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Suggestions great, but need right budget paring strategy

As twin deadlines of statutory natures draw closer for Louisiana, the time for talk should recede and the time for planning for difficult action must commence with the leadership to do it as a budget catastrophe looms.

Both of the state’s temporary panels to find ways of reducing state government expenditures, the Commission on Streamlining Government and the Postsecondary Education Review Commission, are coming the point where they need to spit out recommendations for legislative action, by Dec. 15. About the same time, the state’s Revenue Estimating Conference will certify the status of the balance of the budget as state agencies for months have been taking actions, and continuously talking of additional ones, to pare expenses to stave off a deficit being declared.

With just 55 days to go, the various scattered suggestions and responses must coalesce into a particular strategy that determines what gets recommended and what can be implemented immediately, in order to allow for action by the Legislature and agencies to commence. The optimal strategy should concentrate on four items.

First, personnel is the key area. The largest single area of expenditure in government, or any organization, is in salaries and costs associated with them. No meaningful reduction in the cost of government can occur without much taking place here. Even if it shed no functions (but see below), efficiencies in the number of positions required and in job performances must be addressed.

One lawmaker, in a recent commission meeting, wondered whether the tactic of offering early retirement with some inducement could really trim expenses that much, because it could be that those positions would have to be filled in any event. This is a partial concern, because while many jobs can be eliminated with duties apportioned out, some cannot. But it also is an opportunity in many cases to be able to promote capable subordinates into these positions. Chances are disproportionately that their retiring bosses, because of looming changes that will better match pay to performance, went early because they were coasting underperformers. They may have had capable subordinates bottled up behind them who will do a better, more efficient job.

Second, reductions cannot be indiscriminate. Across-the-board cuts may work, but not well, because they lump in the necessary with the peripheral (see below). The Gov. Bobby Jindal Administration has the right idea in moving to an outcome-based budgeting regime, because it will create priorities of functions, and the least important can be identified for cutting. This also means review of dedicated funding must occur to ensure appropriate amounts are going to appropriate things.

Third, taxes cannot be raised as a solution. As the recession continues with no clear signs of ending, the worst thing to do is to raise taxes to sap economic recovery. Fee raising for the most part also should be off the table, unless there can be demonstrated a strong connection between a particular service being performed and the quantifiable amount of resources going into it can be demonstrably shown as significantly lower than this, such as potentially with college tuition.

Fourth, politics must be minimized. Politics breeds inefficiency which sometimes must be tolerated, such as with devoting huge resources to the disabled, but too often can keep programs benefitting too few people who have little real need going when they need to be shut down. It also gets used as an escape from responsibility to make hard and/or unpopular decisions. The idea of across-the-board cuts is an example, for it spreads pain of cutting around assuming everybody will hurt some. But as it attenuates both the necessary and the peripheral, it is not the best use of resources and still promotes the use of some less efficiently than if the cuts fall on the least needed activities, allowing those really necessary to get more funding. Cowardice of this nature must be avoided.

The Jindal Administration needs to adopt these ideas, if it hasn’t already, and articulate to the Legislature that they will guide Jindal’s actions in his budgeting, while also employing commission recommendations, and use of veto powers. Failure to do so will not avert the crisis and just make future solutions harder and less achievable.

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