Jindal Spitballing On Budget Cut Ideas

In a meeting with state legislative leaders yesterday, Louisiana Gov. Bobby Jindal threw around a few interesting ideas on covering the expected $1.6 billion budget deficit for next year.

While the creativity and willingness to think out of the box is laudable, and while reactions should be calibrated to reflect the preliminary nature of some of the ideas getting tossed about, though, Jindal gives off the impression he’s doing everything he can to avoid transforming the core of state government.

As the Times-Picayune reported the meeting, Jindal is offering up for discussion selling off state-owned prisons and office buildings and bonding out future lottery revenues, ideas he thinks could cut the deficit in half. Those would seem to be one-time solutions to what looks like a recurring deficit given the current state budget structure.

Specifically, the ideas are:

  • Selling off surplus state land and property that isn’t being put to its best use. Potential revenue: $13 million.
  • Selling state-owned, privately run prisons in Allen and Winn parishes. Potential revenue: $13 million.
  • Selling the state-operated health plan for government workers to a private insurer. Potential revenue: $100 million.
  • Selling bonds that would be paid back over time with lottery revenue. Potential revenue: $250 million.
  • Selling off state office buildings and having the state lease them from the new owners. Potential revenue: $400 million.
  • House Speaker Jim Tucker, who was at the meeting, didn’t like the lottery idea, as he said it violates the constitution – lottery proceeds are supposed to be earmarked for education. He also said he’s concerned that none of the revenue from these ideas will be in hand by March, when the governor’s budget makes it to the legislature – and that would mean a lot of the budget would be “contingency” spending, which isn’t constitutional either.

    The Democrat legislators in the meeting came out sounding a little more amenable…

    “I still don’t think it’s wise to use one-time money,” said Rep. Jim Fannin, D-Jonesboro, who oversees the House Appropriations Committee. “But these are unusual times that we’re in, and at this point I’m willing to listen and not close the door on anything.”

    “I do intend to keep an open mind,” said (senate president Joel) Chaisson, who said he asked Jindal to consider an increase in the state cigarette tax. “I asked him to do the same thing when it comes to ideas that we might have when it comes to how to best balance this budget.”

    The meeting came one day after Jindal’s Commissioner of Administration Paul Rainwater told the Baton Rouge Rotary Club that the worst-case scenario of 35 percent cuts to state agencies his office had previously warned might come won’t happen. Rainwater also flatly said taxes won’t be going up – an indication that the solution to this year’s budget problems will be coming from an alternative source of some kind.

    One interpretation of this throw-stuff-at-the-wall-and-see-what-sticks process is that Jindal is trying to paper things over for 2011 in an effort to get through an election year without making major changes. If so, this is both smart politics and a major risk. To date Jindal isn’t in mortal danger of losing re-election given the nonexistent field of potential challengers, so while he might be facing a further loss of public approval for having papered over a budget problem for another year it won’t cost him.

    And in the meantime the electorate, which consistently polls as desiring a massive decrease in the size and scope of state government, is actually moving to Jindal’s right. That will likely reflect itself in major gains for conservative Republicans in House and Senate races next year – Democrat leges, seeing the direction of the current howling wind, are switching to the GOP in droves as they seek shelter. As such, while Jindal might be soft-pedaling the budget situation this year he could be looking at an opportunity to make transformative change without transformative consequences to his political career by 2012.

    But in the meantime, budget gimmicks like selling off state property – which in and of itself isn’t a sin and in many or most cases is a quite desirable action – will only fuel a perception that Jindal lacks substance. And his quote about how a one-time revenue source being used to cover a budget deficit from yesterday’s meeting is going to make for head-scratching…

    Jindal said he’s OK with using short-term fixes as long as the temporary dollars aren’t used to expand government. “Using these dollars while we shrink government is very different than using them to grow government,” Jindal said.

    But he’s not shrinking government. The point is that these one-time revenues are being used to fund government at a larger size than it would be if he just cut the budget. Selling off a state office building only to lease it back from the new owner isn’t a particularly sound fiscal move (unless the new owner gives you a sweetheart deal on the rent) unless you’re reducing your state workforce and need less space. And until that reduction occurs, the governor’s stock will continue to wither.



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