CABL would like to thank the 2016 Statewide Leadership Louisiana sponsors! Their support is invaluable to the success of the program.
Wurtele Foundation CoughlinSaunders Foundation
CABL would like to thank the 2016 Statewide Leadership Louisiana sponsors! Their support is invaluable to the success of the program.
Wurtele Foundation CoughlinSaunders Foundation
For weeks people from across the state with diverse interests in what goes on in state government have been waiting to see the revisions members of the House budget committee would make to the governor’s executive budget.
Would they find more money? Would they find a more judicious way to make $600 million in cuts? Would they do something bold and transformative?
Perhaps not surprisingly, the answer was no, no and no.
In fact, the House Appropriations Committee pretty much did what’s it’s sometimes done in the past and approve a “faux budget” that appears to score some political points in one corner while exacerbating serious problems in another. That’s truly unfortunate.
Certainly a lot of people expressed a sigh of some relief when the headlines proclaimed that the highly-popular TOPS scholarship program – threatened by a massive budget cut – would now be fully funded. Who wouldn’t be pleased with that?
The problem, of course, is that it really isn’t. In many ways, it’s yet another shell game similar to what we’ve seen before. Unspecified cuts are made here, a questionable funding scheme is used there, a public agency charged with fighting corruption is shuttered without so much as a public hearing – and the public is somehow led to believe that all is now well with TOPS.
At the same time, the state’s key safety-net hospitals are placed in an even more precarious financial situation that if allowed to run its course would threaten closures, serious loss of services, potentially higher costs down the road and disruption of medical education in the state.
It doesn’t take a genius to figure out that this version of the budget is neither real nor honest. It’s in serious need of repair. But it does tell us something we as citizens all need to know.
One is that our budget problems are real and even some of the House’s most fiscally conservative members couldn’t figure out how to make them go away. Another is that cutting our way out of the situation doesn’t seem to work. Whatever combination of cuts is proposed still leaves consequences that most agree are unacceptable.
And finally it tells us that at whatever point we get our spending aligned to our revenues, we need to make a concerted push for long-term fiscal reform. That means tax structure reform, but also budget and spending reform. Much of our problem right now is the result of self-inflicted wounds. We need to put in guardrails that at least limit our seemingly irresistible propensity for shooting ourselves in the foot.
If one had to place a bet, it would probably be reasonable to wager that when all is said and done the final budget will look more like the one the governor originally presented, still with hundreds of millions of dollars in cuts, but with some degree of restored funding for TOPS.
Yet, these chronic budget games are getting tiring. To a large degree, citizens have been misled about our budget issues for the last several years. Now that we can’t really avoid them anymore and the current administration has painted a more honest picture of where we stand, we as citizens should be better equipped to make informed decisions about what the solutions might be. That’s good.
Unfortunately, this budget muddies those waters again. One can only hope that this time, we’ve finally figured out how to see through the mess.
There had been some question about how the new 2016 Legislature, bringing with it a number of new faces, would respond to the onslaught of bills this session attacking many of the state’s most significant education reforms.
To some degree the question was understandable. The education committees in both the House and Senate were filled with a number of newly-elected members. Added to them were several veteran lawmakers who had never served on those committees and hadn’t developed the institutional knowledge that comes with hearing these often controversial bills week in and week out.
It’s perhaps still too early to get a clear read on these new panels, but the last couple of weeks seem to indicate that they lean towards being reform minded, particularly as it comes to school choice issues.
A case in point is that over the last two weeks there have been a number of bills going after charter schools from one angle or another. Some sought big changes, others were part of efforts to kill with a thousand cuts. What’s significant is that none of them succeeded in any kind of meaningful way.
And the one bill that did make it out of the Senate Education Committee is identical to a similar bill that had already been killed by the House committee, which doesn’t bode well for that one, either. While these outcomes are extremely positive, they don’t necessarily indicate that all the other bad bills out there will suffer the same fate. But they do send a strong message.
The question of charter schools has been a contentious one in Louisiana for many years and that’s becoming even more the case as parents and citizens in various communities begin to demand more educational options for their children. As a result, charter schools are being portrayed by some as outsiders who are dropping into local districts and somehow trying to steal children from their schools. That’s pretty ridiculous.
The truth is that charter schools are public schools. They are operated with public dollars by nonprofit, volunteer citizen boards who must go through a rigorous process for approval. That is by no means easy. BESE turns down more charter school applications than it approves and then once they are given the green light, they have a limited time to show meaningful progress for students or run the risk of having their charter revoked.
What’s more important, though, is that they are as local and community-based as you can get. It’s parents, educators, business leaders and other civic-minded citizens of the district who come together to open a school because they don’t feel like their own local system is providing the options they believe students need. And they seem to be right as there has been strong demand for many of these schools and often long waiting lists.
Charter schools are no panacea, of course. Some fail and, indeed, BESE has revoked charters at a number of schools that weren’t doing the job. But the truth, as has been exhibited in New Orleans, is that many charter schools are succeeding and they are bringing students to academic levels many would have believed was impossible – which makes much of the committee testimony in this year’s charter school debate all the more disconcerting.
On the one hand, you hear passionate parents talking about the successes their children have seen in some charter schools and that without them they would have had no other options for their child. On the other, you hear school districts concerned that if charter schools come into their area they would take “their” students away and lose money. Charter schools don’t take anyone away. Parents voluntarily choose to send their kids there.
It should be pointed out that even after all these years, charter school enrollment in Louisiana still makes up only a fraction of the total student population. When you take New Orleans out of the mix, which is in a special circumstance and made up of nearly all charter schools, the statewide impact is even smaller.
So it’s hard to understand how this relatively small number of public charter schools, formed by concerned local citizens, are such a threat to the hundreds of traditional public schools across the state. They’re not, of course, unless they are providing a product that school districts just don’t feel like they can compete against.
This legislative session a number of high-profile bills dealing with various aspects of public charter schools have been introduced. When the body of that legislation is considered as a whole, the direction it attempts to move Louisiana is clear – away from CABL’s goal of providing meaningful options to parents, students and taxpayers who feel that their local school districts are not providing the quality of education they desire.
From CABL’s perspective they fall into three major categories:
BESE Approval of Charter Schools
This year there are several bills that seek to limit BESE’s ability to authorize charter schools over the objections of local school boards. All of these bills are basically attempts to put the desires of school boards above the needs of the students they are there to serve.
Those bills getting the most attention generally prohibit BESE from approving a charter school in an “A” or “B” school district when the school board has already denied the request. The suggestion there is that parental options for a better quality education are unnecessary if the school district receives an “A” or “B” grade. The facts strongly show otherwise.
Louisiana has 40 “A” and “B” school districts and within those districts are 124 schools with a letter grade of “D” or “F.” That is a significant number of low-performing schools in districts that are deemed to be high-performing.
But the problem is even deeper. Louisiana’s “A” and “B” school districts also have 201 “C”’ rated schools. A “C” school may seem modestly okay – average – but these schools mask some real issues for children. In Louisiana, a full third of the students in “C” elementary schools read below the minimum “basic” skills level. Another third read only at the minimum level. The situation is even worse when it comes to math.
What that means is that most of the young students in “C” schools are not learning language or math skills at the level that is considered proficient by the rest of the nation, nor are they grasping what they need to fully succeed in the next grade. This tells us is that in Louisiana there are many thousands ofchildren who may reside in “A” or “B” school districts, but who are not getting the education they need to succeed. They and their parents need choices too.
For-Profit Charter School Operators
There is also legislation in the governor’s education package to prohibit charter schools from contracting with a for-profit entity to manage or operate a public charter school. On the face of things, this might seem to be an appealing concept, but it fails to take into account several realities involving both charter schools and the nature of public education in general.
The first is that every charter school is overseen by a nonprofit board of community volunteers who are responsible for the success of their schools. The fact that in some cases they choose to contract with a for-profit provider to operate the school or run back office operations should be of no consequence. The truth is that public schools in districts across the state already contract with a wide variety of for-profit vendors to provide needed services. It is part of the normal course of delivering public education.
In fact, the list of for-profit vendors enlisted by some public schools is almost endless. They include things such as food service, janitorial service, garbage collection, curriculum development, tests, textbooks and computers. They are also used to provide assistance in areas such as specialized testing, helping special needs students on an individualized basis, and tutoring.
It is also worth noting that some of the for-profit charter schools have developed business models that allow them to build brand new school buildings, sometimes in districts that have not seen a new school building in decades. And despite their for-profit status, many also have waiting lists of students whose parents want to enroll them in these schools.
That, in and of itself, speaks to the continuing demand for a wider variety of educational choices in many parts of the state. It is inappropriate for the government to limit the types of vendors charter schools can contract with to deliver a quality education just as it is to deny school districts the flexibility to obtain the outside services they need. The issue should not be about what entity delivers a high-quality education to students, but rather, if they are succeeding in doing that.
Charter School Funding
It should be noted that there are also a number of additional bills this session that deal with money issues surrounding charter schools. They take a variety of approaches, but generally they all represent attacks on charter schools which are mostly intended to decrease their funding and ultimately make it more difficult for them to succeed.
From CABL’s perspective this is unfortunate. The purpose of public education is to educate children. Limiting the avenues to do that and constructing barriers that take away options from parents is counterproductive. Charter schools should continue to be accountable for results and face consequences if they fail to perform. But their financial resources should not be withdrawn because some feel threatened by the fact that a great many of them actually succeed.
In summary, charter schools bring something unique to public education. They have the freedom and autonomy to do different things and make decisions in the best interests of children. They also bring a degree of competition into the education arena that can only be a positive for students.
School districts portray charter schools as entities that are taking both state and local dollars away from them. But it is important to remember that the children that attend charter schools are citizens of the state and the parish where they attend school. Their parents’ state and local tax dollars are going to support a local school. The teachers who receive their salaries are public school teachers.
In short, charter schools are all a part of Louisiana’s public education system. They offer additional options for parents and students who often have no other options. It is CABL’s belief that charter schools be approved or rejected – and then stand or fall – based on their merits, their outcomes and what they can do to help children attain a quality education.
That is why it is regrettable that many of the legislative initiatives this session seek to undermine charter schools and stifle educational options for Louisiana families. Charter schools need to be held accountable for results, but they should not be denied the opportunity to succeed.
The packet given to members at the first meeting of the Task Force on Structural Changes in Budget and Tax Policy said a lot. Each person got a thick accordion-style pocket folder containing three somewhat recent reports on Louisiana budget and tax policy. It all but screamed, “been there, done that!”
But times change, circumstances change and the political needs of policy makers change. So yet another new task force/committee/commission, or whatever you want to call it has been empaneled by the Legislature to do another study of better practices in state fiscal policy. CABL serves on this one as it did on the last big legislative budget study, the Commission on Streamlining Government, and we hope this one can yield some positive results just as the last one did.
The good news is that as the plethora of past reports indicates, a lot of work has already been done on all of these issues. That means we’re not starting from scratch and we already know what some of the likely recommendations will be because they’ve already been made.
There’s also good news in the fact that in many ways Louisiana is already doing a pretty good job in some of its budget and spending practices. For instance the national think tank Center on Budget and Policy Prioritiesmakes a number of recommendations about best practices in budgeting. While Louisiana isn’t perfect, it’s one of only five states that meet all three of the organization’s policy criteria for smart budgeting: multi-year forecasts, consensus forecasts, and attention not only to revenue but also baseline spending.
It should be pointed out that it’s not really an oxymoron that Louisiana actually has some good spending and budgeting policies while at the same time we have some of the worst budget issues in the nation. There’s a lesson there and that is that good policies can help you avoid some bad times, but they don’t make up for ignoring the warning signs those policies send you and then making bad decisions.
There is, of course, a negative side to things, too, and that is that over time we have made a mess of our tax structure and there are examples that bear that out. According to figures from the Department of Revenue, when you consider our major sources of taxation we have more than $15 billion in taxes on the books. But out of that $15 billion we only collect about $7.5 billion because we have more than $8 billion in various tax exemptions.
Leaving the argument of too many exemptions aside for a moment, what this essentially says is that we have designed a tax system that basically raises somewhere in the neighborhood of $7.5 billion through a structure that levies more than $15 billion in taxes and then exempts half of that. That doesn’t make good sense.
Here’s why. For argument’s sake let’s just assume we don’t really want to raise the full $15 billion – let’s say we want our tax system to raise $10 billion. Then if that’s the case, we ought to design a tax structure that has about $10 billion of taxes on the books and removes that extra $5 billion. That simplifies the tax code, allows you to lower tax rates, is more transparent, and creates a better tax environment for both individuals and businesses.
Another example can be taken from the Washington D.C.-based Tax Foundation which has done a lot of recent work in Louisiana. In their report Louisiana Fiscal Reform: A Framework for the Future they make a number of interesting points. They identify Louisiana as a state with one of the lowest tax burdens in the country, ranked 45th overall, but they argue we have serious problems elsewhere:
Even though Louisiana has a competitive tax burden, its tax structure leaves much to be desired, ranking toward the bottom of the pack at 35th nationally. The most poorly ranked element of the state’s tax system is the sales tax component, which ranks 50th in the country, chiefly due to its high rate and multiple parallel local sales tax bases.
This actually makes two major points. One is that low taxes don’t necessarily translate into a strong or competitive tax climate. In Louisiana’s case, in fact, it clearly doesn’t. The other is that we had problems with our sales tax well before the recent special session. Since that Tax Foundation report was released, we now have a sales tax that’s risen even higher and a sales tax base that we made even more complicated and confusing than it already was.
The point is that these are all things that can be fixed and hopefully this latest tax force can be a catalyst for that improvement. Louisiana as a state has to decide what level of services it wants to provide citizens, what the quality of those services should be, and how much money it costs to deliver the desired outcomes. Those are issues that are yet to be resolved.
But assuming they are, there’s also a decision to be made about how we collect the money that we raise. Clearly we do so now in a way that is not particularly friendly to taxpayers and makes us less competitive with other states – even those who have higher taxes than we do.
What that means at the end of the day is now more than ever our state leaders need to act like leaders. They need to be honest with the public and tell people where our state stands and how much money we realistically need to deliver the things we say we want delivered. If there’s something we’re doing that we don’t need to do, we should stop. If our spending policies are flawed, we should change them. And if we’re giving away too much money, we should cut back.
But once we do all those things and we figure out how much money the state really does need, we have to have another conversation about how we collect it. Yes, all of this is politically hard and probably personally painful, but if we care about our state, want to see it improve and hope that it will be a decent place for our children to stay and live, we need to act sooner rather than later on all of this.
We’ve certainly created a mess of things, but there’s one thing you can say for a mess – usually if you make it you can also find a way of cleaning it up. Louisiana needs to get cleaning.
There aren’t many cows in Louisiana that have become more sacred than TOPS to a lot of families, but in recent years that ever-popular program has been coming under increased scrutiny. Unlike a number of other programs that have attracted legislative attention, no one is saying there’s anything wrong with it or that there has been some sort of abuse or fraud.
No, just about everyone loves TOPS. The problem is simply money. At a time when state tax revenues have been falling considerably short of state spending, TOPS has become inextricably tied up in the state’s ongoing budget mess. As a result, you’re seeing reluctant legislators filing more bills than ever aimed at reducing the program’s costs.
To some degree that’s out of necessity. For the last few years, the cost of TOPS has risen by an average of around 12-percent per year. For the 2013-14 school year, Louisiana spent about $223 million on TOPS. For 2016-17 projections are that it will be close to $300 million. To a slight degree that reflects an increase in the number of students taking advantage of the program, but the real culprit is the annual increases in tuition that have been instituted to mitigate the huge cuts that have come in state funding for higher education.
Stated simply, TOPS is a program that pays full tuition at Louisiana public colleges, and when tuition goes up so does the cost to the state for TOPS. Exacerbating that is the fact that the percentage increases in tuition in Louisiana over the last several years have been the highest in the country, so TOPS expenses have been accelerating at a fairly rapid pace.
When it comes to curbing the cost of TOPS, the approach that probably has the most traction is one that the Legislature passed last year and which Governor Bobby Jindal vetoed. That one essentially “decouples” TOPS from future tuition increases unless the Legislature makes a specific appropriation to increase the award. What the means in practical terms is that if a TOPS grant is worth, say, $5,000 this year it will still be worth $5,000 next year, even if tuition goes up.
It doesn’t really lower the cost of the program, but it stops the growth and makes it more sustainable for the future. CABL supports that approach, as does the governor, and it seems likely the Legislature will, too. But there are a number of other bills that target the program in different ways, some of which we haven’t quite seen before. They include:
Whether any of these other approaches pick up any steam remains to be seen. Generally, lawmakers have been reluctant to tinker much with TOPS and some of these ideas represent major shifts in the program which might also carry with them a veto threat from the governor.
Finally, another possibility that has never really been a possibility in years past, is that given the current budget shortfall of $750 million, funding to the TOPS program could actually be reduced. Though that’s never been done, it’s not quite the longshot it used to be, and it would clearly get the attention of parents and students who are often agnostic about the various happenings going on at the Capitol.
Then again, considering the backlash that would surely follow, that’s probably not an option most folks should spend a lot of time worrying about.
Any way you slice it, there were a lot of bills filed for the regular session focusing on both K-12 and postsecondary education. For colleges and universities most of the proposals deal with efforts to fix problems – either real or perceived – and give institutions a bit more of a break than they’ve been able to manage in recent years.
But on the K-12 side it’s hard to say anything but that this year’s legislative agenda is designed to move Louisiana backwards. Clearly, some of the bills are a part of the governor’s package and deal with issues he has been talking about for some time. Others come directly from legislators. But taken together they amount to a serious effort to retreat from many of the reforms that have yielded us steady improvements in student performance, increased graduation rates, and better preparation for students going to college.
By far, the biggest attacks are directed at Louisiana’s various school choice options, particularly charter schools and students served through the scholarship, or voucher, program. All together there are nearly two dozen bills dealing with choice issues and their basic goal seems to be to restrict and limit options for students and families in both of those programs.
Hand-in-hand with that, the usual threats to school accountability in the state continue, but there are also some new attacks on our progress that would have to give almost anyone pause. Among them:
As unfortunate as all that is, on the higher education side, it’s a totally different story. While most of what colleges are worried about revolves around funding, there are a number of proposals to make both big and small changes in various aspects of postsecondary education. The area, by far, with the most bills filed deals with TOPS. More than a dozen TOPS bills have been introduced and they seek to do a greater variety of different things than we’ve seen before. They include:
Other higher education legislation includes another go at either creating a single governing board for higher education or strengthening the authority of the Board of Regents, providing schools with tuition authority, and creating avenues that could lead to the closure, merger or consolidation of schools.
Add all of these bills together and you have a pretty hefty education agenda this session. And while the higher education bills seem to be directed at dealing with some structural issues that are fairly well recognized, that’s unfortunately not the case on the K-12 side.
Louisiana has been on a long path of education reform focused on the wellbeing of students and we have seen real and measurable improvement over that time. A lot of that is because we have raised expectations, given parents more school options and held everyone accountable in a transparent and understandable way.
Now many of our leaders are trying to shift gears and move us in a direction which can only be described as backwards. That’s not the way Louisiana needs to go nor is it an outcome that that children of our state should have to accept.
It’s hard to know just what to make out of the just completed special session and what it all means for the future, but just about any way you size it up, it doesn’t look particularly good. Lawmakers did manage to close all but about $30 million of the $956 million budget shortfall that was looming between now and June 30, but that’s about all they did. They didn’t finish their business.
In leaving the budget $30 million short, they forced the governor to make more cuts which, interestingly, they themselves couldn’t seem to make. And then they left next year’s budget with a hole of as much as $800 million with no clear idea in sight of how to deal with that. One could say they provided a “fix” of sorts to the most immediate crisis, but certainly no solution. And a solution is what we need.
If you think about it, the answer they came up with was basically just to raise sales taxes. That’s in a state with one of the highest state/local sales tax rates in the country, which on April 1 will become the very highest rate at more than 10 percent in some parishes.
Because of the way legislators went about it, they spread the taxes around pretty well so that just about everyone is affected – businesses and individuals. But it really wasn’t good tax policy. It is true that given the immediate need to get money into the treasury quickly, sales taxes were about the only option, but they’re not a long-term answer.
In fact, the way they passed they’re not long term at all. They’re slated to roll off the books in 27 months and there goes more than a billion dollars. And therein lies the problem. We have a permanent structural problem in our budget totally apart from the price of oil and we addressed it with another temporary tax.
After seven years of legislators complaining about the previous governor “kicking the can down the road,” they themselves kicked it again.
After many complained that the governor and the administration didn’t start with enough budget cuts, they looked under the hood and couldn’t find many either.
And after statement after statement about the need for more structural spending reform, they failed to pass the one bill in the session that amounted to a significant spending reform and which would probably protect us from getting into future budget messes like the one we find ourselves in now.
The point is that our elected leaders, particularly those in the Legislature, need to step up and address this problem that has plagued Louisiana for close to a decade now. That problem is pretty clear – we spend more money than we take in. The solution is clear, too – you make your expenses equal your revenues by cutting, raising revenues or a combination of both. Yes it’s hard, but how long can we keep on doing the same thing we’re doing?
Higher education and our health care system can’t take it anymore, and neither can our people.
Certainly, dealing with all of this isn’t easy, but we have pretty much reached the point, if we haven’t already passed it, where we need to straighten this out. To the Legislature’s credit, a number of lawmakers made tough votes, introduced well-thought-out legislation and provided strong leadership in the best interests of our state. Others seemed to choose a more political path and certainly that’s the nature of the beast.
But this year-after-year cycle of crises is taking its toll on our state. And though we’ve just ended a special legislative session that was supposed to solve the problem, it appears we’ve just prolonged it.
With just a few days left in the current special legislative session, it may be too early to give a real assessment of how things turned out, but there are some observations worth making.
The first is that going into the eighth straight year of cuts to the state budget finding additional cuts on anywhere near the scale we need to balance the budget is getting pretty difficult. While cuts should continue to be looked at and efficiencies made, it’s getting harder and harder to just squeeze them out of whatever is left.
A case in point, the House sent to the Senate a list of just over $70 million in cuts above what the governor had recommended. That was a good number, but in all honesty, it’s hard to describe most of those cuts as anything but “fake.” You can’t really cut the Department of Education’s budget by 85 percent and eliminate the state’s testing program or make some of the cuts to health care that were suggested. That’s just not realistic. The Senate restored almost all of them.
So the takeaway there is that if we are going to make any significant cuts in next year’s budget, it is going to have to be in a way that’s based on some sort of structural spending reform. That can mean a lot of things, but ultimately it seems that we would finally have to establish our spending priorities, target our revenues to those things, and probably just stop spending money on things that are less important. History tells us that’s a tall order.
It’s also disconcerting to hear the remarks made by the chairman of the House Appropriations Committee suggesting that allowing a deficit in this year’s budget could be an option. Of course, that would be the ultimate kick-the-can-down-the road outcome and the suggestion was widely dismissed. But it’s that type of thinking that creates concern about how all of this is going to turn out.
Another takeaway is that, so far, this session doesn’t seem to be doing much to help with next year’s budget. Close to half of the solution for the current year’s problem is coming from one-time revenues. That’s okay for a crisis like the one that’s staring us down now, but that’s also the habit everyone swore they were going to break.
Unclear is what kind of plan lawmakers have, if any, to ultimately solve the recurring fiscal problem that’s been nagging us for years. It seems evident that won’t happen in this session, but when you consider that the biggest new revenue source for next year – a new penny of sales tax – is universally loathed and something everyone vows will be temporary, you start to wonder when and how they’ll begin to address something more permanent.
Finally, one thing that is clearly missing from the debate during this session is any discussion of what we want our state to look like when this is over. It’s always about can someone cut their budget a little more and nothing about what do they need to get the job done right. “Right” is the operative word here. Is higher education really where we want it to be? Do we feel confident we’re putting enough into things like mental and behavioral health and other areas of health care? What about those who inspect our food and water? Lest we forget, the bad judgment that led to the water crisis in Flint, Michigan was a result of chronic budget problems.
The point is that in dealing with these issues we have to be fiscally prudent and at the same time forward looking. Sadly, it appears not much has changed. Making fake budget cuts isn’t fiscally prudent and thinking only about money and not outcomes isn’t forward looking. But just like walking and chewing gum, we ought to be able to do both.
It may be one of the most reform-minded bills of the session and one which most people know nothing about. It’s HB 86 by Rep. Walt Leger and its goal is to change behaviors when it comes to state spending in a way that is systemic and forward looking.
To understand its intent you have to rewind to 2005 and the aftermath of Hurricane’s Katrina and Rita. Much of south Louisiana was devastated and the economy went into a severe shock. But immediately afterwards, a major rebuilding effort got underway, and it churned billions of recovery dollars from insurance companies and the federal government into our economy.
And things bounced back to new heights. The national economy was booming, oil prices were in the $100 range, and all of that activity was pumping hundreds of millions of dollars into the state treasury and creating huge surpluses. So what did we do? Well, mostly we spent it and there’s no question that it went towards a lot of good things. But it also grew our recurring budget significantly, so much so that, thinking it would last forever, we passed a major tax cut totaling hundreds of millions of dollars.
Then, of course, the bottom fell out: the hurricane recovery dollars plateaued and then dropped, oil prices tanked and then the national recession hit Louisiana. So the bottom line was something quite predictable – when revenues were booming we spent them, grew our budget and lowered our taxes, and when they went away, we were hamstrung with a structural budget deficit we’re still trying to work our way out of. That’s what Rep. Leger’s bill attempts to address.
Basically, it caps the amount of money we can spend on an annual basis from our two most volatile revenue sources – energy taxes and corporate taxes – and says when we exceed that cap those dollars go into another account that can’t be spent on the recurring expenses of government. There are still ongoing discussions about just what might happen with the revenues that exceed the cap, but the point is this is really a significant spending reform bill.
It puts the brakes on government spending when revenues spike and eliminates the big cliff we always tend to fall off of when those revenues dry up. Realistically for the short-term, this bill won’t have any impact, but for the long-term something along these lines could be huge.
Clearly, there are a lot of important pieces of legislation that need to pass this session to keep the state from shuttering some of its most critical services. But Rep. Leger has come up with a strong concept that mirrors CABL’s historical perspectives on fiscal reform. We would be shooting ourselves in the foot – again – if we failed to put something like it into law.