SADOW: Edwards’ Budget Takes Louisiana To Democrat Fantasyland

Louisiana Democrat Gov. John Bel Edwards last week presented a budget that begs the state not to look behind the curtain and asks that it keep digging itself a deeper hole.

A good portion of the statutorily-required presentation made by Commissioner of Administration Jay Dardenne to the Joint Legislative Committee on the Budget comprised of shoulder-breaking attempts to have the Edwards Administration pat itself on its own back. After a brief excursion into how budget projections bounced around in the past year because of the Wuhan coronavirus pandemic and the impact of Edwards’ restrictions on commercial activity, a variety of data attempted to demonstrate improvement in various economic and social indicators. Tellingly, he emphasized government-led projects obtained while hardly speaking of larger private sector trends – for reasons made obvious below.

However, this provided an incomplete and potentially misleading picture of how recent budgeting may have affected the state’s economic health. Largely federal policy influences all states’ economies, so to understand the impact of an individual state’s economic policy, as influenced by fiscal policy promulgated through a budget, all states must be compared.

Below is a table listing five measures of economic health for a state, including changes in per capita personal income, population, total employment, and in the unemployment rate. The first column gives the ranking and statistic (percentage change, except for unemployment rate) in parentheses for the first term of Edwards, the second for the first term of his predecessor Republican Gov. Bobby Jindal, and the third Jindal’s second term. As budgets enact during the state’s fiscal year and it is assumed it takes six months for their policy effects to infiltrate the economy, except for unemployment rate, the appropriate years for analysis are, respectively, 2017-19, 2009-13, and 2013-17 (except for population, which is taken mid-year and doesn’t include 2009 because of data limitations). Unemployment rate is not ranked by change but by its listed average for the year; thus, the intervals for it are 2008-12, 2012-16, and 2016-20 with the last year’s statistic reported. State spending (exclusive of federal dollars) at these interval endpoints also is listed, in per capita terms:

Statistic Edwards Jindal 1st Jindal 2nd
Per capita income 27th (3.9) 32nd (2.9) 46th (1.8)
Population 45th (-0.2) 27th (0.6) 29th (0.3)
Total employment 42nd (0.9) 19th (1.1) 44th (0.5)
Unemployment rate 36th (7.2) 16th (6.4) 47th (6.1)
State spending per capita $4,257 (11.3) $3,946 (-8.2) $3,826 (-3.0)

Two things are worth noting here. First, Louisiana is performing below average to poorly compared to other states over Edwards’ terms and budgets. Second, it is no better than Jindal’s second term, and much worse than his first. The slight advantages the Edwards years has on Jindal’s second set in terms of employment and greater one on income are offset by the depopulation of the state under Edwards: less competition for jobs and fewer people that relatively boosted the average income (which is calculated by population into GDP).

So, relative to other states, Louisiana’s fiscal policy as reflected in its budget hasn’t delivered under Edwards. It didn’t under Jindal’s second term, either, but that was marked as a period like Edwards with tax increases even as per capita spending decreased a bit, while Edwards more than doubled the inflation rate in spending increases. Clearly, Jindal’s first term of tax cuts and spending cuts brought the best economic results to the state.

With this historical data available for analysis, after the rapid growth in taxing and spending under Edwards the best strategy – especially with economic uncertainty surrounding the pandemic and a predicted dire revenue drop of $660 million from this time last year from taxes, fees, and licenses – would hold the line on, if not cut, spending. Plus, special one-time monies propped up the budget last year and this one that Dardenne asserted will come again for fiscal year 2022 may not return for the next. If things turn out better than expected, there are plenty of nonrecurring needs to which those monies could go. Otherwise, the prudent approach at the very least would refuse authorizing new commitments, if not make reductions.

Yet that mode of thinking goes against every fiber in Edwards’ being. So, Dardenne in his presentation acknowledged this reality, then tried to spin his way out it. Thusly explaining the sunshine blown up legislators’ skirts when in reality the state lags – badly – most others explicitly, precisely because of the ethos contained in Edwards’ past budgets. You don’t turn things around by doing more of the same that has caused you to underperform. Indeed, he argued against decreasing the size of government when the Legislature’s Republican leadership announced they would pursue tax reform in the upcoming session.

Instead, he emphasized how leftovers from the federal government created more one-time money for FY 2022, about $200 million more in general fund monies, that the plan largely plowed into new continuing commitments. Therefore, the package lards up $400 across-the-board pay raises for educators and half of that for other school employees (despite the state ranking in the middle of the pack of spending per pupil yet about at the bottom of student achievement), and pay raises for higher education (despite institutions receiving separate money from the federal government in the hundreds of millions of dollars) and the civil service. More money would be shoveled into the Taylor Opportunity Program for Scholars (the quasi-merit, quasi-entitlement program paying for college tuition) and GO Grants (need-based college costs program).

Most audaciously, after discussing how changes advocated by Edwards that would empty jails did accomplish that, Dardenne admitted what the Edwards Administration had refused to acknowledge previously: the changes would foist increases in spending on prisons, as reflected by a request for an increase of nearly $24 million. And, the budget didn’t really incorporate other costs that could crop up in fiscal year 2022, such as replenishing the state’s Unemployment Trust Fund in which the state currently rests in a $133 million hole (and when pressed by questioning, Dardenne begged off estimating costs for disaster bills due).

All in all, the plan presented rejects sound fiscal sense in favor of an ideological agenda focusing on bigger government. By trying to install new continuing commitments that can’t be sustained after the disappearance of federal gifts and by fiscal policy that doesn’t achieve acceptable economic growth as measurable by historical data, this budget attempts to bake in future tax increases that keep unnecessarily-inflated government.

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