Time Is Of The Essence On Reform And The Budget

The Legislature begins the 9th week of its regular session Monday with two major issues unresolved. Retirement reform appears to be stuck in the state Senate, and it took two tries to get an unpopular $25 billion budget for fiscal 2012-13 out of the House Appropriations Committee.

Time may not be a big factor at this point, but with only four weeks remaining in the session, it could soon become troubling.

Gov. Bobby Jindal rushed his education package through the legislative process with breakneck speed, but the retirement reform train has slowed to a crawl. It would affect the Louisiana State Employees Retirement System and higher education members of the Teachers Retirement System of Louisiana.

The Senate Finance Committee is scheduled to consider the three main retirement bills Monday. One raises the retirement age, a second increases employee retirement contribution rates from 8 to 11 percent, and the third uses a five-year rather than three-year average to figure a retiree’s pension.

Each of those measures has undergone significant changes in an effort to pick up support, but it’s questionable whether the newer versions are any more palatable.

The House did approve a new cash balance retirement plan for state employees and higher education workers, but it wasn’t a breeze. The state and employees would contribute to the plan, and the funds would be invested. Employees would have access to a lump sum payment when they retire.

House members threw a monkey wrench into the process when they voted 55-46 Tuesday to also enroll those employees in the federal Social Security system. However, the amendment was stripped from the bill the next day after opponents said it would add too much to retirement costs. The House then voted 55-45 to approve the new plan and send it the Senate.

Still sitting on the House calendar is a bill that would merge the Louisiana School Employees Retirement System with the Teachers Retirement System of Louisiana. Whenever legislation sits around for a long time, as some of these bills have done, it’s usually because supporters don’t have the necessary votes to move them along.

Another indication things aren’t going well came Thursday. The chairman of the House Retirement Committee voluntarily deferred a measure that would have virtually eliminated cost-of-living raises for retired state workers and teachers. Some retirees are trying to live on less-than-poverty pensions.

The week to come may decide the ultimate fate of the retirement reform effort. The Jindal administration has given some ground, but the concessions may not save the package.

Meanwhile, money woes continue to eat away at higher education and health care. Those two major areas of the budget are unprotected and always get hit the hardest. Lawmakers haven’t had the courage to do what it takes to spread those cuts around.

The Revenue Estimating Conference said the current year’s budget is short by $211 million, and next year’s will need over $300 million to keep it in balance. Cutting $200 million over the next two months is a daunting task.

One quick solution is to use the rainy day fund to plug this year’s holes. Unfortunately, the Jindal administration and legislators can’t seem to agree that is a good solution.

Even more troubling to fiscal conservatives is the fact the governor’s proposed budget is based on contingencies — things that haven’t happened — and contains over $300 million in one-time money — funds that won’t be there next year.

We hear a lot about cutting fat in government, but the fact is the state grants too many tax exemptions and rebates. It’s an issue that is discussed often, but governors and legislators can’t resist the effort to keep giving money away. Corporate income and franchise taxes, for example, have declined dramatically over the last five years.

Industrial inducements and low corporate taxes do fuel economic development. However, is the state really getting more in return than it gives away in special concessions?

The proposed $3.65 million annual tax rebate to keep the Hornets NBA team in New Orleans is a good example. Supporters say it will be cheaper than the current payments to the team. And they insist the Hornets make a $114 million impact on the New Orleans economy.

Reports are supposed to be done showing the financial impact the team has on the state, but when is the last time you saw such a report?

Even more troubling is the news the state will spend $50 million to renovate the New Orleans Arena where the Hornets play and another $10 million to upgrade its practice facility. You can understand why taxpayers find these things puzzling at the same time they hear about more severe cuts to higher education and health care.

The budget uncertainty this year has become standard procedure, and no one seems interested in finding out why and arriving at some kind of solution. The Jindal administration keeps telling us we need to fix the education and retirement systems, but what about fixing the way the governor’s office and the Legislature handle our tax money?

Jim Beam, the retired editor of the Lake Charles American Press, has covered people and politics for more than five decades. Contact him at 494-4025 or [email protected].

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