Imagine, God forbid, that your boss just cut your salary by 25% because business is bad. Instead of reducing your spending or getting a second job, you elect to do the following:
1. Take a cash advance on your credit card to pay your car note.
2. Refinance your mortgage, but instead of choosing to lower your monthly payments, ask for the one-time savings up front to pay for your Disney World vacation.
3. Decide, reluctantly, to sell your bass boat. It’s worth $2,500. You ask $10,000. You wonder why it doesn’t sell.
4. Instruct your kids they must begin paying for room and board. When they ask where they’ll get the money, tell them to borrow it.
Your plan may work–for a while. Then, as sure as “eggs is eggs,” you’ll go broke, just like Louisiana eventually will if the legislature passes the Jindal Administration’s proposed, yet again unbalanced budget for the fiscal year beginning July 1.
Here’s how the administration plans to “balance” state revenue and spending this time:
1. Pretend the state will have an extra $800 million to spend as a result of the yet-to-be realized savings from leasing state hospitals to private hospitals, even though the leases have not been negotiated.
2. Refinance the state’s tobacco bonds (good idea) but dump the $90 million one-time savings into the operating budget and spend it next year (bad idea).
3. Propose to sell state real estate at inflated prices well above appraised value and spend the money before they sell.
4. Borrow $100 million from the New Orleans Convention Center to keep our colleges open while promising to repay the loan with the proceeds from future bond issues that will exceed the state’s constitutional debt limit.
5. Raise college tuition 10% for Louisiana students, who already owe $900 million in student loans, despite the fact that education is the new currency of our global economy and 8% fewer Louisianans have a college degree than the rest of America.
Call this budget what you like: a fond illusion or smart accounting. The result will be the same: mid-year budget cuts for the sixth year in a row, because the budget is not balanced. Why should we care? Because making a college cut $10 million with six months left in the fiscal year is like a $20 million cut from day one. That shreds muscle, not fat.
There’s a better way. It’s not complicated: don’t spend more than you take in, and when you do spend money, spend it on things you need, not things you simply want.
Louisiana families know that. So do Louisiana businesses. Why can’t government figure it out?