The projected level invites another roughly 4 percent drop in state
government spending. No doubt when the Revenue Estimating Conference coughs up
its next set of numbers as early as the middle of next month, these will show
slack revenue growth behind the rate of increase in predicted spending. This
stems from problems faced by practically every state, a national economy with
the faintest of recoveries ready to slip back into recession held hostage by
national government policy that relies on government by continuing resolution
at levels locking in too high wasteful and counterproductive spending.
Understand that this is by design, courtesy of 2009-10 unified national
rule by Democrats who still hold veto power to change it. Beggaring of the
states is part of the long-term strategy of Pres. Barack Obama
in his quest to transform
the culture from an opportunity to entitlement mentality. One of the
effects of the deliberate debasement of a private sector-led economy is to
dampen state revenues, and since all but Vermont must operate balanced budgets,
the left’s goal is to force them into tax increases and thereby the acceptance
of larger government in a way to make this increase nearly permanent (as it is
trying to do at the federal level), or to have them beg for bailouts that
increases federal power over them. Either way, the aim is to defeat, at least
temporarily if not permanently, conservatism, fiscal rectitude, and alternative
power centers.
Gov. Bobby
Jindal need not take the bait. Instead, he can use this looming difficulty
as a chance to demonstrate that a few measures he and others have proposed
during his term would have been and continue to be the solutions. This is done
by figuring out the actual baseline deficit, and then figuring out the reforms
to close the gap.
Starting with the $964 million predicted shortfall, if forgoing
inflationary kinds of increases, that amount can be lowered to $800 million.
These include things such as the “merit”
civil service increases and legally required but that can be waived education
funding automatic increases. Given vagaries of promotions, insurance payments,
etc. the entire amount may not be realized, but for purposes of illustration
let’s say that it will be.
Next is around $250 million worth in the form of so-called “one-time”
money. Most of this comes from “funds sweeps,” which means these dollars were
dedicated to a certain purpose and freed from that purpose. They are surplus as
the current fiscal system, which contains in the neighborhood of 300 dedicated
funds, shunts money to specific purposes for which it never will get used
because it steers too much of it to fill legitimately those purposes. Likely at
least that amount of excess will have flowed into state coffers over the past
year and would be made available again and should be used, rather than sit
never to be used, and certainly not as for as important a reason. That closes
the shortfall to $550 million.
Then comes contributions from an array of poor policy choices that, in
some cases, have faced multiple attempts in recent years to change if not
eliminate them, which cost the people hundreds of millions of dollars. Facing
notable defeats in the past couple of years has been statutory changes that
would have state employees pay more into supporting their gravy
train of retirement benefits. The proposed increase of this past
legislative session of an additional three percent paid in by them would pump
in by the latest
figures an extra $114 million that would not have had to be taken from
taxpayers.
Also resisting multiple reform attempts and including just months ago
was the Taylor Opportunity Program for Scholars that pays for tuition
essentially for in-state college students who achieve modestly or less in high
school. While many
changes would make it into a true scholarship program that would more
efficiently use resources, just changing the maximum award level as
proposed last session would have saved $56 million.
Perhaps the most wasteful use of state money on a single program are
the motion picture tax credits, which for every
seven dollars declined in tax revenues produces one accepted. The amount of
forgone revenue varies yearly depending on movie-making activity, but $200
million this year is a good ballpark guess. Since about three-quarters of the
credits actually are sold to Louisiana taxpayers by the studios, if we adhere
to the wild supposition that no movies at all would be shot in the state
without them, then this is forgone revenue of $150 million.
A mistake several years ago was to create an earned income tax credit
for state filers. It has the effect of suppressing
economic activity and misallocating resources, estimated to cost the state
$48 million in the upcoming fiscal year.
Finally, Louisiana taxpayers continue
to pay for thousands of empty beds in nursing homes as the state moves away
from its money-goes-to-the-institution policy of caring for the elderly and
disabled and more towards, as the law dictates, home- and community-based
solutions. Unfortunately, some years ago, after the nursing home industry bet
wrong and over-expanded, it got the previous compliant governor and the
Legislature at the time to build in this handout, costing the state about $20
million a year. Repeal of this law is long overdue.
Add these up and back them out of the deficit adjusted for no
inflationary spending and the use of one-time money, and it’s now down to $182
million. This reduction causes no pain to the vast majority of the citizenry,
goring only a small coterie of special interests that have enjoyed significant
taxpayer subsidization of their choices. And of what’s left, perhaps the Revenue Study Commission can go beyond
elimination of the film credit and EITC to wipe that out.
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