State rosy budget picture masks long-term problems

As the progress of both the state’s operating and capital budgets shows, the good news about financial bonuses coming through this spring is a fiscal crisis from the hurricane disasters of 2005 has been averted, for now. The bad news is this merely papers over the structural problems inherent to Louisiana’s spending habits.

The conditions have allowed a lot of goodies to be tossed into the operating budget. But as state Rep. Jim Tucker astutely observes, these take all the impetus out of breaking the state of its inefficient spending habits often geared more towards satisfying special interests rather than fulfilling the needs of the entire state, in terms of the widest range of individuals specifically benefiting and that is gets done at lowest cost to the taxpayer.

A case in point is the state’s incredible over-reliance on long-term care in institutions rather than in the community. A restructuring of the system towards the opposite a couple of years ago was calculated to save nearly $100 million, and would provide better targeted, more appropriate care.

Instead, last year Gov. Kathleen Blanco briefly broached the matter then abandoned it, and nary a peep has come out this year about it. In fact, the state continues to move in the direction of inefficiency; SB 613 by state Sen. Sherri Smith Cheek which essentially would take the wasteful existing reimbursement formula for nursing homes for long-term care and institutionalize it into law inexorably is making its way into law without drawing a single vote in opposition to this point.

Nursing home operators claim doing so would bring more financial predictability to their operations, making it easier to obtain private sector financing. But I’m sure any business sector (especially one which gets 85 percent of its revenues from the state to the tune of about $800 million) would love such guarantees rather than have to compete in the marketplace against more efficient alternatives, yet the state doesn’t oblige them. This bill serves only as a shield to better protect this industry, at the expense of the taxpayer.

Situations like this riddle the budget, and bring back memories of a decade ago when the Republican Congress set about slashing taxes and the rate of growth of government spending through welfare reform and other measures (over vetoes of Pres. Bill Clinton) that produced an economic boom in Louisiana and elsewhere. But instead of taking advantage of the situation to slim down without pain, then-Republican Gov. Mike Foster and a compliant Democrat Legislature changed things little so a few years later budget problems returned and the structural problem of inefficient spending and misplaced priorities, which if solved would prevent these reoccurrences, continued.

Blanco and her Democrat leaders in the Legislature are following the same path; the same mistakes being repeated again. Will it take Republicans residing in the Governor’s Mansion and controlling the Legislature after 2007 to change this?