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Experts challenge Jindal on budget cuts and revenues

Associate Professor Kirby Goidel, LSU Manship School of Mass Communication

Louisiana Budget Project Director Eddie Ashworth

Taking dead aim at conventional wisdom, two keynote speakers at the LFT’s 46th annual convention made the case that Louisiana needs more money in order to fund vital services, and that voters will support raising revenues if they believe the money will be spent wisely.

Since both of those messages contradict Gov. Bobby Jindal’s hard-line demand for budget cuts, the stage is set for confrontation when the legislature convenes in April.

The messages were brought to the convention’s 200 delegates by Louisiana Budget Project Director Eddie Ashworth and LSU Manship School of Mass Communication Associate Professor Kirby Goidel.

Ashworth opened the discussion by saying, “A lot of what you hear from the administration today is just simply not true…Our fiscal problem is not due to state government spending beyond its means and it is not because we are spending too much.”

After Hurricanes Katrina and Rita devastated Louisiana in 2005, Ashworth said, a lot of temporary federal recovery money came to the state. But as those funds dry up, state spending remains at about the same level as before the disasters.

At the same time, said Ashworth, the demand for state services has risen.

“Medicaid enrolment gone up 13%,” Ashworth said. “Medicaid for children has gone up 16%. Food stamp recipients have gone up 20 %. Enrolment in community and technical colleges has gone up 37% at same time that spending has been flat.”

Much of the state’s budget shortfall stems from what Ashworth called “the largest tax cuts in state history” in 2007 and 2008, when the state was flush with federal recovery money and before the recession.

That loss in tax revenue, combined with the effects of the recession, precipitated the current crisis, he said.

Compounding the problem is the fact that Louisiana currently offers over 440 separate tax exemptions, which amount to $7.1 billion in lost revenue.

If a looming $1.6 billion revenue shortfall is only dealt with by cutting the budget, Ashworth said, the result will be devastating for families in Louisiana.

Most of the budget is dedicated, either constitutionally or by law, to specific purposes and cannot be cut, Ashworth said. The discretionary budget, which can be cut by lawmakers, is just $2.6 billion.

“That $1.6 billion has to come out of the discretionary part of the budget,” Ashworth said, “and after three years of budget cuts, it is down to $2.6 billion. That’s a 62% cut, and I’m here to tell you, it cannot be done without decimating the institutions that serve the people of Louisiana.”

Goidel completed the keynote’s one-two punch, announcing that voters in Louisiana are much more open to new revenues than the governor admits.

Reporting on a recent public opinion survey conducted by the LSU Manship School of Mass Communication, Goidel said, “If Eddie is telling you why the numbers are wrong, I’m going to tell you why the statement that people don’t want any balanced approach to the budgetary problem is wrong as well.”

Citing the survey, Goidel said, “The typical citizen is not reflexively anti-tax, but they do want to make sure money is serving an important public purpose, that it is not being wasted, and taxes are fair.”

The survey showed that over half of the people, 51.1% believe the state’s budget crisis can best be solved with a combination of spending cuts and tax increases.

When asked if state income taxes are too high and should be reduced, only 30.7% said yes. Less than half – 40.8% - said that sales taxes are too high and should be reduced, Goidel said.

Large majorities favored raising certain taxes: 77.2% favor higher taxes on casino gaming; 70.5% favor higher taxes on alcoholic beverages, 68.2% favor higher taxes on tobacco, and 53.4% favor higher income taxes on higher-earning individuals and households.

In contrast, Goidel said, the public “shows great reluctance to cut… They are only willing to make minor cuts, and prefer no cuts where most of the state dollars are – health care, primary and secondary education, higher education, and roads.”

In particular, 85.9% said there should be no cuts (55.9%), or just minor ones (30%), to higher education. Also, 87.7% said there should be no cuts (67.4%) or just minor cuts (20.3%) to health care. Those are the two areas most susceptible to cuts, because their funding is not dedicated.

“There is a real public aversion to spending cuts,” Goidel said, “especially when we talk about cutting public education, especially when we talk about spending on health care and especially when we talk about spending on colleges and universities. The public doesn’t want to see those cut.”

In keeping with the convention theme of “Better Choices for a Better Louisiana,” Goidel said, “When the public is faced with a choice between bad government and limited government, limited government always wins. But when faced with a choice between smart government and limited government, the fight is a lot more fair.”

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