Louisiana is enjoying an economic boom the likes of which we have not seen in a generation. We boast the lowest unemployment in the Deep South, and our per-capita income has surged to 29th in the nation, a remarkable achievement for what has historically been one of the nation’s poorest states.
In some parishes, like Ascension and Calcasieu, officials worry about how to handle too much prosperity — too many newcomers straining the schools and sewers and roads.
So why is our state government perpetually broke?
The economics of government are not all that different from a typical household. In times of prosperity, revenues swell, and when the economy recedes, the money thins out.
But the good times are not fattening the state budget at all.
Instead, even as the recession has loosened its grip, Louisiana has been balancing its books by selling and leasing properties, raiding funds that are supposed to be dedicated for specific purposes and even gigging local governments to repay emergency loans that date back to Hurricane Katrina. The health insurance program that covers a quarter million state employees and teachers, bulging with half a billion dollars just two years ago, is now going broke.
Part of the problem is the unchecked growth of state giveaway programs that were designed to lure new industries to Louisiana. The price tag has increased fivefold in just a decade.
The programs were started in good faith but were poorly designed, so that in many cases they cost too much and subsidize jobs that would probably be here already.
There are Wal-Mart stores all over America, so why did the retail giant need an incentive to build in St. Tammany, the New Orleans area’s richest parish? Fracking is occurring all over the country, so why did Louisiana need to spend $1.2 billion to encourage it here? “Duck Dynasty” is the most popular show in the history of A&E, so why are we subsidizing it to the tune of $330,000 an episode?
One of the unspoken truths in Baton Rouge is that everyone in politics — whether they are Democrats or Republicans, black or white, crooked or honest — knows the giveaway programs need to be trimmed back. Even Gov. Bobby Jindal, a stern foe of anything that would smell like a tax increase, tried to curtail the programs as part of his plan to eliminate state income taxes. But the plan fell apart when it appeared an 11 percent sales tax rate would be needed to offset the loss of income tax revenue.
Since then, there has been little energy for reform, and the beneficiaries of the breaks have deployed an army of lobbyists to protect the status quo.
But the time to act is now.
The giveaway programs have sponged so much of the state budget that support for higher education has been cut in half. Most states seek to build their economies by improving the skills of their workforce through education, but Louisiana seems to be moving in the opposite direction.
Moreover, Louisiana’s unfolding boom — fueled by low energy costs that are attracting industry like never before — should provide sufficient job opportunities without the need to turbocharge select businesses with tax breaks and subsidies.
It will be up to the next governor to unwind the giveaways. Voters will be making that choice in less than a year, and they should demand that candidates address the issue truthfully.