For several years now, cable TV has been brightened by “MythBusters,” a popular series in which researchers debunk assumptions widely held to be true. The Mythbusters crew is needed at Louisiana’s State Capitol, where there’s a bumper crop of budget fictions these days. Faced with a deluge of red ink in the state budget, some have resorted to magical thinking. In the tradition of “MythBusters,” let’s answer some of the major delusions floating around the special legislative session:
Myth No. 1 : Louisiana’s rainy day fund can save the budget. The state has a contingency fund to help it through tough times, and officials expect to draw out $128 million from it, the legal limit to help fill part of the budget hole. But at an estimated $900 million, the current year deficit is still massive. Even after tapping into its emergency piggy bank, the state will still need a mix of budget cuts and tax increases to balance its books.
Myth No. 2 : The budget quagmire can be resolved by increasing efficiency in government. We don’t want to discourage economy, and Commissioner of Administration Jay Dardenne is proposing more cuts in operations of state government. Substantial cuts have been made. Again and again, former Gov. Bobby Jindal ordered agencies to cut expenses. The costs of the government in the fiscal year beginning July 1 are considered to be about $2 billion short. Belt-tightening alone can’t fill the gap.
Myth No. 3: The state can realize massive savings by eliminating “waste, fraud and abuse” in the giant Medicaid budget. State Treasurer John N. Kennedy, who has a talent for glib, back-of-the-envelope analysis of state fiscal issues, has made much of anecdotes about poor people racking up hospital charges for hangnails and indigestion. But we reject the notion that there are hundreds of millions in savings that can be had here. Neither the government nor private insurers nor hospitals and doctors have made much of a dent in ballooning medical care costs. Jindal put in place a “managed care” Medicaid plan called Bayou Health, but it will take time — years, not months — to slow the pace of medical expenditures, if that is possible at all.
Myth No. 4: Eliminating state dedications can produce a big budget windfall. The Louisiana Association of Business and Industry has proposed eliminating the dedicated funding that puts as much as $1 billion of the operating budget on autopilot. We’ve long supported the elimination of statutory dedications, the so-called “stat-deds,” because they reduce the state’s flexibility in controlling spending. But many of these stat-deds address important needs, such as public defenders and debt service. Such funding can’t be chopped without real impacts. Dardenne proposes a significant cut in stat-deds, though, hoping to save $150 million or so in the budget.
Myth No. 5: Eliminating or cutting state contracts will yield big savings. There are thousands of state contracts, but in many cases, the big money is in large contracts that every state must have — writing and grading standardized tests or contracting with hospitals and other providers of health care. Often enough, because of operating cuts in the Jindal years, contractors are replacing state employees trimmed to reduce payroll. Tough times demand a renewed sense of vigilance about how state tax dollars are spent. But what remains are the hard options — serious cuts to basic state services and raising taxes. They aren’t pleasant choices but now is the time for a budget debate based on hard facts, not imaginary numbers.