New numbers empower Vitter, marginalize Melancon

The irony of it all is that as Democrats prepare to wield more power in Washington, in Louisiana the biggest loser from this will be its sole Democrat member while the biggest beneficiary will be its most high-profile Republican.

One might think Democrat Rep. Charlie Melancon might be in a good position given the takeover of the White House by his party and a stronger majority in the Congress. The fabulously do-nothing 110th Congress run by Democrats, which when it tried to do something substantive typically sent extremist legislation blocked by Pres. George W. Bush’s veto, gave Congress the lowest public opinion approval ratings in history. But with him out of the way, the floodgates may open allowing Melancon and his ilk greater leeway than ever (as long as they hold on to that power which, if they serve up the same kind of legislation they have been proposing, unless it tries to structurally change electoral politics in Democrats’ favor such as by the misnamed Employee Free Choice Act, won’t be long).

But his problem is that things got too good for Democrats. Melancon often argues his affiliation with the liberal Democrats, not liked by a majority in the state (and whose presidential candidate got about 35 percent of the vote in Melancon’s Third District), is tempered by his fiscal conservatism. He will claim that it’s not a contradiction to put him into office because he can help moderate the more extremist tendencies of his party. It’s an assertion that next year he will have a much more difficult time conveying convincingly.

In the 111th Congress, the self-proclaimed fiscal conservative Democrat “blue dogs” will have about 50 of the about 257 Democrats in the House. With a majority (assuming all present) of 218 in order to win votes, for the fiscal and in every way liberal Democrat House leadership because of absences and defectors, they won’t need Melancon or his colleagues to pass legislation and therefore will not moderate it. In the 110th, their votes were sometimes crucial but that not being the case any more, their influence will go down.

At the same time, Republican Sen. David Vitter’s influence will go up, and for the opposite reason. Being in the smallest minority now than ever before, as a member of the opposition Vitter has greater freedom than ever to make a name for himself within it precisely because the opposition does not have the responsibility to govern. Utilizing the power of filibuster and cloture along with other Republicans, Vitter can publicly lambaste the harebrained schemes likely to emerge from the 111th Congress and have a visible hand in stopping them, gaining large credit back home for doing so.

Melancon, by contrast, will be tarred with every bad decision made in Congress. And to add to the irony, this will impede him as he contemplates taking on in 2010 Vitter who will be gaining strength with the same dynamics. As a result, in the next two years expect a lot of vocal opposition from Vitter, while Melancon stays as far away as possible from discussing policy desires of his party and confines his remarks mainly to how much pork he brings his district.

Calendar militates against Jindal 2012 White House run

As speculation flies about potential national aspirations of Gov. Bobby Jindal, one thing often left out in the equation is the electoral calendar particularly is unsuitable for getting himself elected to a second term as governor and making a stab at the presidency in 2012.

As anyone who has paid attention to national politics over the past two years can relate, running for the presidency is a full time job starting at least two years out from the election. The 2008 election had particularly two newer trends that exacerbated the problem even more. One was the abandonment of public funding by serious presidential candidates in order to raise more money than ever, which takes additional time of a candidate, and the other was the most front-loaded primary schedule ever which mandates more work earlier in a campaign.

Senators who may oversee a few dozen people at most and whose only responsibility is to cast votes have the luxury of time to campaign while on the job, and the president and vice president have huge staffs and resources to help the president out with his far more numerous tasks (the vice president hardly has any, of course). But governors are another matter, who have to run a state and largely must keep state and national issues separate which makes their time campaigning for national office at a premium. It’s no accident that since the beginning of the Depression only five sitting governors were able to get a major party nomination for the presidency and just three have won, the last being Bill Clinton in 1992.

And these governors typically have an advantage that Jindal will not – about three-quarters of them are selected in off-years for presidential elections, so that they can run for reelection and as soon as that is complete, they could pick up running for the White House. Jindal will not have that opportunity since Louisiana is joined only by Mississippi in having its statewide elections in the third year of a quadrennial presidential cycle, a year later than most. In Louisiana, Jindal could get elected in October, 2011 and then face the beginning of presidential preferences primaries less than three months later, while other Republicans will have been campaigning exclusively for the presidency for months, perhaps even years. Jindal can’t, because he cannot be seen as ignoring state issues when running for reelection.

One could argue that Jindal might have that luxury. Right now, Democrat officials are whistling into a hurricane if they think Jindal will lose in 2011. Only unless Jindal proves utterly incapable of helping to fashion a fiscal solution to the current budgetary crisis would he stand any chance of not being reelected. No Republican that could win will run against him, and Democrats have few they could put up against him with any legitimate chance to win.

(Lt. Gov. Mitch Landrieu would rather be mayor of New Orleans in 2010 and if he can’t get that, he’s not going to give up his safe position to go up against Jindal. Atty. Gen. Buddy Caldwell is too old and low profile to seriously contest Jindal. Rep. Charlie Melancon probably will try for Sen. David Vitter’s seat knowing he could be redistricted out of his House job, but if he can’t beat Vitter in 2010, there’s no way he’ll beat Jindal in 2011. Sen. Mary Landrieu would not want to leave the gig she has.)

But neither will Democrats give Jindal the luxury of an easy run that could allow him to think of piggybacking a presidential candidacy on a gubernatorial one. Democrat operatives at all levels know how dangerous Jindal is to them nationally and they aren’t going to give him a pass at the state level to bolster his national stature. When the most competitive Democrats pass on the election, look for the party regulars to throw a sop to blacks by backing up a black candidate who cannot win, such as what occurred in the Seventh District this past fall and at the gubernatorial level in 1999. This move serves the dual purpose of placating black Democrat officials, as the whites running the party take for granted black votes but when this becomes too obvious it results in revolts such as state Rep. Michael Jackson’s independent bid for Congress in the Sixth District this year. If state Democrats know they will lose, at least they can take the opportunity to throw some bones to that part of their neglected base.

So even if Democrats back someone with really no chance to win, Jindal still will have to work at his reelection which will obviate any presidential campaigning. In this situation, the only way for Jindal to take a shot in 2012 would be to not run for reelection. While if president-elect Barack Obama does what he campaigned on the country will be in a mess by 2012, still it would be a gamble by Jindal to give away sure reelection for a chancy run at the White House.

When Jindal tells the media he’s only focusing on his present position, he very likely means it. By retiring after a presumably successful eight years in 2015, he would be set perfectly for a 2016 run if Obama somehow wins reelection (and would quiet critics about his “job-hopping”). If a Republican does win in 2012 he could challenge Landrieu in 2014 and set himself up for 2016 or 2020. These possible futures given the electoral calendar do make it unlikely that Jindal will go for the White House in 2012.

Support of EWE commutation explains LA ineptitude

At first I thought I was reading a term paper from one of my sub-par students. No, it turned out to be an Abbeville Meridional newspaper editorial advocating the early release of former Gov. Edwin Edwards, now better know as Prisoner #03128-095, and the intellect and logic showed in demonstrates exactly why Louisiana ranks at the bottom of many quality-of-life indicators.

The rambling thesis of this appears to be that the elderly Edwards has suffered enough. A lifetime of achievement it offers as exculpatory justification. In doing so, not only does it miss the entire point of Edwards’ punishment, it doesn’t even provide convincing arguments that he merits commutation of his 10-year sentence.

The editorial skirts Edwards’ apparent corruption in office. Instead, it advances the peculiar notion that his long service in various capacity somehow exempts him from paying the full price for his misdeeds, even going so far as to maintain proof of his overriding good work was being elected governor four times showed “he must have done something right. Voters in this state are not stupid.” No comment of mine can illuminate better the “merit” of this statement and I’ll leave it to my readers to ponder this wisdom without my input.

While he never was convicted of abuse of office, plenty of circumstantial evidence makes it hard to explain what the author claims is a “myth” that “Edwards made his money in politics.” If he didn’t make it while in office, it seems difficult to understand why Edwards was so unconcerned from what today would be illegal lobbyist cash gifts from Tongsun Park while in Congress, or why his former operative Clyde Vidrine would produce salacious revelations in his books about these things, or why during his 1986 corruption trial it was revealed that Edwards regularly visited Las Vegas casinos with suitcases full of hundreds of thousands of dollars when as governor he made in salary a fraction of the contents of one such case each year. Willing suspension of disbelief does not make for good argumentation.

It also reads a “second myth is that government in Louisiana is corrupt and that all elected officials are crooks.” Insofar as this is a straw man argument – nobody seriously argues this so why waste the space refuting something irrelevant – it claims corruption essentially stops at the Orleans Parish lines. The author needs to do a little research to discover just in the past year high-profile corruption cases being decided in Jefferson Parish concerning judges and a former state senator and in Baton Rouge about the state’s film office. Somehow, asserting without proof that little corruption exists outside of New Orleans is supposed to make readers believe … what? That since Edwards wasn’t from New Orleans he wasn’t corrupt?

The sad fact that the author runs from is that Edwards was convicted of a federal crime of using his influence improperly in politics. No amount of character references or favorable polling can change this fact, and it is important for him to serve his entire (and typical for the collection of crimes for which he was convicted) sentence because, as noted elsewhere, it provides disincentive to deter criminals from doing things, including performing additional corrupt activities to prevent the day of reckoning from coming to hold off their punishments long enough to have a way to escape their full sentences.

It will be interesting to see whether the Meridional is consistent in its view about Edwards concerning the case of Bernard Madoff who also allegedly engaged in corrupt activities (in the financial markets). Investors may have lost billions by him (although some made quite a bit from him as well, so he did help the public), but, hey, the guy is 70 years old and no doubt the trial will be taxing on him so why not let him off light? I await this editorial that argues if Edwards should be let off despite what he did to the Louisiana citizen, regarding Madoff that he merit the same treatment for what he did to duped millionaires.

That such an editorial so oblivious and would seem to take itself seriously just provides another indicator explaining Louisiana’s dismal situation. People who entertain the notion that violation of public trust not be punished to the full extent of the law are the same folks who keep putting into office politicians and supporting public policy that tolerates such behavior to the detriment of the state.

Normal circumstances make Cao reelection difficult

With all due respect to longtime Orleans Parish stalwart Republican and former city councilman Bryan Wagner, saying GOP Rep.-elect Anh “Joseph” Cao was going to win earlier this month the majority-black-Democrat Second District without a favorable confluence of events shows less political sense than the neophyte Cao’s, who acknowledges these things. Whether he can win absent these dynamics in 2010 is another matter.

Wagner, who played a major role in the Cao campaign, naturally wants to create the impression of future electability of Cao because he understands the fundamental truism (misunderstood by many) that donations go to candidates on the basis of their quality, i.e. ability to win. These resources Cao will need for a 2010 run because all the Democrats in the 2008 contest except one outraised him as of Nov. 16 in terms of both total funding and individual donations. However, it is likely when the next reports in early January are released through the general election, Cao’s totals should have gone up considerably and won’t be reported too far behind incumbent and indicted Bill Jefferson’s.

Let’s not kid ourselves over why this was the case: Jefferson was viewed by many, even by some who voted for him, as corrupt, discouraging electoral and monetary support. Some portion of these people, as shown previously, who had supported Democrats against him twice unsuccessfully in the party primary and runoff, while they could not bear to vote for a non-Democrat in the general election did not vote for Jefferson thus at all. But an underreported aspect of the election was the fissures in the black vote that had begun to appear in the Democrat runoff primary in black support for Jefferson spread more forcefully in the general election.

As previously noted, in the runoff estimated black support (calculated by Jefferson proportion of the vote less proportion black registration) for Jefferson dipped to about 89.5 percent against a Hispanic opponent. It further dipped in the 142 precincts with at least 90 percent black registration to less than 85 percent, precincts on average only voting about 80 percent in Jefferson’s favor (in several, he barely pulled an estimated 70 percent of the black vote). (Contrast this with the five 90 percent-plus white precincts that gave Cao an average 92 percent of the vote, where he got an estimated 95 percent of the white vote.) Simply, an unusually high proportion of blacks abandoned a black candidate in favor of a Republican, and it’s hard not to conclude it was more the scandal-tinged Jefferson than Cao’s campaign that triggered this significant exodus.

So Cao was seen this election cycle as a quality, competitive candidate, but most likely because of the nature of his opposition. Reduced black loyalty to a black candidate when running against a non-black, the introduction of (mostly white) Republicans into the contest who were absent in the primary which had produced the least-electable candidate, and, as previously observed, a much bigger drop in black compared to white participation from the primaries in part due to black registrants’ questions about Jefferson all played a role in making Cao an attractive candidate, obviously enough to win.

That perception will be enhanced by a couple of years’ service in Washington. But that time also is plenty for one or more black Democrats free of scandal to position themselves well to win the 2010 party nomination to go up against Cao. Such a candidate will restore black voting loyalty to levels not far below those below the Jefferson era’s (giving Cao a little credit for some minor conversion through good service) and not discourage those blacks who stayed home. This scenario creates numbers that undeniably will make Cao a longshot for reelection, and no amount of talking up his chances by senior Republicans will change this. Not acknowledging this reality almost certainly will lead to his defeat.

Although I do envision one scenario where Cao’s chances would be pretty good. I won’t go into details now, but it involves as the Democrat nominee somebody who believes a high crime rate “keeps the New Orleans brand visible” and envisions New Orleans as a “chocolate city” ….

Tax cuts blamed when LA really has spending problem

It’s official: the arbiter of liberalism in the American press, The New York Times, has weighed in on Louisiana’s budget deficits present and forecast, and as usual misses the point in its eagerness to slant the story in favor of big government.

The party line that liberals want to spread about the state’s deficit is that tax reduction, principally the individual income tax cut, is bad even in flush economic times, perhaps explained by irrationality. Appropriately to advance this notion, they trot out one of the most liberal state legislators, head of the Democrat Caucus state Sen. Eric LaFleur, who practices a little psychology in declaring “euphoria” captured the minds of so many greenhorn legislators who “hadn’t been around long enough” to know apparently that tax cuts have consequences by his reckoning. (For his part, LaFleur proved to have a gelatinous spine by voting for the cut, although at least he has done the proper liberal thing by declaring he had “misgivings” about it.)

Of course, this view entirely ignores the statistics and recent history of the state’s fiscal picture. Numbers officially got declared on Friday so they have yet to be posted, but the forecast has the fiscal year 2009-10 revenues numbers for the general fund outside of statutorily-dedicated funds to come in around $8.3 billion (as opposed to the previous that came in a billion bucks higher). Excluding in all cases federal recovery dollars, this can be compared to the numbers of (still-evolving) about $9.65 billion for FY 2008-09 (note that if the 2/10/08 forecast had held a surplus would have been declared instead of the deficit that used the 5/9/2008 forecast), about $9.5 billion in FY 2007-08, $8.2 billion in FY 2006-07, and $7.3 billion in FY 2005-06.

In other words, from FY 2005 to FY 2009 (predicted), state revenues have increased over 13 percent, at a decent annual clip of nearly 3 percent. The increase for 2005-08, pumped up by federal disaster recovery dollars, was 32 percent. By contrast, consumer inflation over the 2005-08 period was only 9 percent (and may not even be that high through 2009 given recently falling prices). Add to this that the state’s population has declined slightly (about 85,000) throughout this period. This shows that state revenues (and therefore, except for an eventual $500 million or so of tax cuts now or about to kick in, spending) rose much faster than existing needs and demands on government. Only unless one thinks (as no doubt The Times, LaFleur, and liberals in general) that government should do more (implying that people should be less responsible for their own affairs), could such an increase in spending from these revenues be justifiable.

Once again, the data are very clear: Louisiana has not had a revenue problem, which has grown at a faster rate than inflation with a stagnant population, but rather has had a spending problem. There is no justification why government must keep doing more just because more money rolls in. With all of the excess revenue coming in, a tax cut was not only appropriate because it allows people to keep more of their money and will set the stage for improved future economic growth, but it was the moral thing to do. Yet the majority of the attention of the article was about the revenue side of the equation, not on spending.

Deficits loom now because spending was not kept under control. If it had been, huge surpluses could have been declared for a couple of years and far-sighted legislators could have in the past (even one this year) voted to increase the maximum size of the Budget Stabilization Fund where this money could have been saved to cushion future deficits. Even better, with spending controlled, the deficits may not have appeared at all, and the excess money could have gone to unfunded accrued liabilities, coastal restoration, improved infrastructure, etc., if not even more tax cuts.

Often, when people advocate reductions in government spending, their ideological opponents ask where cuts should take place. But in this situation of rapid revenue growth above the baseline price and population levels, the more appropriate prior question is first to justify the increased spending beyond what was being done previously, and then what cannot be justified is the candidate for cutting. Trying to deflect attention from this imperative by fixating on revenue-raising measures disingenuously disserves the public.

Success on Jindal health plan also can help budget woes

It is all interconnected, the balancing act Gov. Bobby Jindal is trying to pull off as state revenues look to underperform and state expenditures, basically Medicaid, prepare to overperform. He has to get it right or practical and political ramifications will be substantial.

Naturally the state’s current and looming budget deficits have dominated headlines for the past week, even as surrealistically a surplus came about for last year.. Problem is, that surplus cannot directly be used to offset this year’s or the predicted deficit. As has been suggested previously, the best use of the surplus would be to boost the Budget Stabilization Fund, which would comprise about 60 percent of it. And while paying off debt and then using interest savings with the remainder also would generate some more short-term cash to offset the future deficit, perhaps a better strategy would be paying down unfunded accrued liabilities of state retirement systems to reduce huge expenditures in the next two decades.

But aggravating spending over the long run will continue unless the single biggest portion of the biggest item growing at the fastest rate continues, and that is Medicaid spending on the poor and indigent. This week, Jindal got a significant victory with legislative approval to allow him to bring to the federal government a coordinated care plan that would introduce private sector aspects to the system that promise to hold down costs.

This came despite two different forces who oppose the plan. One comes from physician organizations which would prefer the fee-for-service model because it better serves their interests. The new plan would reduce providers’ abilities to make nonessential and/or duplicative charges and thereby also their revenues. It additionally would force more attention to be paid regarding their own practice management which some would prefer not to do.

The other, represented by the only dissenting legislative committee vote of state Rep. Karen Carter Peterson, objects because Jindal’s plan disempowers government too much for its liking. The current fee-for-service arrangement, where government pays whatever reasonably is billed, puts everybody but the health care consumer in charge and encourages no efficiency. Jindal’s plan, developed by Health and Hospitals Secretary Alan Levine who supervised a similar reform in Florida, introduces market forces with competing nongovernment administrators. This is in contrast to rumblings coming from Democrats in Washington who now control both majoritarian branches of government and campaigned on providing national universal health care.

Peterson commented that the process was too rushed, even though legislators were not being asked to make a commitment and many options were open. The implication was this plan was trying to get approval before Democrats essentially could force a plan onto states that had no free-market mechanisms to it, as it would be more difficult for them to dismantle these kinds of programs (which more and more states are turning to) oncethey were put into place. Particularly dangerous to their perspectives is that Jindal’s plan has elements of universal coverage in it, making it politically difficult to turn down half a loaf.

However, while a rearguard action of the likes of Peterson’s would slow things down for nothing more than political reasons, the fact is it is highly unlikely that in less than a month the federal government will be able to act on and approve the waiver anyway. The real concern is that with the new administration coming in, months will pass before positions are filled where these kinds of decisions can be made and that threatened to push back the intended launch date a year from 2010. By having lower-level bureaucrats start immediately on approval, that could save several months, and Democrats still would get a chance to approve or not.

Jindal is being particularly crafty with his introduction of the elements of universal coverage, and not just because it can win approval for a free market-oriented plan. Because of past shenanigans, the state owes $771 million to the federal government for Medicaid overcharges. Jindal has proposed waiving that if the state plows that into a phase-in of universal coverage, and also makes for a more compelling case for the efficiencies from the free market elements to be introduced in order to keep overall costs down. One must be there for the other, and without either, as Levine has preached constantly, costs will continue to spiral without any improvement in coverage or service.

The timing is everything because while Jindal probably can come up with stopgap measures to take care of this next fiscal year’s deficit, with no attempt to control Medicaid spending future year deficits will create a chronic budget problem. So not only does Jindal have political stakes attached to Medicaid reform for its own sake, but also to help mitigate potential future budget woes. With legislative approval, given the confluence of political forces in these times of transition, he may have started playing a winning hand.

Vitter opponents' rhetoric only helping his reelection

If his opponents want to oust Sen. David Vitter from office in 2010, they have found exactly the wrong way to do it. He now enjoys the happy coincidence of an issue where he can come out in favor of his conservative principles and ride public sentiment in his favor while making opponents look sanctimonious and simultaneously devalue the only real vulnerable issue concerning Vitter.

Until last year, Vitter was 99.44 percent assured of reelection, given his strong conservative voting record in a majority conservative state. Then he revealed commission of a “serious sin” in the past, likely the usage of a prostitution ring prior to election to federal office. Given his record on the issues, his apparent contrition, and that many voters will accept somebody who votes the right way as long he doesn’t abuse the powers of his office, his chances for reelection may have plunged to 90 percent.

But with the emergence the possibility of the federal government bailing out one or more failing domestic automakers, he may be on the way to that higher plateau of reelection possibility. This issue not only allows Vitter to remind Louisianans of his specific opposition to this, shared nationally, and general dislike of government intervention into the economy, but the way in which his opponents have attacked him about it makes him look even better while pushing away the “character” issue. Just one sample of the rhetoric from a union hack that plays into Vitter’s hands:

“I don't know what Sen. Vitter has against GM [which has a major facility in Shreveport] or the United Auto Workers or the entire domestic auto industry; whatever it is, whatever he thinks we've done, it's time for him to forgive us, just like Sen. Vitter has asked the citizens of Louisiana to forgive him,” said [Morgan] Johnson, president of [Shreveport] Local 2166. Otherwise, Johnson said of Vitter, it would appear, “He'd rather pay a prostitute than pay auto workers.”

Is it possible to critique Vitter in a less intelligent way than this? Here’s a guy defending an industry losing money hand over fist because of an inadequate business model that allows a $30 differential in labor costs to its rivals promoted by his very union which allow typical workers to make $55,000 a year (exclusive of benefits worth 150 percent more), which until recently paid people not to work up to two years, paid them more in early retirement than when they worked, and supplies health benefits that even members of Congress would envy. And has the audacity to ask taxpayers many of whom are poorer that these unionized workers to subsidize this? Especially when Vitter would have supported a bailout bill that moved up minor union concessions only two years?

(It’s not like the UAW has been a fan of Vitter’s. Over his career, on average he has supported the UAW in votes only 6 percent of the time. So what did they expect? And General Motors hasn’t exactly been generous to Vitter during his 9 years in office: for the first time, earlier this year it gave him a contribution, of $1,000. Contrast this with the $19,000 they have thrown at Republican Vitter’s Democrat colleague Sen. Mary Landrieu in her 12 years in office, who wanted the bailout to go through.)

All this rhetoric does is it makes Vitter look like a champion of taxpayers, the middle class, and even more courageous because he is going against a special interest in his own state. And to drag in the shot about “pay” not only looks stupid because it’s clear that Vitter, nor anybody else, is obligated to “pay” any workers, but by coming up with such a strained metaphor on the character issue reduces its effectiveness. That is, when people see such an attack and recognize it is so ludicrous, it desensitizes them to the issue forcibly tied to it.

It also helps Vitter that he has attackers from outside the state that also seem to be part of a greedy cabal asking for handout to save them from their own folly. Speaking of paying, Vitter could not have had the funds to fund all the favorable publicity he can derive from a column appearing in the Detroit Free Press which basically called Vitter and others ingrates from not supporting the handout when Detroit manufacturers had sent aid after the 2005 hurricane disasters – never mind the difference between a natural disaster and bringing your own problems onto yourself, and not having the wisdom to figure out that if you’re doing something wrong that put you in this situation you don’t ask for a handout and not make more than cosmetic changes. (Perhaps it’s no surprise that with such simplemindedness in its product this outlet is losing so much money it is eliminating home delivery every day of the week; maybe it should ask for a bailout, too.)

If Vitter keeps getting these political softballs to whack over the fence, nobody is going to remember he had a “transgression” at all. If his opponents allow Vitter to demonstrate conservative credentials favored by the state’s majority over and over again, they might as well save their resources and give up on defeating him now.

Looming deficits beg reevaluation of handling mechanisms

As Louisiana goes forward to contend with a budget deficit of $341 million this year (so far; there are two more regularly checkpoints at minimum on this figure before the end of the fiscal year) and a potential $2 billion deficit for fiscal year 2009-10, the question arises how the state’s fiscal mechanisms can deal with these deficit situations which cannot exist according to the state’s Constitution except for extreme circumstances. A review of these procedures is in order.

As of this year note that about 65 percent of the state operating expenditures can be financed currently through federal monies of some kind. Thus, the total being discussed here is about $14.5 billion. (Recognize this excludes any disaster recovery federal dollars.) Of that, a little over 63 percent is discretionary funds that have no strings attached to them in their expenditures, a little over 10 percent are non-discretionary in that they are fees or other self-generated revenues that go back into the programs from which they are generated, and the remainder is by law revenues dedicated to a certain purpose. (Technically, about three percent of the grand total really goes to capital outlay projects.) The “undedicated” monies go into the general fund, and the dedicated funds have each of 36 funds into which they go.

When there is a budget deficit in the current year reported in a fund, appropriations from the fund in question may be reduced. Typically, the only meaningful deficits that exist are in the general fund, and to take care of those typically appropriations must be reduced to the discretionary areas. In this instance, on Friday the Joint Legislative Committee on the Budget is likely to certify the deficit numbers coming from the general fund with little or no deficits from the others.

LA tightened belt 4 years ago; it can work again

The news about Louisiana’s looming budget deficit probably was beyond what elected officials wanted to hear – current year $341 million, and if spending stays at the current projection factoring in known increases without adding services, it will be a billion dollars more and $1.2 billion less in revenues to cover it.

Some things to note about the issue for this fiscal year:

For this year as a whole, this projects to about a 3.5 percent hit on the general fund minus dedicated funds which constitutionally means Gov. Bobby Jindal and the Joint Legislative Committee on the Budget together can handle the cutting (although in reality, since half the year has gone by, it is a 7 percent real cut) by up to 5 percent in a fund

Over half of this, about $5 billion, for disbursement lies in statutory dedications many of which are stable but some potentially unpredictable in cost – for example, higher enrollments and tuitions at state universities through TOPS, those stemming from judicial proceedings, debt service increases, etc. – which must be paid without the budget going into deficit

The remainder is not statutorily dedicated and is considered totally discretionary in its treatment, of which almost 34 percent goes to higher education and 40 percent to health care – meaning that potentially if cuts are uniform across agencies at the 3.5 percent level, these two will absorb around $252 million in cuts, or a real reduction in their general fund allocations for the remainder of the fiscal year of 15.6 percent and to their overall budgets of 8 percent and 3.2 percent, respectively

About 29 percent, the largest portion, of the general fund goes to the Minimum Foundation Program, but that is the exception to the rule and can be cut at most only 1 percent, or around $27 million, providing less than 10 percent of the amount needed.

About $4.35 billion of statutory revenue dedications, as opposed to those of expenditures above, also come into the state’s coffers, but to redirect any of these immediately would require legislation from a special session, so the only savings here would be from operations such as those from executive orders recently issued by Jindal and then subsequent transfers of funds

Next year’s numbers truly are sobering (although not unreal such as those of 20 years ago were with a $1 billion deficit to a general fund that then was less than $4 billion in generated revenue), a drop of about 13 percent to around $8 billion in revenue for the general fund (note that as recently as May, the forecast for next fiscal year was essentially flat). Jindal wisely has promised not to use the Budget Stabilization Fund monies to tackle this year’s deficit because next year’s really will call for these funds. It also cries out for him to dump the maximum amount of funds from the declared fiscal year 2007-08 surplus into it to use next year.

This is serious. The head of my budget unit has called a faculty meeting tomorrow on 18 hours notice just to address this. It’s going to take quite a bit of skill to maneuver this just for this year’s alone so Jindal better be prepared to sacrifice his holidays (the budget must be brought in balance 30 days after a deficit projection or else a special session is triggered).

As for the future, as Jindal wisely has ruled out tax increases that might depress the economy even further, tinkering around the margins as Jindal can do for this fiscal year will be insufficient. Still, to put matters in perspective, the initial revenue forecast after the 2005 hurricane disasters pegged the general fund at $6.6 billion and $700 million worth of cuts made that turned out to be not needed to match realized revenues. If it could be done then, it can be done again.

Months later, wisdom of line item vetoes confirmed

Much wailing and gnashing of teeth occurred this summer when Gov. Bobby Jindal did what he said he would, cut down on state government money going to private interests. He employed his line item veto to excise around $16 million going to 258 nonprofit organizations, and some legislators who had one or more such entities in their districts made disapproving noises about how crippling the lack of funds would be for the organizations.

But Jindal and supporters of these moves pointed out that if these truly were desirable functions being performed, other sources of money would compensate for the loss of state funds, or the organizations would find more efficient ways of doing these things, or government formally would oversee the function. Almost six months later, this is exactly what has happened as opposed to the apocalyptic scenarios some legislators asserted would be the outcome.

Some organizations did find other philanthropic sources. Others relied more heavily on volunteers. Still others found ways to work more efficiently. Many had to cut back services to some degree, but that only demonstrates that perhaps they was an oversupply of that service to begin with or a more efficient way or alternative funding sources could not be found. In all, this demonstrates that government money was not being used as optimally as it should have been, as these other solutions and resolutions existed but had not been implemented precisely because of the free flow of money from government.

This disposition also points out why the system has existed so long, not because it is a good use of taxpayers’ monies, but because it suited the political needs of politicians. Legislators could promise money to these organizations, the members of which no doubt would work for that legislator’s reelection and sing that person’s praises. The governor could use line item veto threats of these kinds of projects to entice legislators to support his initiatives.

By taking the issue off the table, however, these political dynamics no longer apply. It was a bold move by Jindal, unilaterally surrendering this tool of power, but he did so and by his continuing to enforce this standard, the state will be better off.