Democratic Gov. John Bel Edwards and his legislative allies said if they could pick more from our pockets, this wouldn’t happen. And because of his decision to expand Medicaid, it only will get worse.
At the end of last month, Edwards’ commissioner of administration, Jay Dardenne, delivered the bad news that Louisiana found its budget from last year $313 million out of whack. That came despite a big tax increase, including higher levies on alcohol and tobacco purchases, hikes on car rentals, and making permanent a communications tax commencing Apr. 1 that the administration had said, along with spending cuts, would balance the fiscal year ending Jun. 30.
Instead, the flummoxed Dardenne, much like a student discovering he had failed his basic economics exam, reported the taxes did not bring in as much as anticipated — despite the fact that crude oil prices had rebounded in that period almost a third, giving relief to a major sector of the state’s economy. Bump up sales taxes by 20 percent and consumer excise taxes even more, and you wouldn’t think it would put the brakes on an already indifferently performing economy?
The impact of these tax hikes isn’t pretty. Even with partial recovery in the energy sector, since Edwards took office the state’s unemployment rate has risen from 5.9 to 6.7 percent, with 13,000 more residents unemployed. Also, the number of jobs has shrunk below two million to its lowest level since the beginning of 2014. Meanwhile, the national rate has declined slightly with job growth of nearly 1.5 million.
That wasn’t all of Dardenne’s bad news. He also warned that when the Revenue Estimating Conference meets to ratify this figure later in the month, it likely would also declare a deficit for this year’s budget, compounding cuts that could reach 10 percent in some agencies just to adjust to last year’s shortfall. And when that happens, Medicaid expansion will have contributed in a major way to the problem.
Consider that almost all of the predicted $1.5 billion annually in new taxes flows into the general fund. Yet, excepting health care expenditures and adjusting for $300 million in spending on higher education that counted as a dedication last year, this year’s general fund spending compared to last year’s budged higher by just $63 million out of nearly $9 billion. That leaves the Department of Health alone accounting for almost all the elevated general fund spending this year to last, with its increase of $507 million.
That rise of 21.9 percent tripled the average annual increase in state health care spending seen during the second term of former Gov. Bobby Jindal. Edwards’ order to expand Medicaid that took effect for fiscal year 2017 stands as the only significant policy change between it and the previous fiscal year.
Nobody with more than a passing knowledge of the data acquired from other states’ experiences in Medicaid expansion — as well as of reports on the subject by the Jindal Administration that forecast huge future deficits from it — believed the oft-repeated figure by the Edwards Administration that expansion would “save” Louisiana more than $180 million. The Department of Health still has not released its methodology and calculations that went into derivation of its figure.
The budget already concedes that expansion will cost the state, considerably. Because of that, any deficit reported for this fiscal year suggests
that Louisiana does not have a revenue problem, but a spending problem exacerbated by Edwards’ policy choices.
Jeff Sadow is an associate professor of political science at Louisiana State University Shreveport, where he teaches Louisiana Government. He is author of a blog about Louisiana politics at http://www.between-lines.com, where links to information in this column may be found. When the Louisiana Legislature is in session, he writes about legislation in it at http://www.laleglog.com. Follow him on Twitter @jsadowadvocate. Email him at email@example.com. His views do not necessarily express those of his employer.