Now that Louisiana has a Democrat in the governor’s mansion and a customary state budget deficit to resolve, and now that the emphasis at the Capitol has changed from cutting government to raising taxes, something the majority of the state’s public has not been interested in doing (John Bel Edwards most certainly did not run for governor on raising taxes; he denied he’d do it and then changed the subject so as to talk about David Vitter and hookers a little more), you are being inundated with a narrative aimed at making you compliant with the idea that Louisiana’s public sector is flat on its back and can’t afford any more austerity or else “permanent damage” will result.
And that the state has to do what is necessary to “recover” from the mismanagement of eight years of Bobby Jindal.
Now that we have a chief executive who couldn’t even manage the election of the Speaker of the House to his advantage, Louisiana will “recover” from the damage Jindal did. See how that goes?
We’re not going to try to make you believe all the negative things said about Jindal are false, because that would be inaccurate. There are lots of legitimate criticisms of our previous governor. But what we will do here is disabuse some of you of the more popular notions being forwarded by the Edwards administration and their willing stooges in the media – mainstream, social and otherwise.
And there are three of those which are most prominent at present.
1. Bobby Jindal broke government in Louisiana.
This is a bit of a specious charge, and it’s thrown out there as a general excuse for anything the Edwards administration is doing that generates criticism.
The major specific item which seems to be released when the general charge is questioned is Jindal’s efforts to privatize the 10 Charity hospitals the state used to run, as some of those efforts have been difficult given the varying degrees of success the private operators have shown since taking on those contracts. Some have gone well, others are likely to need to be re-bid, and some of those hospitals are ultimately going to be shut down.
And when the emergency room at Baton Rouge General Hospital’s Mid-City campus shut down last year, it was heralded as a disaster of disasters for the people of North Baton Rouge, who lacked emergency room access since the public Earl K. Long Charity Hospital had been shut down and its ER access for indigent patients transferred to Our Lady of the Lake Hospital in the southern part of town.
This is supposedly Jindal’s doing, though a number of factors – most prominent among them the spiraling costs of health care and particularly those in emergency rooms and the state just not having the budget to continue subsidizing the colossal cost overruns ER visits engender – are responsible.
And here’s an unhappy truth – emergency rooms in or near areas where poor people live are going to get hit with a whole lot of unnecessary and wasteful ER visits. Poor people go to the ER because they don’t have family doctors, and they know that ER visit is free when they’re poor. Sure, they’ll get a bill but if they say they’re indigent they’re never going to be made to pay for it. And if they’re on Medicaid like the Democrats want them to be, then it’s expressly a government responsibility to pay the bill.
So you get the kinds of abuses state treasurer John Kennedy talks about in the ER, where a place designed to handle gunshot wounds and heart attacks ends up being an adult day care facility or a treatment center for acne and athlete’s foot. That’s why that ER closed, and it’s one reason why for the state to be handling the brick and mortar costs of running hospitals in addition to having to pay the medical bills for the poor wasn’t sustainable.
Somehow, an attempt to right-size the public infrastructure in health care so that it didn’t drown the budget is “destruction” of government. Yeah, whatever.
2. Jindal’s irresponsibility with the budget has led to catastrophe.
Nobody is going to claim that Bobby Jindal did a good job with Louisiana’s budget. He didn’t, and we’ve said so multiple times here at the Hayride. Hell, all the way back in 2012 I wrote in The American Spectator that Jindal’s inability to slay the budget dragon at the state level largely disqualified him from any ambitions he might have where the presidency was concerned.
That said, Jindal left Louisiana’s budget in the shape it’s in because Jindal let the price of oil drop below $30, instead of keeping it at $60-something like he was supposed to. When oil goes down the tubes, the state’s severance tax revenue goes down the tubes, but it’s worse than that – the pass-around effects of low oil prices are that drilling and exploration activity not just in the Gulf of Mexico but in every region of the state (we have shale plays yielding oil and gas almost everywhere; some of which haven’t even been tapped yet) are devastating; jobs vaporize and the communities depending on them essentially see their economies frozen. That means income tax revenue will take a dump, and it means sales tax revenue will take a dump.
Louisiana is in an economic downturn due to the price of oil, and that’s amid a terrible national economy which has held Louisiana’s economy down since 2009 or so. We should have been booming during that time and for most of it we outpaced the national economy, but nobody has really boomed in the Obama economy.
These things have little to do with Jindal. They transcend anything a mere politician can change.
Jindal made two major mistakes early in his time in office where the budget was concerned, and he made them with the aid of, or even upon the insistence of, the state legislature. The first was to use the Katrina recovery money flowing into the state as a baseline for ongoing expenses – Louisiana had a state budget of some nearly $30 billion in his first year, and he and the legislature spent the whole lot of it as though they’d have $30 billion coming in indefinitely. That was a missed opportunity; Louisiana had a sizable backlog of road projects, public universities which needed a boost to their endowments or construction and maintenance to their physical plant, and an unfunded accrued liability in the state’s pension programs. The thing to do with that influx of cash was to clear as much of the one-time expenses off the books as possible while keeping the operating budget low. Buying state employees out of their pensions and switching them over to defined-contribution plans like a 401(k) would have done a world of good for future budgets, for example.
Using that influx to boost the budgets of state agencies and public colleges was a bad move, particularly politically. We’ll talk about the effect on the colleges below.
The other mistake was that when that $30 billion started to evaporate into something a little more realistic, like the $24-25 billion Louisiana is currently sitting on, Jindal tried to ride it down and make incremental cuts every year rather than just gut the budget and bear the consequences one time. After he’d been re-elected with virtually no opposition, 2012 would have been the year to make drastic cuts to the state’s operating budget and drive a large surplus that could have been used on the one-time spending priorities, and he had the political capital to do that. But he used it on something else, namely the education reform plan he passed that year which brought charters, vouchers and teacher tenure reform statewide. And that wasn’t a bad decision; those reforms will have a salutary lasting effect on education in this state by creating a marketplace which, as it grows, is the only way Louisiana is ever going to get out of the bottom five in K-12 public education outcomes.
But the downside is the state budget has been a mess every year for the last six or so, because Louisiana is simply spending too much money on government and the tax base can’t afford it.
Part of this problem is that voters, assisted by bad state legislators giving them the opportunity and participating in the problem independently with their own actions, have stupidly dedicated tax dollars to budget items which are not properly high priorities in comparison to the things we all say we need to handle first – education, medication and incarceration. And those dedications have generated little pools of surpluses, because the taxes going into the dedicated funds are higher than the governmental activity they fund actually costs. So we’re overtaxing ourselves to pay for things we don’t absolutely need, while the things we absolutely do need aren’t getting enough.
That’s an oversimplification, because nothing in Louisiana is really underfunded. Everything needs to be cut. According to the Tax Policy Center, which is a joint project of the left-leaning Brookings Institution and the right-leaning Urban Institute, Louisiana spent $9,403 per citizen in fiscal year 2013 between state and local governments. The federal average was $8,219 and the Southern average was $7,287. Our level of spending puts us about even with Massachusetts and California.
When Louisiana is at the Southern average, then we’ll listen to the complaints about how the state’s been gutted. Until then, you have our permission to tell the whiners to shaddap.
Back to the dedicated funds. Jindal’s practice was to just sweep the surpluses out of those dedicated funds every year and use them to fill the holes in the general fund, where the deficit is. For the most part this did a lot of good to ameliorate the budget problems as revenues fell from $30 billion to $24 billion and government remained too big. But he was castigated for using “one-time money” in doing it. That’s a misnomer; there is nothing about the fund sweeps which were inherently “one-time;” you can sweep surpluses out of those funds every year, you just have to affirmatively do it rather than do so on autopilot. And there is no reason why those surpluses should exist unmolested; if the government is taxing the people for more than it needs, then either the government ought to repurpose that surplus toward something else that serves the people or the people’s money ought to be returned to them.
John Bel Edwards spent eight years in the legislature screaming about Jindal and his one-time money, screamed even louder after he was elected and magically discovered a mid-year budget deficit roughly the same size as that which was supposed to be covered by the $700 million in new taxes he helped pass last year, and set about proposing to fill the gap…with “one-time money.” Edwards says he wants to paper over $488 million of the $750 million mid-year deficit with fund sweeps and use of the state’s rainy-day fund. Which means we don’t want to hear Edwards complain about Jindal’s budgeting ever again.
At some point there will be a political consensus in favor of freeing up all the dedications and giving the governor and legislature the power to make honest and prudent budgets. But Jindal never had that consensus and he did as well as could be expected with what he had. Edwards is discovering that, and he looks like an idiot in the process.
3. Jindal has “gutted” higher education.
This is the dumbest of the three, but it’s the most pervasive.
For one thing, higher education has been “gutted” – by what standard? It won’t be much of a surprise to many of you that the baseline number being used for education spending in Louisiana’s general fund comes from 2008, the year Louisiana had a $30 billion budget. That’s why it was such a mistake to spend that $30 billion in the state’s budget rather than use several billion dollars of it on one-time spending items and hold the operating costs down.
Jindal has cut higher education spending by some 60 percent, or whatever. Right. Except the higher ed dollars from the general fund are more or less back to what they were pre-Katrina. Which is not a colossal surprise; Louisiana’s population is about the same as it was pre-Katrina. So spending what we spent before is “gutting” higher education. Sure.
Here’s something else you probably weren’t aware of: LSU’s budget now is actually HIGHER than it was in 2008.
It’s higher because LSU is catching a great deal more money from tuition than it used to, as opposed to political subsidy money appropriated by the Legislature. But in the case of in-state students, those tuition increases were paid for by the TOPS program, which grew by leaps and bounds. And TOPS is what? Higher education spending, which the whiners refuse to count. Why? Because they don’t like the idea that their funding would come from the marketplace; meaning, that they have to go out and earn that funding by attracting students who carry those dollars with them.
And in fact, the higher education budget of the state reflects an actual strategy Jindal and his folks had, in that they were working to create a market in higher ed in Louisiana. Those colleges unable to attract TOPS students would suffer for it fiscally; those able would do perfectly well.
This idea that Jindal “gutted” higher education funding reflects little more than the demand that the funding come as a reflection of political power – the friendly relations with state legislators fighting essentially for pork for their districts – rather than the laws of supply and demand. Given that Louisiana has 14 public universities and that’s far too many, the smartest way to ultimately kill off the ones which don’t deserve to survive is to let the market – with TOPS serving as the facilitator – do the killing.
Jindal’s problem is he didn’t articulate the strategy in a way that his political allies could defend, and therefore the narrative that he killed higher education took hold with little opposition. The fact that LSU has had a string of substandard leaders (Sean O’Keefe, Michael Martin, John Lombardi, F. King Alexander) who have spent more time complaining about general fund dollars than moving to the entrepreneurial model Jindal opened up for them actually furthered that false narrative.
But of course, that’s common with government. Failure in the public sector is actually a good thing; it means you need more money. And if you don’t get it, the whole thing is the fault of the guy who didn’t give it to you.
It’s a hell of a racket, even if it’s built on unsustainable lies.