The state's projected $1.6 billion (and growing) operating budget shortfall for the fiscal year that starts July 1 hangs over the heads of Gov. Bobby Jindal and state lawmakers like a modern-day Sword of Damocles. The enormity of that budget gap — and the draconian cuts it could precipitate — has public universities, public health care advocates and many others in a state of near panic. There is reason to worry, because there appear to be no more stashes of one-time cash for the governor and lawmakers to raid in order to "balance" the budget. Moreover, in the next few weeks, Jindal and lawmakers must cut an additional $103 million from the current fiscal year's budget — on top of some $183 million in mid-year cuts that came in November.
There are no easy options, no gimmicks left to paper over such a huge deficit. That said, this crisis presents Jindal and lawmakers with an opportunity to make some badly needed, long-term structural reforms that could prevent something like this from happening again. As daunting as the immediate problem is, it will be worse in future years unless significant reforms are made. Out of this crisis, we hope Jindal and lawmakers will seize the opportunity to institute structural budgetary reforms.
When lawmakers convene in April, they must work on two levels: They must address the $1.6 billion revenue shortfall for the next fiscal year; and they must address the long-term, structural deficit that has made Louisiana government an unsustainable model of waste and inefficiency. Here are some ideas we've heard that are worth considering for the short term:
• Suspend state sales tax exemptions. This idea is broad in application, but sales taxes are regressive. We think this approach should be limited in scope and part of a larger solution.
• No money for NGOs. Most non-governmental organizations (NGOs) are local entities that cannot find money on the local level, so they tap the state because they find favor with lawmakers. We cannot afford to pay for local items that local government chooses not to fund. This is a good long-term reform as well.
• Suspend costly business tax exemptions and tax credits. Louisiana gives away far too much to businesses that promise to bring jobs, but those jobs almost always fail to meet expectations. And too often they go to out-of-state workers and contractors.
• Cut state consulting contracts. State Treasurer John Kennedy has advocated this for years. It's time to give his idea a try.
Louisiana has not had a balanced operating budget since Bobby Jindal became governor.
• Slash the Capital Outlay Bill. We shouldn't stop ongoing projects, but delaying new ones would save millions and reduce our debt.
As lawmakers consider long-term reforms, they should recognize that Louisiana has not had a balanced operating budget since Jindal became governor. That's how we got into this mess. They also must recognize that the problem cannot be solved by using the same approach that created the problem in the first place. That means no more spending one-time revenue on recurring expenses. Ever. Here are some other ideas:
• Expand Medicaid. The time for ideological grandstanding is over. Expanding Medicaid helps working people, not grifters or deadbeats. It also would pump hundreds of millions of federal dollars a year into Louisiana's public health care system at a time that money is desperately needed.
• Eliminate all budget dedications. Our constitution and statutes are riddled with budget dedications that prevent lawmakers from doing what voters elected them to do: make sound fiscal decisions. Put this on the ballot for the fall elections so every candidate for governor and Legislature has to take a position on it. It also would help the next governor and Legislature deal with the mess Jindal is about to leave behind.
• Eliminate all tax exemptions. This would lower tax rates significantly — and make our tax system fairer. Conservatives say they want a simpler tax code. This is what one looks like.
• Overhaul higher education. We have too many four-year public universities and too many higher-ed governing boards. Time to consolidate, refocus missions and put money into centers of excellence.
No doubt the coming weeks will bring many more suggestions. None should be dismissed out of hand. When a problem is this big, everything has to be put on the table. Above all, our elected leaders must not let this opportunity for structural reform pass them by. To do so would be an abdication of their responsibilities.