APPEL: A Structure For Putting Louisiana’s Fisc On A Sound Footing

As we start the Special Session let me try to present the big picture as I see it. Any financial problem has two components; the revenue side and the expense side. All we have heard from the Governor is the “desperate” need for about $3 billion in new revenue to backfill the revenue side. Clearly the underlying expense side premise for his position must be that Louisiana delivers services effectively and cost efficiently. With due respect to the Governor and without getting to details which are beyond the scope of this posting I must disagree with that premise.

In my view we are faced with three expense side issues that must be solved. First is the issue of the $900 million short term deficit. I believe that we should accept the Governor’s proposal of a combination of one-time money, some cuts, and some taxes (as long as they include a sunset provision) and get this issue off of the agenda. There are no cuts or any other means to solving it short of what has been proposed and as long as it hangs out there this problem will be co-mingled with the much more important, long term expense side issues.

In my view the long term issues are actually two. First, there are the long term cuts proposed by the Governor; cuts primarily to higher ed and healthcare. These are all the news and their prominence in the news occludes our much more important expense side structural faults.

Our budgetary structural faults are the fundamental issues that, to a great extent, cause our economy to always be on the brink of disaster. These faults include our state pension system, our structure of higher ed, our incredibly large state subsidy to local government, our capital outlay system, our non-existent infrastructure program, and so on. When added to revenue side tax reform these are the elements that must be solved if we are ever to have a promising future and yet, for what I must assume are political reasons, they are being completely ignored by the Governor.

I have no doubt that if we approve the Governor’s revenue plan we will never see reform to these critical problems. Let me repeat that, if we pass the taxes the Governor wants, goodbye to any structural reform for perhaps generations to come!

My solution; let’s fix the short term problems in the Special Session and then adjourn, next let’s tackle the expense side structural problems in the Regular Session, and finally, immediately after we adjourn from the Regular Session, we should call ourselves back into a second Special Session and address any lingering revenue issues.

The Governor’s timing in the Special Session call is an assurance that our state will remain ineffective, fiscally inefficient, and over taxed. Just remember this statistic, per capita Louisiana already is one of the highest spending states in the south. Yet we cannot fund our own higher ed system.

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