Jindal Releases Budget Preview

It’s out, and you can read the full release here.

Until the details of this thing can be gone through, it’s hard to evaluate it. From the way it looks, though, getting most of the $1.6 billion deficit covered appears a lot easier than anybody thought.

Jindal says he’s cutting $1.04 billion just from some restructuring of state government. To wit…

The budget includes countless initiatives, department by department, using a host of strategies – including reorganization, consolidation, collaboration, privatization, modernization, and policy innovation – to strategically reduce spending while transforming government to do more with less.  Major reduction and savings areas include:

  • Department-by-department strategic reductions to the existing operating budget: Approx. $410 million
  • Reductions across the executive branch by annualizing FY 11 midyear cuts: Approx. $110 million
  • Reducing more than 4,000 fulltime positions across the executive branch: Approx. $96 million
  • Protecting MFP total funding at more than $3.3 billion, but not funding certain increases anticipated at continuation, such as state employee “merit” raises; absorbing inflationary costs, with reductions to others: Approx. $200 million
  • Reducing projected General Fund increases at continuation through funding efficiencies: Approx.  $225 million

Overall, the FY 12 Executive Budget proposes total funding of $24.9 billion, a decrease of $1.1 billion, or 4.3 percent, compared to the FY 11 total existing operating budget of $26 billion.

Without specifics, again, it’s hard to say for sure. But some of these seem like they might be adoptions of suggestions made by state treasurer John Kennedy or Blueprint Louisiana. Jindal’s commissioner of administration Paul Rainwater disagreed with Kennedy on the numbers of many of his proposals, though the suggestions themselves weren’t necessarily objectionable to the governor. One thing’s for certain, though – killing 4,000 state government positions is absolutely the right thing to do given where Louisiana ranks among Southern states in state employees, but Jindal is going to be branded as Satan by the Left for doing it.

The release makes clear that higher education, health care and K-12 education are going to be spared by budget cuts. On higher education, it appears that Louisiana is moving toward a more tuition-based model of funding…

Due to the loss of ARRA funding for higher education, the Governor’s Executive Budget replaces it with increases in state funding and self-generated revenue. After replacing ARRA, and if TOPS or changes in hospital funding are not counted, then there is no change in funding for higher education.

The FY 12 budget provides $82.5 million in funding, which includes $39.9 million in additional new funds, plus $92 million from a proposed constitutional amendment, bringing the total funding for TOPS to $174.5 million. The necessary increases are also included in case the Legislature passes the Governor’s proposals to provide more tuition flexibility to universities.

On elementary and secondary education…

Governor Jindal said his budget continues to protect K-12 education funding in the FY 12 budget. This means the MFP will increase from $3.31 billion in FY11 to $3.38 billion in FY 12.

While funding to other programs has been reduced by 26 percent over the last three years, funding for the state’s MFP – the state’s largest allocation of education funding – has increased by 6.2 percent, from $3.12 billion in FY2008 to $3.31 billion in FY11. From FY08 to FY 11, the state’s appropriated student count allocation increased from $4,735 to $5,038 per student, representing a 6.4 percent increase. Taking into account the new dollars committed to the MFP in this budget, the MFP will have increased by 8.2 percent since FY 08.

Jindal has already been attacked by the state’s teacher’s unions on the subject of what amounts to a freeze in the Minimum Foundation Program, which pays for teacher salaries, because he rejects the idea of eliminating business tax incentives. This budget isn’t likely to engender any love with the union bosses, though it does seem clear that they’ve got little to complain about given some of the cuts elsewhere.

And on health care, Jindal said the FY 12 budget proposes no cuts in Medicaid private provider rates, no reductions in eligibility and no elimination of services.

And then there’s the question of one-time funds, a solution used to plug a large budget hole last year to great consternation from many quarters. Jindal is admitting he’ll be making up the majority of the half-billion dollar remaining deficit beyond what his restructuring plan will do by using one-time funds; specifically…

One-time money utilized in the current fiscal year – including ARRA funding, amnesty proceeds, and other funds – totaled $1.6 billion.  To help bridge the gap and mitigate reductions to vulnerable services like higher education and health care, the Governor’s budget does utilize one-time dollars in the upcoming fiscal year, but significantly less than before. The breakdown includes:

One-time revenues for recurring expenses:                                                 $474 million
Recurring revenues used for one-time expenses:                                        $57 million
Net total of one-time revenues for recurring expenses:                              $417 million

The amount of one-time revenue used for recurring expenditures in the proposed budget will be considerably less than the $800 million used in the last budget approved prior to the start of the Jindal administration (FY 08), and more than $1 billion less than the amount used in the current fiscal year. Importantly, this amount is also roughly the same as the projected year-to-year increase in General Fund revenue from the Revenue Estimating Conference’s official forecasts between FY 12 and FY 13.

Again, we don’t have specifics of whether he’ll be emptying out the rainy-day fund to cover the losses, patching unused Louisiana Economic Development money ($67 million of which is sitting fallow after the failure of the V-Vehicle startup planned for Monroe to get a Department of Energy loan) into the general fund, banking on the sale of a pair of state prisons or other pieces; so while we’re greatly opposed to one-time money used for recurring expenditures, at least the majority of what the Governor is doing involves attacking the structural problems with the deficit.

Here’s hoping that the new Republican majorities in both the House and Senate have ideas of their own how to drain the remaining $417 million swamp Jindal wants to put one-time money into. This budget doesn’t solve the state’s problem, though it does chip away at the waste nicely.

But that’s a preliminary impression. Until we can see the specifics we won’t be able to tell whether the numbers are realistic or the changes are courageous with any degree of confidence.



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