When Gov. Bobby Jindal’s administration hired an outside consultant to find “efficiencies” in state government, lawmakers and other state officials greeted the hiring news skeptically.
They’ve become more doubtful about the worth of the $5 million contract as the consulting firms’ ideas have trickled out and proposed to balance the state’s budget next year.
The state’s income estimating panel refused to boost its revenue forecast by more than $50 million that the Jindal administration insisted could be brought in using the consultant’s ideas to bolster tax collection efforts.
Meanwhile, senators combing through the 2014-15 operating budget proposal question whether more than $70 million in savings ideas from the consultant used to balance the spending plan can really pan out.
The Jindal administration hired Alvarez & Marsal in December to look at ways to make state government programs more efficient without cutting services and to generate more money for programs without raising taxes.
Commissioner of Administration Kristy Nichols, the governor’s top budget adviser, said the consultant’s work can save the state hundreds of millions of dollars. She said the firm brought ideas from other states and national expertise, and she said the contract has more than paid for itself with the savings already identified.
“It is actionable. It is real,” she told senators.
After getting hit with criticism when the firm was hired, the Jindal administration amended its contract with Alvarez & Marsal to require that the firm find $500 million in savings ideas.
More than $73 million in savings expectations were included in the House-approved version of the nearly $25 billion budget for the fiscal year that begins July 1. But House lawmakers received little detail about what was included on the list.
Senators delving into the details of the “savings” found cuts to services, and they bristled at suggestions like closing 18 Office of Motor Vehicles locations and limiting ferry hours in Cameron Parish on a critical route for emergency vehicles. Nichols announced Friday that those two plans will be scrapped.
Other savings plans included in the budget involve thinner asphalt for some paving projects, fewer toll-free numbers and expanded rehabilitation programs for inmates.
Insurance policies will be changed for ferries and barges. Contracts for copiers will be consolidated. Pregnant women on Medicaid will be allowed to use midwives instead of traditional, more expensive delivery rooms.
Sen. Dan Claitor, R-Baton Rouge, suggested the ideas either were generated by state workers in individual agencies or could have been devised by them, without outside consultants.
Other lawmakers think that by using the proposals, the Legislature and the governor are setting the state up for midyear budget cuts when the savings don’t materialize.
“The recommendations that were made were absolutely laughable, and the idea that they would add up to anything close to $73 million is preposterous,” said Rep. John Bel Edwards, D-Amite, chairman of the House Democratic Caucus who is running for governor in 2015.
Louisiana’s income forecasting panel resisted the consultants’ ideas entirely.
Revenue Secretary Tim Barfield told the Revenue Estimating Conference that Alvarez & Marsal had identified ways for his agency to bolster tax collection efforts and bring in more money for the state treasury.
Nichols, a member of the conference, sought to include $54 million estimated to be raised by the improved collection efforts into next year’s income forecast.
But other members of the conference refused, saying there’s no way to know if those dollars would appear.
LSU economist Jim Richardson, who sits on the panel, said he didn’t doubt the improvements could generate more money for the state treasury. But he added, “I just don’t know when or how much.”
House Speaker Chuck Kleckley, R-Lake Charles, also disagreed with the approach.
The four-member Revenue Estimating Conference needs unanimous support to make changes to a revenue forecast, so objections from Richardson and Kleckley scuttled the attempt to add the consultants’ expectations into the projections.
Richardson suggested the effort had the “aura” of trying to bump up the income estimate to solve the state’s immediate budget shortfalls. Lawmakers worry that could be a problem with the other ideas from the consulting firm, too.
Melinda Deslatte covers the Louisiana Capitol for The Associated Press.