Statistics vindicate Jindal on rejecting federal funds

While many states flounder trying to deal with their latest funding crisis, by contrast Louisiana fares very well thanks in part to good decisions made by Gov. Bobby Jindal.

States have had to weather getting operating budgets in order, fending off a looming pension crisis, and now facing shortfalls in their unemployment insurance trust funds. States gather from employers a tax, based upon a myriad of factors with both a base federal component and additional state part, which goes into a fund from which the eligible unemployed may draw. The prolonged recession – ironically lengthened because the Pres. Barack Obama Administration with Congress’ compliance in the first half of his term slackened eligibility requirements – has created unemployment levels not seen in nearly 30 years, draining these funds in the states. This has caused many of them to do one or more of tighten eligibility requirements, reduce payments, increase taxes, or seek costly loans from the federal government.

But, while Louisiana has had to tackle budgets and pensions (in the case of the latter, half-heartedly), it has had no real worries with its unemployment trust fund.

As of the end of last year the state had nearly $1 billion sitting in its fund, and so the legal triggers that would do things like raise taxes or cut benefits remain unengaged. And the fund has remained larger because of Jindal’s and many legislators’ fortitude regarding an Obama Administration plan to expand benefits even further.

In 2009, among other incentives dangled in the federal spending bill, the state was offered almost $100 million in one-time money if it would make a permanent legal change (with penalties if it changed back subsequently) for this expansion, with a decision due this month. But analysis showed it could cost an extra $109 million a year (at then-current levels) to the state, so Jindal turned it down and got the backing (after interesting parliamentary maneuvering) of the Legislature.

Ideological opponents lambasted Jindal at the time but history proved his decision correct. National policy, both generally and specifically with the unnecessary, double-secret oil drilling permanent moratorium, conspired to push the state’s unemployment levels higher, yet the trust fund continued in excellent shape, which would be undergoing serious deterioration that with a couple of more years of similar statistics could have put the state in the same league with those now sufferings. Instead, its fund looks well able to survive at least a couple of more years of Obama economic policy, a point Jindal can make convincingly in his reelection campaign.