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|Jindal, lawmakers will earn their keep|
The regular legislative session that begins Monday will be the most challenging session a governor and state lawmakers have faced in Louisiana since the oil bust days of the 1980s.
That will be the case because Gov. Bobby Jindal and legislators are staring at the gloomiest financial picture Louisiana has witnessed since, well, the 1980s. That was back in the day when the collapse of the oil and gas industry ripped apart state finances in light of a dramatic decline in severance taxes, which largely fueled state government then. Higher education and health care weren't the only arms of government that suffered badly in Louisiana some 20-30 years ago, but for the sake of recalling those nasty days of doom and gloom, let's stick with them. Let's stick with them since the so-called elite love to bemoan the state of higher ed and health care in Louisiana anytime a governor or the Legislature must cut the budget amid an atmosphere of tight money.
Ironically, it will be higher ed and health care -- again -- that are certain to take it on the chin financially by the time the 2010 regular session comes to a close in a couple of months. It's ironic, too, that just a couple of years ago Louisiana was awash in cash, and state lawmakers were tripping over themselves looking for ways to spend it. Remember that $1-billion-plus budget surplus the Legislature inherited thanks to a red-hot oil and gas industry?
By the time Edwin Edwards took office in 1984 to embark upon his third term as governor the embarrassment of riches Louisiana enjoyed in the late 1970s and into the '80s -- courtesy of the oil patch -- was long gone. The oil bust had not arrived in earnest, but it was well on its way. The budgetary nightmare Louisiana would endure for the rest of the decade had already arrived.
The most significant difference between Louisiana's economy of the 1970s and 1980s and the one we're working with today would be our dependence, or lack thereof, on the oil and gas industry. Though oil and gas still play a vital role in Louisiana's economic well-being, we aren't as dependent on them as we once were.
Yet, like Edwards and state lawmakers did then, Jindal and legislators who have the privilege of serving today must figure out in the coming weeks how to spread around a limited amount of money to pay for a host of services that the people expect government to provide. It won't be easy. In fact, it will be gut-wrenching.
We already know where Jindal stands. He expects state government to make do with less. A tax increase, though not constitutionally viable in a fiscal-only session like the upcoming regular session, would be unwise, Jindal says.
State lawmakers, on the other hand, must balance a roughly $24 billion budget. They must approve a balanced budget because, unlike the Congress, they can't sign off on a deficit-ridden spending plan for the new fiscal year, which begins here on July 1.
Let's recall that for months we've been told the state faces a $2 billion revenue shortfall versus existing expenses over the next two years -- $1 billion for the 2010-2011 fiscal year and another $1 billion in the 2011-2012 fiscal year. Assuming the $2 billion figure is accurate, it is difficult to fathom a Louisiana Legislature agreeing to cut some $1 billion from the budget. Remember, once federal appropriations the state collects and the spending mandates that accompany them as well as some other spending restrictions are removed from consideration, the Legislature has about $9 billion at its disposal to spend in a given year.
That said, it has been assumed for weeks that the Legislature would go along with Jindal's proposed budget for the fiscal year beginning July 1. It's a patch job, utilizing some non-recurring revenues mixed in with some spending cuts. In many ways, it prolongs the inevitable.
The Jindal budget may need to be revisited, though, if the governor is forced to order another round of mid-year budget cuts in light of what would appear to be a decline in income and sales tax collections as the new year unfolds. We'll know more in about a month when the state Revenue Estimating Conference meets to officially tell us how badly the state is performing financially. The outlook is grim, and it is entirely possible that Jindal will have no choice but to order $250 million-$400 million cut from the current fiscal year budget, which ends June 30. Remember, Jindal trimmed the 2009-2010 budget by some $248 million earlier this year.
Another cut to the current fiscal year budget should sound an alarm that Louisiana's budgetary problems are far worse than most of us imagined, and it would compound the pressure Jindal and the Legislature will be under beginning Monday.
That's why we pay them the big bucks.
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