It’s not an exaggeration to say the budget policies of outgoing Gov. Bobby Jindal have led Louisiana into a major financial crisis, but it’s also not fair to blame all of the problems on Jindal policies.
Louisiana faces a deep-rooted spending problem, not only in agencies but in tax-break giveaways for private businesses influential in the Legislature.
And there are stumbling blocks to reform, including funds dedicated in law to specific purposes, even if the public wants other priorities.
“The approach of the new Legislature and administration to closing the deficit must be comprehensive and recognize that cost containment, a review of sacred cows, transparency and structural budget reform must be on the table, along with any discussion regarding revenue increases,” declared Stephen Waguespack, head of the influential Louisiana Association of Business and Industry.
He’s right, if only because any new revenue — meaning tax increases — is politically easier when accompanied by spending reforms.
LABI’s contribution to the discussion is a series of issue papers, “Budget Basics.” Much of this material is known, being built on work done not only by LABI analysts but those of the Public Affairs Research Council and other good-government groups.
It’s important to remember that LABI does have a pack of dogs in this fight, because many of its members have benefited from lavish tax breaks that have gone out of control. As The Advocate reported last year in its “Giving Away Louisiana” series, costs of business tax breaks have exploded in recent years, even if the original breaks predated Jindal’s arrival in state office.
The 2015 Legislature was compelled to cut back some of those breaks simply to balance the budget, over LABI’s objections, but the reality is that just canceling a percentage of the exemptions and credits does not represent real governmental reform. The budget still leaks, just not as much.
That structural deficit isn’t going to be fixed that way, and LABI rightly notes that cutting spending is not an easy task. The structure of the budget includes huge transfers of state tax money to local governments — for public schools, for example, a worthy purpose. Those theoretically can be cut but, in the case of state aid to local schools, are more likely to be increased than reduced.
The LABI paper includes a note about the financial crisis of the 1980s, when dedicated funding was slashed to free up money for the budget. That might be a possibility, but each of those programs has a constituency dedicated to its preservation.
We like the addition of “Budget Basics” to this discussion, and we agree with Waguespack: “Every spending program at the state and local level deserve equal attention, and how we prioritize is key. Fiscal reform will not be easy but can be done.”
It’s not going to be easy, but it absolutely has to be done. We also predict the business community is going to have to give up some of its gains of the past few years, though, as part of any general restructuring. The Jindal way of doing business simply is not sustainable any longer.