SADOW: John Bel Edwards’ Budget Is Fiscally Irresponsible

Democrat Gov. John Bel Edwards said his reelection would result in continued pay raises for education employees. He also alleged that Medicaid expansion and criminal justice changes (termed “reinvestment”) would produce cost savings for Louisiana. That these claims didn’t pan out explains why Edwards will keep fighting tooth-and-nail to inflate the state’s fiscal year 2021 budget, the faux version of which he released last week.

The spending plan put forward is not the legally-required version because he didn’t use existing revenue forecasts, including $103 million extra dollars in the general fund forecast as well as $25 million of individual citizens’ unclaimed assets that follows past practice now in legal dispute with Republican Treasurer John Schroder. Taking that as it comes, it calls for $128 million more in new general fund commitments and $285 million across that, federal funds, self-generated revenues and statutory dedications, and interagency transfers.

Put another way, Edwards wants to increase general fund spending by nearly 3.5 percent, or half again higher than the 2.3 percent increase in inflation for 2019. Over the course of his term, such spending has increased from $9.118 billion to the requested $10.147 billion, or 11.1 percent, while inflation has gone up only 6.8 percent – which doesn’t even include the fact that millions more disappeared from this budget’s general fund total when reclassified as statutory dedications that understate the actual increase. Overall spending has risen from $29.589 billion to the projected $32.165 billion, an increase of 8.7 percent.

Some of the anticipated increase would go to legal changes that force higher spending. At least $13 million will end up in the pockets of local jailers with an increase in their daily allowances for holding state prisoners. This almost offsets $15.5 million in reduced spending because the criminal justice changes mean fewer inmates housed in local facilities, many of which were built and staffed on the assumption of higher numbers of state prisoners, hence the offset. And that offset according to law is expected to increase over the next few years while the number of inmates housed will flatten.

Much of the rest of the new discretionary spending would go towards education – but the majority through the Minimum Foundation Program at half the target rate of a 2.75 percent increase without a dedicated pay raise built in. And as for that spending not discretionary, the lion’s share of the increase comes from Medicaid expansion costs which (after shuffling around sources of funding because of statutory and bookkeeping changes) pump up Medicaid expenditures by $316.5 million, the majority of which comes from state coffers.

Note that if the general fund forecast remains the same – legislative Republican leaders have indicated they will not assent to the increase Edwards wants but perhaps to some lesser amount – and Schroder’s interpretation on the unclaimed property assets prevails in court, those revenues will remain flat year over year. This means Edwards won’t be able to pursue most, if not all, of his desired spending increases, which already have upset teacher unions without the specific money allocated for raises.

And that would be appropriate. Keep in mind all of this has happened on the back of Edwards-supported sales tax and other smaller tax increases, plus a change in federal tax law that boosted state income tax take more than any of his tax hikes. Plus, he squeezed nearly $315 million more a year out of health insurance policy-holders to finance expansion. Yet even with all of these new revenues taken out of Louisianans’ hides, he wants to spend more.

Expansion has attracted around half again as many enrollees as predicted. A third to half of those enrollees were once able to afford their own health insurance, but they then dropped their private plans (or were dropped by their employers) when Edwards’ unilateral decision to expand it waved this freebie in front of their faces. That development, eminently foreseeable that it was, is the main driver of exploding costs. It is eating Louisiana out of house and home, and Edwards owns that.

Rather than bail out Edwards for his expensive policy decisions, legislative leaders should hold the line on revenue forecasts and/or in budgeting. He needs to face the consequences for these mistakes of his by cutting elsewhere, adding revenues such as from patient responsibility measures for Medicaid recipients, or by reducing giveaways like $180 million to make movies, $50 million (and going higher) to pay people to work less, and tens of millions more unnecessarily spent annually on nursing homes instead of on home- and community-based services.

Until Edwards takes political responsibility for it, he’ll just keep trying to foist his tax-and-spend agenda on suffering Louisianans, instead of right-sizing state government.

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