Louisiana’s economy and state finances have turned around during his 3½ years in office, Gov. John Bel Edwards tells voters constantly as he seeks reelection in the Oct. 12 primary.
Average weekly earnings are up and the unemployment rate is down since he became governor in January 2016. And with Edwards taking the lead, the big state budget deficit that he inherited has become a modest surplus.
But the governor’s two Republican opponents — U.S. Rep. Ralph Abraham and businessman Eddie Rispone — say Louisiana’s economy has floundered with Edwards at the helm.
Fewer people are working in Louisiana today than when he became governor, they point out, and Louisiana’s economic gains trail the national average.
They both are, and that’s why, as the campaign begins in earnest, voters are hearing claims and counterclaims about the economy. It’s typically a key campaign issue, even if governors have little sway over the short term to create jobs and grow an economy that depends heavily on the price of oil.
Most of the state’s economic indicators are up since Edwards took office, but these metrics have generally grown more slowly than the national averages. The progress hasn’t changed Louisiana’s status relative to other states. It continues to rank near the bottom in most economic indicators, as it did under Edwards’ predecessor, Bobby Jindal, and the governors before him.
An analysis by 24/7 Wall Street published 10 days ago by USA Today covered 2013-18, a period that includes parts of both Jindal’s and Edwards’ tenures, and ranked Louisiana’s economy as 47th best nationally. The report cited systemic shortcomings that have slowed the economy under both governors.
“Low educational attainment may hinder the development of high-growth sectors like information and professional business services in Louisiana and stymie overall GDP growth throughout the state,” 24/7 Wall Street reported. “Just 23.8% of Louisiana adults have a bachelor's degree, the fourth smallest share of any state.”
As he runs for a second term, Edwards naturally emphasizes more positive figures.
He revved up the rhetoric when he stopped in New Orleans last week during a statewide RV tour that he cut short because of Hurricane Barry.
“Think back to where Louisiana was four years ago,” Edwards told a crowd of supporters. “The economy was in shambles. The state was in the ditch.”
The Republican Governors Association paints a totally different picture.
“Since John Bel Edwards took office, Louisiana has faced falling economic rankings, a shrinking labor force, and lost the most jobs of any state,” spokeswoman Amelia Chasse Alcivar said in a statement. “Just like a typical liberal Democrat, his answer has been higher taxes and record spending that have only succeeded in growing the size of government.”
But Edwards can point to gains in the economy since he began occupying the Governor’s Mansion.
Total aggregate personal income in Louisiana increased by 7% from 2015 through 2018, the state’s gross domestic product increased by 7% over the same period and the state unemployment rate dropped from an average of 6.3% in 2015 to 4.3% in June 2019, according to state and federal government figures. Average weekly earnings also increased by 8.8%.
But the growth in personal income, the state’s economy and average weekly earnings all lag national gains since 2015, in some cases substantially. Across the country, personal income is up by 23% over that span, GDP up by 13.7% and average weekly earnings up by 9.9%.
Louisiana’s unemployment rate has dropped by 32% since Edwards took office. The national rate declined by 30%.
On Friday, only hours after the federal government released the latest state-by-state jobless numbers, the Governor’s Office issued a statement saying the unemployment rate in Louisiana has dropped by the largest percentage point decline of any state over the past year.
The Democratic Governors Association released a video on Thursday touting Louisiana’s “Bayou Boom.” The video consists of televised clips of new job announcements, and it is similar to gains trumpeted by Louisiana Economic Development, an arm of the executive branch that promotes investment in Louisiana.
But a more telling measure is the jobs picture under Edwards. Here, the numbers are not favorable to the governor. Fewer people hold private sector jobs than when he took office — a point Republicans highlight at every opportunity.
Total private sector employment in Louisiana has averaged 1,982,500 in 2019, down 0.7% from the 2015 average of 1,996,000.
In sharp contrast, national employment has increased by 6.4% since 2015.
Louisiana’s unemployment rate has dropped at the same time that fewer people are working in Louisiana because fewer people are actively searching for jobs, the unemployment rate measure. That’s not a positive indicator for the state.
Another statistic that’s not a positive indicator: Louisiana’s population has dropped by about 10,000 since 2015. Only a handful of states have lost population over that period of time.
Comparing Edwards’ record to Jindal’s is useful but imperfect, because Jindal served two terms and Edwards has yet to complete his first term.
Under Jindal, the number of jobs increased by a total of 4% over his eight years in office, while the state’s unemployment rate during his tenure increased from 4.3% in 2007 to 6.3% in 2015. His time in office coincided with the Great Recession, a big jump in oil prices and then a sharp oil price drop during his final year in office.
Under Jindal, the state’s GDP increased by 11.6% and total personal income rose by 24.5%.
LSU professor Jim Richardson and Greg Albrecht, the Legislature’s chief economist, offer a few caveats about the performance of Louisiana’s economy during Edwards’ tenure.
Louisiana was losing jobs when he took office for reasons that had nothing to do with him or Jindal, the two economists said, noting the petrochemical industry’s key role in driving the state’s economy.
When Edwards first became governor, Albrecht said, “He still had employment declining from the state mini-recession from oil prices declining. He came in during a downturn that ended in August 2016. We’ve slowly climbed out of that trough.”
Richardson noted that during the upswing, Louisiana has added 0.6% more jobs since 2017.
The average price of oil has increased from $54.06 per barrel in 2015 to $60.26 in 2019, which is down from the $100 per barrel days during part of Jindal’s term.
“From 2015 through the first five months of 2019, we’ve lost 12,000 jobs in the sector of oil/gas/mining,” Richardson said. “We took a beating.”
Richardson and Albrecht agree that Edwards, like his predecessors, has little short-term influence over the performance of the state’s economy.
“Their ability to impact the economy is really limited,” Richardson said. “I know that any governor talks like he can control the economy, especially if it’s going well. That’s what politicians do. Every president does that, too. Presidents have more influence than governors.”
Governors, unlike presidents, have to submit balanced budgets, although Jindal used budget gimmicks to paper over a growing budget deficit that was as much as $2 billion when he left office. Jindal inherited a $1 billion surplus from his predecessor, Gov. Kathleen Blanco.
In 2016, Edwards took the lead in winning approval from the Republican-majority Legislature to raise sales, cigarette and alcohol taxes by about $1 billion to close that deficit. Lawmakers also cut spending by several hundred million dollars.
The tax increases allowed Edwards to end the practice of using one-time money that became a hallmark of Jindal’s later budgets, as Jindal sought to fulfill a pledge to anti-tax crusader Grover Norquist Jr. not to raise taxes while maintaining vital government services.
The one-time money in the state budget plummeted from $1.2 billion in Jindal’s penultimate year and $541 million during his final year to zero today. The use of one-time money was akin to someone using a bonus payment to pay monthly bills, a financial no-no, according to experts.
“The days of smoke and mirrors and budget gimmicks are all gone,” the governor said in New Orleans.
State government spending has increased by 14.8% under Edwards, according to the Louisiana Senate Fiscal Division.
Although they helped to balance the budget, the tax increases have provided fodder for the Republican Governors Association, which hit Edwards in its first TV ad, launched last week.
“While American workers get ahead, Louisiana gets left behind,” an announcer intoned. “Democrat John Bel Edwards raised taxes, just the opposite of Trump.”
The ad also described Louisiana as “the worst state for jobs,” based on figures showing that Louisiana lost more jobs than any other state, 4,000, from when Edwards took office in January 2016 through May 2019.
Louisiana is one of only four states that has lost jobs during Edwards’ tenure, according to an analysis by Andrew Smith, a research associate at LSU’s Center for Energy Studies. The other three — North Dakota, Wyoming and Alaska — also are major energy producers suffering from cutbacks by oil and gas companies. Of the four, Louisiana has lost the most jobs when comparing average employment in 2015 with the average so far in 2019 — 13,760. But each of the other states suffered a greater loss of jobs in percentage terms.
On July 10, CNBC reported that Louisiana has the 46th best economy in the country.
“The good times are not rolling in a state with one of the nation’s weakest economies,” the financial news network reported. “Falling energy prices don’t help.”
Edwards, meanwhile, is focusing on the main benefit of the tax increase and expanding economy — the $308 million budget surplus for the fiscal year that ended on June 30, 2018. Albrecht and Richardson said they believe the state ended with another surplus for the following fiscal year, which ended on June 30.
During this year’s legislative session, the improved economy and the budget surplus allowed Edwards and state legislators to raise teacher pay for the first time in a decade. They also directed $20 million more toward early childhood education and provided more money for the state’s public colleges and universities.
Edwards has been saying on the campaign trail that his decision to expand Medicaid to the working poor not only provided health insurance to 455,000 people but also saved the state hundreds of millions of dollars by shifting some medical expenses to the federal government.
One key financial marker has worsened under Edwards’ watch. The state’s rainy day fund has dropped from $470 million in 2015 to $405 million today, after Edwards and legislators tapped it for $128 million in 2016 and $99 million in 2017 to help balance the budget.
Louisiana’s poverty rate increased a fraction, from 19.6% in mid-2015 to 19.7% in mid-2018, while the number of people on food stamps dropped from 399,000 to 384,000 over the same time period.
Capital News Bureau chief Mark Ballard contributed to this report.