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Blanco's borrowing urge detrimental to state recovery

Be very wary of Democrat Gov. Kathleen Blanco’s idea to borrow the state’s way out of revenue problems caused by the recent hurricane disasters.

When former governor Buddy Roemer instituted the Louisiana Recovery District in 1988 to dodge the state’s requirement that borrowing not be used to fund continuing operations, it created a debt problem that took almost a decade to solve. At one time, debt per capita for Louisianans was among the nation’s highest as a result. The district borrowed $1.3 billion, while more than the $959 million figured bandied about now is about the same when figured in constant dollars. While the amount contemplated for borrowing at this time seems less, chances are the deficit will zoom higher in 2006 and the urge to do it again will return.

It’s a temptation well worth resisting. Roemer’s scheme cost the state hundreds of millions of dollars in interest and only now are debt levels in Louisiana per capita at ordinary levels, ranking 29th among the states and District of Columbia by 2001 ($1,786 per person). Having extra debt to drag down the state’s economy only could hamper any recovery.

In addition, Louisiana has a crushing unfunded retirement liability now at $12 billion (at pre-Katrina population levels adding another almost $3,000 per head) and counting which must be dealt with inside of a quarter century (this, of course, a consequence of the high level of retirement pay given out – Louisiana ranks 13th nationally in total payments, and closer to the top per capita). Even “only” $500 million in borrowing would push the aggregate figure per capita close to $5,000.

Republicans like state Sen. Tom Schedler are right to be wary and to suggest cutting the budget first. He rightly recommends cutting out the urban and rural funds, and changing the long-term health care system’s financing will save even more while improving the delivery of that service. No doubt other areas of savings can be found.

Rather than take a step backwards with the easy way out of borrowing, Louisiana needs to take advantage of the crisis conditions to shape a budget that is built on reasonable priorities, instead of on political power propped up by debt.

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