Reform job left incomplete unless Jindal spends capital

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While his enthusiasm deserves applause, at the same time Louisiana Treas. John Kennedy partially misdiagnoses what truly was a missed opportunity concerning the budget that emerged for state government this fiscal. Where he was correct and not provides lessons for a more effective approach in the future.

Kennedy blamed both Gov. Bobby Jindal and the Legislature for insufficient cutting and thus reliance on non-continuing fund sources (such as reducing in many cases bulging trust funds whose contents are unlikely to be used any time soon). He also outlined alternatives. The story is more complex both in the practicality of his suggestions and how to go about cutting spending.

Some of Kennedy’s ideas do have merit. For example, there does need to be greater oversight of contracts let by the state for professional services. As previously noted (and brought up by Kennedy), at least some portion of educational services contracts probably really aren’t that necessarily. But others simply sound good but invite their own problems. For example, Kennedy’s idea of lopping off vacated state jobs until the state loses 15,000 presents a host of problems. As previously noted, this indiscriminately removes positions which would disallow critical needs from being fulfilled through replacement, and has no relationship to priority of tasks.

Better has been Jindal’s very public hiring freeze strategy and very private attrition campaign. The freeze does allow filling of jobs by need, but it has been behind-the scenes chess playing that has had a greater impact on reducing state personnel costs, by far the most expensive item in state where its per capita spending ratio is the fourth highest in the country. It has been fought at both a macro and a micro level.

Overall, Jindal has battled to turn the civil service system, under which a majority of state employees work, into an organization that uses dollars much more efficiently. In fact, he has been downright scorched earth about it, wanting the optimal system which the State Civil Service Commission has rejected. In response, Jindal has strongarmed out of the budget money for any raises two years consecutively, saving more money than if his plan had gone through. It also, because of the defined benefit retirement system under which most employees operate and as it makes positions especially among less-capable employees seem less attractive compared to the private sector, has the effect of increasing vacancies that then can be strategically dealt with.

More specifically, Jindal has been trying to get government out of inefficient provision of services, through tactics like privatization, and in making other services work better, such as bringing increased rationality to health care provision. But his biggest impediment here has been the Legislature and its subservience to parochial attitudes by its members and pressure by special interests. Many of its members are more interested in keeping government employment high and government money rolling to certain groups.

In addition, the Legislature rejected attempts this year to reform a fiscal structure that would make it easier to make cuts, such as loosening dedications that make for a severe lack of flexibility, allowing lower-priority tasks to continue funded and being forced into cutting more important ones. So, all in all, the Legislature bears the most blame, and the Senate more than the House as it acquiesced more to spending in this fiscal and year and politically forced the House into that, in part because Jindal appeared in need of quick resolution.

But Jindal deserves chastisement as well, as many of the difficulties heretofore noted he probably could have overcome by flexing some political muscle. One could argue he had good cause to be too detached with oil lapping up on shore, and this as well may have distracted him from following up on some good recommendations issued early in the year, only some of which found their way into policy.

Yet the buck does stop with him and the fiscal crisis looms larger. A coordinated effort addressing simultaneously the fiscal regimes’ structural flaws and legislator and other policy-maker resistance must come from him if anything beyond the partial progress of this year can happen in the next year. Not much more than was tried has to be done, it just has to be finished, and Jindal must lead that charge. Unfortunately, an election year may make obstructionist interests dig their heels in further so Jindal cannot be tentative. He faces no serious opposition for reelection and has gained even more political capital from his competent handling of the oil spill crisis. The window for real, beneficial change still remains open; he needs to make withdrawals of that capital to attain it.