Still time for Jindal to act to cushion looming deficits

That the state may be looking at a shortfall of over $1 billion for 2009-10 is unfortunate. That to some degree this could have been mitigated is unquestioned. That it can be managed with a minimum of budgetary agony should not be doubted, if we start now.

It’s not like we weren’t warned, certainly often enough by this space. Under Gov. Kathleen Blanco, when it became apparent that federal disaster relief spending was going to fatten state coffers, the immediate impulse should have been to start bankrolling this bonanza in the Budget Stabilization Fund to the tune of $1 billion-plus a year. Instead, Blanco withdrew funds from it. At least Gov. Bobby Jindal didn’t buckle so badly to legislative demands when he had a shot to infuse money into it in 2008, but that he only dumped in the minimum showed a lack of foresight in planning. And here we are again, with a chance to put the entire projected surplus for 2007-08 into the fund.

Had these suggestions been followed which would have pushed the fund to $4 billion, for this upcoming fiscal year the entire projected deficit could have been withdrawn from the fund (a third may be taken every two years). This would have bought time for the 2008 tax cuts to kick in that will add hundreds of millions from increased economic activity to come to fruition. Regardless, it’s not too late to send the entire projected last year surplus to the fund where maybe it could support a third of this year’s projected deficit.

Besides better revenue management, spending also must be addressed. Given the state’s eccentric eligibility of funds reduction without extraordinary measures, health care is the single largest item by far where controls would have to be instituted. The looming crisis once again demonstrates that Louisiana must rid itself on a fixation for institutionalized solutions both for triage and long-term care. As regards the former, restructuring the health care system to move away from overwhelming dependence on state-owned facilities to provide indigent care will save funds. As regards the latter, putting more care into home- and community-based care by getting rid of the tremendous reliance on nursing homes to produce more efficient and effective solutions will save the state hundreds of millions of dollars.

The Jindal Administration obviously is acting correctly to identify areas of savings now, but it needs to be more proactive in seeking out reduced expenses and banking money. That the possibility exists that Democrats could control the majoritarian branches of the federal government come 2009 brings added urgency to the issue, since strict adherence to promises made by their presidential\al candidate Sen. Barack Obama will cause more economic difficulties. Padding the Budget Stabilization Fund and speeding up the restructuring of health care to reduce reliance on institutional care will help to cushion the blow.