Gov. Bobby Jindal’s last state budget is only three weeks old but already it is poised to come apart at the seams. No one should be surprised.
As he has done for the past seven consecutive years, Jindal this year convinced state lawmakers to cobble together a budget that is a masterpiece of fiscal legerdemain. It combines scandalous (and unconstitutional) dependence on one-time money for recurring expenses with highly speculative projections of savings and/or revenues, plus a new twist: the SAVE Act, which magically renders $747 million in tax and fee hikes “revenue neutral.”
If you’re wondering how Jindal managed in his rookie year to secure a budget without using one-time money to pay for recurring expenses, recall that he inherited a nearly $850 million surplus that year from former Gov. Kathleen Blanco. He promptly flip-flopped on rolling back the Stelly Plan (in what apparently was his last lucid interval as governor, he initially wanted to keep Stelly), ran to the front of the tax cut parade and pretended to lead it, and then promptly spent Blanco’s entire surplus. Ever since, he has used any number of gimmicks to mask what Moody’s Investors Service has aptly termed Louisiana’s “structural deficit.”
The SAVE Act, which creates a fee that nobody pays and a tax credit that no one receives, is Jindal’s magnum opus as a political con man — only it fooled no one in Louisiana. Lawmakers practically held their noses in passing it.
That was just the start.
Immediately after the new fiscal year began on July 1, the Louisiana Chemical Association (LCA) challenged one of the tax increases in court. The tax hike in question suspends (for one year) a 1 percent state sales tax exemption that businesses enjoy on their utility bills.
The LCA cites a constitutional requirement that tax increases must pass the House and Senate by a two-thirds vote. Lawmakers raised several taxes this spring, including the business utility sales tax, with less than a two-thirds supermajority. The courts must now determine whether raising taxes by temporarily suspending a tax exemption amounts, in legal terms, to raising taxes. If the courts agree with the LCA, the floodgates will open and Jindal’s final budget will come tumbling down like a house of cards even before he leaves office. That was not part of his exit strategy.
It doesn’t end there.
Last week, the nonprofit operator of LSU’s Shreveport and Monroe hospitals sued a for-profit competitor for alleged federal antitrust violations. Antitrust law is even more complex than Jindal’s hospital privatization scheme, but the suit has huge implications for that scheme, which Jindal touts as one of his singular accomplishments.
The main allegation of the suit is that the for-profit competitor is trying to lure paying patients away from LSU’s Shreveport hospital (thereby threatening its viability) — and trying to undermine (or take over) the nonprofit’s role as LSU’s hospital operator. If the case proceeds to discovery, the revelations could be very, very interesting.
Count on this: Jindal’s fiscal house of cards will crash, and he won’t spend any time or political capital trying to fix things. Which means whoever succeeds him will have an even bigger mess on his hands come January.