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Emperor Edwards wears no clothes on budget debate

The emperor had no clothes, it appeared from questioning this week by Senate Finance Committee members of the emperor’s representatives, on the matter of whether Louisiana government needs more revenues to function without cataclysm befalling the state.

Democrat Gov. John Bel Edwards’ Commissioner of Administration Jay Dardenne and Department of Health and Hospitals undersecretary Jeff Reynolds briefed the panel on the $70 million reduction in state money from the current fiscal year budget. Last week Edwards announced these cuts would fall entirely on health care, this amount necessary as the Republican-led Legislature spurned his request to raise taxes enough to cover spending he projected to the end of the fiscal year.

The week before at the end of the special session dedicated to close current and forecast future budget deficits, Edwards excoriated the Legislature for failing to accede to the higher level of taxation he desired, maintaining that as a result severe programmatic disruptions would occur. Edwards already had volunteered some cuts, and Republicans came up with some more that, after some line-item vetoes from the governor, came in around $100 million worth combined.

But, when revealed, the cuts seemed relatively painless, all falling on DHH (although in essence some hit higher education when it had to internalize $28 million in Taylor Opportunity Program for Students reductions). Despite the Edwards Administration having told lawmakers that the nongovernment partners managing all but one of the state’s designated charity hospitals would rebel against a rate cut, they took one. And the reductions curtailed no activities of any program, especially concerning Medicaid waiver programs that Edwards alleged repeatedly were at risk unless lawmakers increased taxes more.

Naturally, senators at this meeting wanted to know why the cuts had seemed, in a way, fairly painless. Dardenne generally answered that these came from savings coming from an unanticipated fall in Bayou Health enrollment, renegotiating contracts with providers including with the partners administering charity hospitals, and delaying payments to the partners from this to next fiscal year.

Yet when pressed by some Republican senators, and bringing in Reynolds for elaboration, Dardenne admitted that between the waning days of the special session and the official promulgation of the cuts, and with more time to figure out data trends, there came a shift in focus with more scrutiny on producing efficiencies in several DHH programs and also the idea of swapping present fees with future fees (because of Medicaid expansion’s influx of federal money, they could promise a higher reimbursement in the future). The Bayou Health savings had grown over the previous three months, stemming from efforts begun under the previous Gov. Bobby Jindal Administration to put more effort into verifying eligibility for Medicaid services.

In other words, it appears had the GOP (the House of Representatives in particular) never forced Edwards’ back against the wall to look for cuts and had he gotten the extra tax revenue he wanted, likely the Edwards Administration never would have made the effort to focus greater scrutiny on efforts to root out waste, potential fraud, and less-than-optimal resource usage. The crutch of that additional money taken from the people would have discouraged making government work better.

Republicans on the committee did not take the chance to exhort that they had told Edwards so, but neither did they shy away from pressing the advantage circumstances had presented them. More generally state Sen. Conrad Appel, and more pointedly state Sen. Sharon Hewitt, emphasized that governing should not act as an exercise in gobbling up revenues and then deciding how to spend them all, but that it must entail determining needs and how best to meet them, and then determine the appropriate amount of revenue required. Hewitt thought the reaction to the shortfall demonstrated what government could accomplish when it made prioritizing a major goal.

That attitude seemed far from Edwards’ mind, when asked about his administration’s ability to find money to cut under protest. He claimed it unrealistic to think policy-makers could find around $750 million in savings and efficiencies for the next fiscal year – entirely tone deaf to the idea that government should discontinue spending on low-priority items

Lawmakers need to avoid the fallacy of Edwards’ thinking in the years to come, not just when it comes to budgeting but also when inevitably he will battle to continue tax hikes that start at the end of this week but expire at the end of fiscal year 2018. They should not fear Administration assertions that programs must have a certain level of funding but insist upon credible justifications for that level of spending. Then, given that explanation, they should cut a little more from that in order to spur more intense scrutiny of practices and procedures that surely have some room for improvement. And they must investigate whether the kinds and amounts of services offered by the state actually serve sufficiently important interests and then fund only those that do.

Advocates of big government will exaggerate spending levels and the number and kinds of genuine responsibilities of government. How the Edwards Administration was forced into moving further down the path leading to right-sized government without the world ending provides an object lesson not to buy into that.

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