Political Hay
Bobby Jindal’s Budget Blind Spot
A persistent difficulty in managing fiscal matters threatens the rise of Louisiana’s new political star.
It’s been decades since Louisiana had a political star noticed on a national stage, and with the passage of one of the nation’s most aggressive, landmark education reform packages this spring Gov. Bobby Jindal has become just such a star. So much so that Jindal’s name is one of several being mentioned for vice president by multiple national pundits.
Jindal, a Republican, won re-election in last year’s statewide cycle with an overwhelming 66 percent of the vote. His victory was such a foregone conclusion that the Louisiana Democratic Party could not find a credible challenger against him; the second place finisher was Tara Hollis, a middle-school teacher from tiny Haynesville who had never run for political office.
And the governor had some coattails. When the dust settled after the 2011 statewide elections, Republicans controlled 58 seats in the 105-member House of Representatives and 24 of the 39 seats in the Senate — the first controlling majority for the GOP in Louisiana since Reconstruction. In addition, the six other statewide elected offices remained under Republican control, with no serious Democrat challengers for any of them.
One would expect, given this governing majority-cum-monopoly, an aggressive program of conservative governance would have been in the offing to propel Jindal’s star into the heavens as the Veepstakes beckoned. And when the governor’s education package, complete with an aggressive school choice program and a revamp of the teacher tenure rules, sailed through the legislature over the loud but effectively feeble objection of the teachers’ unions and their Democrat water-carriers in the House and Senate, it seemed such a program was well underway.
But a little more than two months later, Jindal’s critics are no longer restricted to the moribund Democrats. He is, in fact, hearing his loudest complaints from the state’s conservatives. Because the state’s budget is a shambles — and the governor, whose record as a conservative policy wonk is both impressive and long-standing, is being blamed for the Bayou State’s sloppy fisc.
How big is the problem? On Thursday, the Jindal-friendly Louisiana Senate voted unanimously to replace some $300 million in budget cuts for fiscal year 2013 passed by the more fiscally-conservative House, using a combination of “sweeps” from dedicated funds and one-time revenue sources to finance the increased spending. That vote was whipped vigorously by the governor, whose budget proposal the Senate was largely restoring after it had been trimmed by the House fiscal hawks.
This after the Senate voted to tap the state’s Budget Stabilization Fund to the tune of $205 million in order to cover a mid-year 2012 deficit, which materialized when revenue projections from the previous year’s budget exercise proved overly optimistic.
State law indicates the Budget Stabilization Fund, or “rainy-day fund” as it’s commonly called, can only be tapped once every three years. And that means Louisiana’s fiscal future is dire indeed. Local blogger C.B. Forgotston, who has been ringing firebells in the night for years over the poor performance of our political class in painting a sustainable budgetary picture, summed up the concerns of fiscal conservatives thusly:
“According to the experts, the outlook for the 2013 fiscal year is dismal. State government will face another mid-year budget cut in December in excess of $500 Million. In the spring there will be another shortfall and thus another mid-year cut. The only question is whether Bobby Jindal is in Baton Rouge or D.C.”
Jindal’s potential ascension to the national political picture ought to be a positive for the state, but the perspective Forgotston offers — that he’s biding his time before decamping to Washington while critical state business isn’t being done — is one that has gained purchase among the governor’s detractors on the Right as the budget debate has proceeded.
To be fair, Jindal didn’t create the problem Louisiana faces today. In fact, the governor’s supporters can rightly argue that he’s made progress in whittling away much of the structural deficit the state faces while upholding a hard pledge not to balance the budget by raising taxes. Jindal has eliminated over 6,000 positions in state government during his term as governor, he has ratcheted real spending downward over the past two years and he’s undergone structural reforms designed to reduce Louisiana’s Medicaid and state retirement costs. Louisiana’s higher education establishment and health care providers, spending on whose services has been the primary target of the budget reductions given that higher education and health care represent the majority of the state’s discretionary spending, are anything but Jindal fans.
But his detractors aren’t measuring Jindal’s budgetary performance against recent history, when the state’s economy was riding high and its treasury was replete with recovery dollars from Hurricane Katrina. They’re measuring his performance against the state’s revenues. And for the past three years the budget process has been a mad scramble to break piggy banks from Bastrop to Cocodrie in an effort to fund what is now $25.6 billion in state spending.
Jindal, like all Louisiana governors, has the leverage and power over the Legislature to get most of his agenda passed in crunch time — and he’s been ruthless in using that leverage on the budget. As longtime political observer Jim Beam of the Lake Charles American Press noted:
No one was really surprised Monday when the Senate Finance Committee beefed up the budget for fiscal 2012-13 with $350 million in additional spending. The money appears almost out of nowhere, as it does every year.
Cooperative legislators always get rewards in the two money bills. The Senate Revenue and Fiscal Affairs Committee, for example, approved a capital construction bill containing $100 million more in projects than there is money to spend in the year beginning July 1.
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Gary B| 6.4.12 @ 7:47AM
"Because to actually balance Louisiana's budget requires choices that are nightmarishly difficult for a modern politician, even one who was recently re-elected with 66 percent of the vote. "
That's why tea party governors get the big bucks. They're supposed to make those tough decisions. Pick any Louisiana single mom, who is making tough budget decisions every day, and place her in charge. She'll get it done.
Doctor Right| 6.4.12 @ 7:57AM
"To be fair, Jindal didn't create the problem Louisiana faces today. In fact, the governor's supporters can rightly argue that he's made progress in whittling away much of the structural deficit the state faces while upholding a hard pledge not to balance the budget by raising taxes"
So in other words, the entire point of this article is bogus.
Lemme' guess...you're a "Christie for Veep" guy?
Von Mises Jr| 6.4.12 @ 8:09AM
This article is moronic. If I had to guess, the three biggest industries in LA are oil drilling, fisheries and tourism.
- The Obama regime has a de facto drilling moratorium in the Gulf and rejected the keystone Pipeline
- NOAA has been harassing private fishing boats with quotas and fines so that half the fishing boats are sitting at the dock or out of business
- Real unemployment plus underemployment is about 20%, family income is down a few thousand dollars and GDP growth sucks nationwide. Perhaps you skip a vacation to the Gulf when you have no damn money.
Perhaps Mr. McKay should write for the NYT?
Ryan| 6.4.12 @ 8:36AM
As a "outmigrated" Louisianian (a bit of an inside joke, there), I concur with the article - Jindal came in with a lot of promise, but has NOT governed as well as a fiscal conservative should have, more concerned with his power rather than good government.
Louisiana is a gold mine that has not been properly tapped for 200+ years of corrupt government.
Bob K| 6.4.12 @ 10:10AM
Governing Louisiana, since the days of the Longs, going back to Huey, has always been about power. If you don't realize that and understand it then you have no business being Governor there because you won't be able to govern.
Ryan| 6.4.12 @ 12:03PM
Corruption in Louisiana goes back even farther - all the way to the colonial period.
John Navratil| 6.4.12 @ 11:59AM
Ryan,
I left Baton Rouge after High School to come to study in Texas and never went back.
It wasn't the income tax that kept me in Texas, it was the job market. The income tax is piddling and, compared to Texas property taxes, a deal.
Texas has an undeserved reputation as a corruption free state and the liberals are making inroads in all our major cities. Texas is toying with an income tax in exchange for property tax relief. Louisiana is beginning to look attractive after 40 years in Texas and with Edwin Edwards long gone.
Barleycorn| 6.4.12 @ 10:50AM
Scott McKay thinks the ticket to national office for Bobby Jindal is to impose even deeper cuts on public colleges that already are at the bottom of national rankings (and a major reason why Louisiana is one of the poorest and least-educated places north of Ecuador). Who needs education when the state is spending its taxpayers' money on bailing out north Louisiana chicken factories that pay $8 an hour wages?
Never mind that higher education has been sliced by more than $400 million since the state elected a Creationist as its chief executive.
Scott McKay also thinks Louisiana's rainy-day fund can only be tapped every three years, which is simply incorrect. It's every other year. Scott McKay might know this if he visited the state Capitol once in a while.
Ryan| 6.4.12 @ 12:06PM
Louisiana has too many Div I schools. ULM and Grambling should both be folded somehow into Louisiana Tech (my alma mater).
I DO agree that LA does have issues with Jindal and his guys "picking winners" in the state rather than creating an overall business-friendly climate within the state.
Dai Alanye | 6.4.12 @ 1:17PM
"Higher education" is a money pit in most states, and having a raft of colleges and universities is no guarantee of genuine education. So I say, cut the budget of all colleges, and close the worst-performing.
Butch| 6.4.12 @ 4:54PM
There is a statewide effort in that direction, Dai. Jindle has gradually taken over boards of Trustees, including LSU's board. After a dispute with Jindle about what he (Jindle) thought was LSU overreach, the board asked for--and received--the resignation of the President of the entire LSU system. LSU has always been sacred in Louisiana, so it was a major victory for the government shrinkers.
lsudolemite| 6.4.12 @ 12:12PM
As a lifelong resident of Louisiana I would encourage national conservatives to take a very long, hard look at Jindal before proclaiming him the next great hope for the GOP. But a couple of things first:
1. The state budget is a structural mess. What McKay doesn't mention is that over 2/3 of the state's general fund is non-discretionary, which constitutionally protects several special interests. So when higher ed and health care dollars come primarily through discretionary spending, those get disproportionately cut.
2. McKay is also quite correct about the higher ed problem. Louisiana supports over a dozen four-year colleges, which is about twice as many as a state of this size and population needs. One aspect he doesn't mention is how many of those are HBCU's (historically black colleges and universities.) Those are politically untouchable. As are the charity hospitals, who serve mostly poor blacks.
lsudolemite| 6.4.12 @ 12:13PM
(cont'd)
Jindal had to be embarrassed by the LSU student body president before even beginning to address higher ed funding problems. In his first term he pushed for the merger of SUNO (one of those HBCU's) with the University of New Orleans. SUNO boasts a stellar 4-year graduation rate of 4% (that is not a typo), with >70% of its students receiving Pell Grants. After the predictable cries of racism and caterwauling Jindal folded like a cheap suit on the merger, even after an official boasted at a public meeting that they "didn't have to graduate anyone." Where has Jindal been pushing to unwind the maze of legislative budget restrictions? Or a renewed call for college mergers now that he has majorities in both houses?
Jindal spent much of his first term campaigning out of state for the national GOP, to the point that many people here joked about whether he spent any time in the state actually governing. That fundraising has not let up since his reelection. Many of us have suspected from the outset that he's using the governor's office as a mere stepping stone to a national one, and I'm more convinced of that than ever. He won't make any hard political choices for the state because he doesn't plan to stick around for much longer.
Seek| 6.4.12 @ 5:59PM
Any politician who won't stand up to the blacks shouldn't be on a presidential ticket, Bobby Jindal included. He's a nice fellow and reasonably conservative, but doesn't have the Right Stuff. Let's face it: HBCUs long have been the dregs of higher education. Apparently, nobody white or even Asian Indian is allowed to say as much, lest he be branded a "racist" and thus a political non-starter. Why must Republicans be as timid as their Democratic counterparts?
Blacks, as a whole, have little or no business being in college. Ridding Louisiana of the HBCU fiscal funkhole sounds like a great idea, but it takes spine to make happen. With Jindal, it won't.
When will mainstream conservatives stand up to blacks instead of caterwauling about that straw man known as "liberal racism?"
lsudolemite| 6.4.12 @ 7:45PM
In Jindal's defense he didn't have the votes in his first term, but there certainly are now. There's no way to justify something as appalling as SUNO's production to the general public.
Another complication in the higher ed problem in Louisiana is the TOPS scholarship program, which provides free in-state college tuition to students who meet what are, in my opinion, minimal standardized test and GPA qualifications. This was intended to prevent "brain drain" to elite colleges and Texas schools. Therefore, the legislature has made sure that tuition hikes--the primary mechanism for colleges to offset cuts in state appropriations--must go through them, since the state is on the hook for tuition. This has been mitigated with the passage of a law that grants some autonomy along those lines.
In short there seems to be no real leadership on the higher ed front. No legislator wants to vote to shut down or merge a school in their district that will lead to thousands of layoffs. Slashing the entire state budget and forcing everyone to take a bite of that sandwich is one thing; forcing the same two critical state functions to repeatedly get seconds is quite another. The latest round of higher ed cuts will be the 10th since 2008, and we're talking on the order of 30% across the board on next year's budget alone. One-time money is a bandaid. Serious structural budget reforms must be made, but Jindal doesn't seem up to that test of leadership.
cicero| 6.4.12 @ 1:32PM
Everytime a young governor is elected, the pundits get all giddy, and want to change the Constitution to allow them to run (remenber Jennifer Granholm and Arnold S?). They put these guys on the v.p. shortlist before they have any kind of track record, and are shocked when the other side attacks them for lack of experience.
Logevity and a record of success may not be a b ad criterian for consideration for national office.
Oldefarte| 6.4.12 @ 2:16PM
This ["....In fact, the governor's supporters can rightly argue that he's made progress in whittling away much of the structural deficit the state faces while upholding a hard pledge not to balance the budget by raising taxes. Jindal has eliminated over 6,000 positions in state government during his term as governor, he has ratcheted real spending downward over the past two years and he's undergone structural reforms designed to reduce Louisiana's Medicaid and state retirement costs. Louisiana's higher education establishment and health care providers, spending on whose services has been the primary target of the budget reductions given that higher education and health care represent the majority of the state's discretionary spending, are anything but Jindal fans....."] should primarily say it all. Government in general terms is a runaway train without brakes economically/financially speaking, since it represents administration/management by commettee instead of by decree. A private company can be managed by its CEO dictatorially but not so with a public government [whose governors have to co-manage with legislatures and fellow POLITICIANS]. The whole idea should be currently to REDUCE/ELIMINATE COSTS/EXPENSES and if Jindal is doing thus, great!!!
jeffsadow | 6.4.12 @ 2:47PM
Scott leaves somewhat of a mistaken impression in this piece. For example, while he writes that around $300 million was culled "using a combination of 'sweeps' from dedicated funds and one-time revenue sources to finance the increased spending," the money from the dedicated funds actually represent almost all recurring funds separated from the general fund. Only about a quarter of that amount is genuinely one-shot only revenue (such as the sale of a former state hospital) -- and the so-called fiscal hawks did not squawk about leaving that in there (for a fuller explanation of the "one-time" money concept in LA, see http://jeffsadow.blogspot.com/.....vites.html). So it's not as cut-and-dry as he makes it appear, especially as when the Senate dealt with the bill, with Jindal's blessing they matched the genuine non-recurring revenues with genuine one-time costs (for example, legal judgments against the state).
lsudolemite| 6.4.12 @ 2:59PM
And then the news today that the House accepted the Senate putting the rainy day money back in to fill the gap, which Jindal wanted to do in the first place. This looks like political posturing on the part of House fiscal hawks to boost their record.
jeffsadow | 6.4.12 @ 3:00PM
Scott also errs in his understanding of the Budget Stabilization Fund, the "rainy day" fund mentioned. Actually, the draw on it this year does not count against a draw next year, as Art. 7 Sec. 10.3 of the LA Constitution makes clear. Only if the draw occurred in the current fiscal year (2013, starting 7/1) and then in the budgeting for the next fiscal year (2014) is it limited to one-third of the 2013 total in the fund over those two years. Besides, the draw may take place for budgeting FY 2014 only if recurring state (not including federal) revenues for FY 2013 were greater. That would be the only reason Jindal could not recommend a draw from it next year, if forecast 2014 revenues come in higher than in 2013.
Of course, the same political question remains: a draw to make up for lagging FY 2012 revenues and then another for 2013 or 2014 might cast Jindal in an unfavorable light.
Butch| 6.4.12 @ 4:39PM
TINY Haynesville! Sir, I'll have you know that Haynesville is the home of the famous Golden Tornado, the perennial state football champs!
Is the Hayride out of Shreveport, by any chance? My mom took my big sis and her friends to see Elvis and Johnny Cash at the Louisiana Hayride in the old Municipal Auditorium in Shreveport.
JWJ| 6.4.12 @ 4:54PM
Author leaves out so key information.
All information from usgovernmentspending.com and used 2005 dollars.
FY2009 Louisiana spending per capita $5,285.
FY2012 per capita spending $4,721
FY2009 TOTAL state spending = $24.0B
FY2012 TOTAL state spending = $21.7B
Whatever Jindals shortcomings from the author's perspective, Louisiana is actually spending LESS money than before. That is a HUGE deal.
Barleycorn| 6.4.12 @ 10:03PM
JWJ - While Jindal loves to take credit for this, it has very little to do with anything he accomplished and a whole lot to do with the buckets full of federal money that was coursing through Louisiana's government in 2009 - mostly recovery dollars to compensate state residents for homes that were destroyed in 2005 due to the incompetence of the U.S. Army Corps of Engineers. When the Road Home program ended and the (much smaller) Hurricane Gustav recovery wrapped up, the overall state budget shrank considerably.