In response to a looming deficit in the budget just adopted in June by the Legislature, Commissioner of Administration Kristy Nichols and the legislative budget committee eliminated 167 vacant positions and found some extra dollars to balance the budget halfway through the fiscal year.
“None of the positions that were taken were filled,” the commissioner announced triumphantly, cleaver in hand. “The bottom line is we protected higher ed. We protected health care. There were no layoffs.”
Maybe, but things are still a mess.
The elimination of unfilled positions is only part of the story. An odd recipe of cuts in this fund or that, taking money from a corporate tax amnesty fund and other sources of cash filled out the Nichols deficit package. The administration and budget committee had to close a projected $180 million deficit in the $25 billion budget that runs through June 30. Revenues are not coming in as anticipated, in large part because of a drop in the price of oil, but more distressingly in slower-than-expected collections in mainstays like personal income taxes and sales taxes.
If there is a deficit, move fast on it. Agencies having to make cuts would find it harder as the fiscal year advances. Gov. Bobby Jindal and Nichols were quite right to do so.
But the odd-lot collection of expedients does not grapple with the underlying problem of how the sausage is made. Even in a rising economy, which the people of Louisiana do have reason to be thankful for at this time of year, the state tax system does not effectively translate that economic activity into tax receipts.
Jindal’s recipe from the beginning, long before Nichols rose to head the Division of Administration, was to cut into state revenues with deep tax cuts and reduce expenditures by shifting state aid from colleges and replacing some of the losses with tuition increases.
The recession of 2008 hammered revenues; only the billions from the economic stimulus bill — much maligned by Jindal — kept the governor’s budgets from complete collapse. The tax cuts were ill-timed, and cuts in state income tax rates hurt the state’s tax capacity. Now that the economy is recovering, the state sees little benefit.
This year’s budget is propped up with about $1 billion in one-time revenues paying for recurring expenses. We hate to think what is going to happen when Jindal and his cooks leave the kitchen to their successors.