As candidates for state treasurer campaign, the main topic of conversation is one not in the job description: how to fix the state’s longtime fiscal dysfunction.
Even the Democratic candidate, New Orleans lawyer Derrick Edwards, says he’s running “because we can no longer afford to have billion-dollar deficits in our state budgets. I will fight to stop cuts in education and health care.”
The three main Republican candidates in this overwhelmingly GOP state share similar sentiments, but for them, all this budget talk may come back to bite them.
As legislators during the past nine years — when state budgets failed to generate enough revenues for the services lawmakers wanted — candidates state Sen. Neil Riser, of Columbia, and former state Rep. John Schroder, of Covington, played important roles in the annual budgets now universally blamed as a major contributor to Louisiana’s financial problems. Both now say they were against most of those spending plans and had long criticized how the budgets were put together by the Gov. Bobby Jindal administration.
Perhaps most vulnerable on the issue is Angele Davis, of Baton Rouge, who as commissioner of administration for Jindal was the chief architect for the first couple of those budget proposals. She is now gingerly distancing herself from the unpopular former governor, saying that part of the reason she left after two and half years was because the Jindal administration wouldn’t embrace the budgeting practices she advocated.
“I don’t agree with what happened after I left. The problem was the political side of the Governor’s Office wanted to go in a different way,” Davis told The Advocate last week in an interview. “We’ve seen politics and political ambition harm our state. The desire to be president of the United States, politics, has hurt our state.”
The election to replace John N. Kennedy as state treasurer is the biggest race on the Oct. 1…
An important post
The treasurer’s job is about managing the state’s revenues and debt — not drafting and passing a state budget. The treasurer signs the checks that pay the bills; presides over the Bond Commission; and brokers state loans with Wall Street financiers.
As one of the six officials elected statewide, the treasurer is one of the most important posts. But only about 20 percent of the electorate is expected to vote in the Oct. 14 election for someone to fill the rest of John Kennedy’s term. After 16 years as treasurer, Kennedy stepped down in January to become a U.S. senator.
Seven candidates signed up to run. One of the three major Republicans and a Democrat are thought likely to make the Nov. 18 runoff.
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Since none of the candidates has broken away from the pack, Baton Rouge pollster John Couvillon said, “it really comes down to the strategic decisions the individual candidates make, the types of ads they run and how successful those ads are.”
Those commercials won’t begin in earnest until after Labor Day and they are likely to focus on who is most responsible for Louisiana’s fiscal mess.
Starting from zero
As commissioner of administration from January 2008 to August 2010, Davis proposed spending plans based on the philosophies of David Osborne, a scholar who basically argues that state and local governments should start their annual budgeting process at zero and fund only those programs that could show their services are needed and that their activities are accomplishing their objectives.
This prioritization system was to replace the traditional method of starting next year’s budgeting with the amount the agency was appropriated last year, then cutting services or rearranging funds to meet those numbers.
Jindal embraced Davis’ plans when he was elected in 2007. But as a series of tax cuts and economic setbacks, like the collapse of oil prices, failed to bring in enough money, Jindal swept funds, sold assets and tapped other one-time funds to pay for ongoing programs that legislators demanded.
His run for president would benefit from showing a lower budget that didn’t cause widespread discontent over the cuts to services. His critics called it “smoke and mirrors” accounting and his budget practices have since been vilified by fellow Republicans and Democrats alike — including those who voted for the spending plans.
Louisiana may need to again take out a short-term loan for as much as a half-billion dollars…
Davis tugs at her hair as she speaks, clearly uncomfortable with criticizing Jindal, who along with Gov. Mike Foster and then-Lt. Gov. Mitch Landrieu, gave her the opportunities for on-the-job training in public financing and dealing with the big credit rating agencies that decide how much loans will cost taxpayers — experience that is the basis of her appeals to be state treasurer.
“I wanted to do this,” Davis said, tapping one of Osborne’s books. “And we did it, for the most part successfully, at least while I was there. In the end, I think politics got in the way.”
In budget drafting meetings, Davis often found herself alone arguing priorities on how to spend limited dollars, according to three former Jindal aides who also participated. A plan to close motor vehicle offices, home of drivers’ licenses and car registrations, for instance, was scrapped because while legislators agreed consolidation was more efficient, they weren’t keen on closing the offices in their districts.
“Writing a budget is a political process,” Timmy Teepell, Jindal’s chief political strategist, told The Advocate last week. He added that all the budget proposals submitted during Jindal’s tenure contained far less spending than what the Legislature ultimately approved. “If Gov. Jindal could have waved a magic wand, it would have been a much different result. But legislators vote on budgets. He had to give on areas.”
Davis said while frustrations played a part in her decision to leave, the biggest reason was that she and her husband, 19th Judicial District Court Judge Timothy Kelley, had just adopted their son, Davis. She went on to found the Davis Kelley Group, a business consultancy in Baton Rouge, where she’s worked with Fortune 500 companies and regional nongovernmental organizations.
“The last time we had a surplus, she was commissioner,” Riser said.
Like a banker
As chairman of the Senate Revenue and Fiscal Affairs Committee during much of Jindal’s administration, Riser said, he consistently fought to eliminate wasteful spending and to reduce tax burdens.
He was the only no vote in giving final approval to the budget in 2008. He said he voted against the budget because it used the surplus dollars as one-time money on services that became part of the year in and year out budget. He wanted the lion’s share of that extra money to go toward paying down debt, Riser said in an interview after coming out of a meeting last week with Shreveport businessmen who spoke of the state’s fiscal dysfunction and little else.
Riser said he tries to direct such conversations into explaining how the treasurer, like a banker, analyzes the spending and revenues of a business plan, identifies possible problems, and suggests improvements. He’s been doing that work for 24 years as a member of the Caldwell Parish Bank and Trust Company’s board of directors.
Schroder served on the budget-writing House Appropriations committee — except for a short interval when he was ousted for criticizing Jindal’s budgeting practices.
A Republican residential developer from Covington, Schroder said he consistently voted against budget proposals that used techniques to spend more money than the state raises in a given year. Those budgets, nevertheless, were approved by the Legislature.
“For 10 years, I have stood up for the Louisiana taxpayers and fought to reduce state spending,” Schroder said in an email last week. “We can’t keep spending every penny we think we have.”
Schroder sees the treasurer’s job as one of negotiating with legislators behind closed doors toward more workable budgets.
“I will work to expose every wasted tax dollar and continue to work with the Legislature to find solutions. I will lead and take a stand whenever and wherever necessary,” he said.