past excuse time. As a member of the Baton Rouge Press Club, after Jay Darden ‘s recent presentation discussing to the last 20 years of his experience, while other reporters are asking questions of immediate concern, I can ask the leading question of .”Why won’t the rank and file of the public see the situation as he represents?” His answer, politics, Fox news representing government cant work and Washington, doesn’t give us a answer. I believe until the average public see the shenanigans end, gas tax used for NO airport despite what the constitution says, State police with $14 million raise, state workers told that while the average USA SS payment is $1300 and the avg state worker exceed that with jobs that had health care and job security, the Jay Dardens $7000 mo retirement raise and Sally Clausen’s $14K per month brought to Texas not to mention LSU playing in Houston while Wis plays in Wis not Chicago and not a SINGLE politican complains of the financial loss or publicity loss to New Orleans or our renovated Superdome we will not see change. However unlike Jay’s comment, these can be changed – fixed and it does not have to be done on a national level, which give us opportunity. I hope one sees this as a way forward instead of just a picture of what is. To a better future….
Its not my right to co op this column, however if you would give me the grace to support a point to many that appear to care about our state. Just last nite, right there on AOL was another independent group, that probably cared no more about LA than you might Idaho or Iowa rated La state government 44 in the nation. Need not fear we at 44 are still ahead of sister Miss and AL. However we need to see with clarity where we are to chose to make changes, including budget or resource allocations so we can live up to our potential to ourselves and the nation.
Here is their take on our state after telling of our immense opportunities, like location and resources, I add weather and topography.
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“Despite the presence and exploitation of natural resources, Louisiana’s population struggles with high poverty, low educational attainment, and high violent crime. Nearly two in every five state residents live in poverty, the third highest poverty rate of all states. Just 84.6% of adults have a high school diploma, and 23.2% have at least a bachelor’s degree, each among the lowest attainment rates of all states. Also, there were 540 violent crimes reported for every 100,000 residents last year, the fifth highest violent crime rate.”
I own a small apartment complex (3 plex) located just off Sherwood forest Blvd. I have had a 19 year old killed in my parking lot. Just yesterday a tenant, paying rent, told me of a multiple shots, nearby, that had police cars screaming that would certainly be in the newspaper today. The onlline advocate today under crime had murder, DWI, hit in run deaths to the point I could not casually locate the incident. Is this how we wish for us and our children to live?
My sincere, Thank You for your interest and the opportunity to express my opinion to people that I believe care not just about process but about reaching our state’s potential that would not leave people like me worrying at 3:00 am would, even moveable, burglar bars on the windows trap a young child in a fire. .
Thanks for your contributions to this discussion. There are many studies like the one you cite. For example, the most recent assessment of business climates by 24/7 Wall Street ranks us 50th says this about Louisiana [note that they never mention taxes]:
50. Louisiana
> 1-yr. real GDP change: 1.0% (12th lowest)
> Avg. salary: $46,784 (22nd lowest)
> Adults w/ bachelor’s degree: 23.2% (4th lowest)
> Patents issued: 399 (14th lowest)
> Working-age population chg. 2010-2020: -3.2% (7th lowest)
No state is worse for business than Louisiana. Working-age Louisianans are less likely than the vast majority of state residents to have the qualifications many businesses look for in job applicants — just 23.2% of adults in the state have a bachelor’s degree, nearly the lowest percentage of all states. The presence of science, technology, engineering, and mathematics-related occupations usually reflects a business-friendly environment where companies can grow. In Louisiana, just 3.2% of occupations are STEM jobs, the third lowest share of all states. Unlike most states, Louisiana’s working-age population is also shrinking.
According to Louisiana’s department of economic development, 80% of the nation’s offshore oil rigs are in waters off the Louisiana coast. This suggests that while Louisiana is not especially business friendly, some types of businesses do better in the state than others.”
http://247wallst.com/special-report/2017/02/14/the-best-and-worst-states-for-business-3/11/