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Governor Edwards, taxes, budgetary canyons and Louisiana political poppycock
Written by  // Tuesday, 26 January 2016 13:15 // News//
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canyon capitol 2"He lied; He broke his promise; Just like a democrat, tax and more taxes; Typical Democratic scare tactics to raise taxes…"

These words have been the siren cries from those (many of them Vitter supporters), who now appear to be in apoplectic gleeful that Louisiana governor Jon Bel Edwards and his newly-found soul mate, Republican Commissioner of Administration Jay Dardenne, are talking the “T” word, taxes and not the “C” word, cuts.

I’ve read their posts on social media.    I’ve heard them on talk radio.

Despite the fact that Louisiana is in the hell-hole of budget craters, in the amount of $2.6B over the next two years which includes a stop-gap $750M shortfall for the balance of the year 2016 fiscal year, the focus appears, not on—“how do we fix this mess”, not on “how did we get into this emergency of emergencies”, but instead upon “how can we blame the current Governor” and “I told you so”.

For the past few weeks, on social media and in particularly in my Louisiana Politics Facebook group, I have defended the Governor and the current administration against some of these charges.   But, it’s not just the angry Vitter backers stirring up the dung.   Even some respected media has implied that the candidate Edwards should have known about the depth of the budget crises, none of them have provided any real details as to why they make this claim, other than the fact he was a high-ranking legislator.

They, and the Edwards attackers appear to forget the mid-November (election month) when the Revenue Estimating Conference met to reveal some frightening numbers.  Not once did any debate questioner ask Edwards or Vitter a single inquiry about how bad the budget was.   I surely did not hear the question, Rep. Edwards, “how are you going to fix the $750 million dollar hole for this budget year and the $1.9 million for the year thereafter”.  Did you?  You can assume that if Edwards actually knew the deep hole numbers, so would Vitter.  So would have Senate President John Alario, who denies knowledge.  And Vitter, nor Edwards or the former Republican House Speaker nor anybody else said beans about the sharp spiral downward. 

So, despite my frequent urgings that some of these people claiming that Edwards “lied” (claiming he would not raise taxes while somehow presumably secretively knowing that he would do so) or “broke his promise not to raise taxes”, not a single critic has presented any credible information revealing either charge.  None of them have presented information about any discussions Edwards or Dardenne had with the Jindal administration about the budget crises during the transition period when the books opened.    

All of them seem to forget that Edwards and Vitter said they would raise revenues.

In fact, last year, under Jindal and the republican-controlled legislature, we raised over $750 million dollars worth of revenues on the backs of business by primarily cutting tax incentives.  While this might not be a sales tax, according to Stephen Waguespack of LABI, it is a tax, meaning his constituency was severely hurt by the revenue increases.

So, given this backdrop and further given my interest in trying to get details about this charges so we can move on to how to return to budgetary health, I sought to receive real details from the person, who would know, none other than the Governor, himself. 

In an short interview yesterday and in a gathering with two other media persons, Edwards responded to my question about his knowledge of the severity of the budget hole.

Governor, a number of people are saying that you should have known The major budget, the 1.9 and the 750 million, so, could you just give us a timeline, in terms of when did you know, how did you find out

I would just remind you that in November, the joint legislative committee on the budget met to consider a proposal by Gov. Jindal to eliminate the current midyear problem which at that point stood at $437M.  They did everything Governor Jindal asked them to do and today, we're sitting here with the 750 million dollar problem.  Which by the time the REC meets on  February 10,  We could be at $800 million dollars.  So, how i could have anticipated that, I don't know.  We all knew we had a problem in the next fiscal year.  I would just tell you that the problem is larger by the factor of at least two, then we knew about as recently as October and November. And while the price of oil certainly has exacerbated the impact on this, it is still, a relatively small part of the problem. We have had irresponsible and basically dishonest budgeting in our state for a number of years now and the roost, the chickens have come home to roost. This is just where we are.  we're not just going to continue on this path, we're going to do things about it.  By doing things better, there's going to be some short-term pain associated with this. There's no way around it. This is not the situation i wanted to step into.  Any governor would rather have a one billion dollar surplus to start off, rather than a 1.9B shortfall. But, we are where we are and we need (inaudible) 

I know the above is not satisfy those who insist upon calling Edwards a liar or claim he broke a campaign promise not to raise taxes.  If any of them (or anybody else) has any relevant details or quotes that prove either, please provide the exact quote(s) or information.

Otherwise, let’s move on, your credibility is showing and you are becoming a bore.

HOW DEEP IS THE HOLE?

Well, we know that the governor is looking at taxes and cuts.  If you think we will only cut and not raise taxes, you also might think Louisiana has the finest schools, the healthiest population, the safest roads in the country.  So, let’s look back for relevant history.  A republican-dominated legislature and a Republican governor, dealing with a smaller budget crises, raised $750 revenues on business last year.  And, that was during an election year.

So, trying to put the budget crises in perspective, I did some quick research.  Based upon my unscientific calculations, assuming we shut down all of the state’s universities, we would be saving only $700M from the general fund.  Of the $1.9B dollar gap, those closures of all of our institutions of public higher education, would cut the canyon-sized pit to a mere $1.2 billion, therefore, we wouldn’t even have to debate which university to close or which schools to consolidate.  Problem solved, right?  Now, let’s look around and see what else we can bludgeon.

After last legislative session of Spring 2015, while Bobby Jindal pranced around New Hampshire, Iowa and lectured the nation on Obama’s administrative stewardship, the budget shortfall expanded and with oil prices continuing to drop, the conditions worsened.

Thus, Louisiana is now left with a short-term crises of $750 million for this remainder of the fiscal year and another one of $1.9M for the next year, starting July 1, 2016.

One of the major ways to bridge the gap is through a sales tax bridge which the current governor favors.  What is a sales tax bridge and how long is the road?  Edwards discussed this issue yesterday and said he now owns the horrendous situation and must provide leadership:

Make the case for tax penny sales tax It would you support a sunset provision

First of all, we're calling it a bridge because it is a bridge to a new tax structure.  And once that structure is in place, the penny would go away. So, that's exactly the concept. Unfortunately, we believe that the penny is necessary, Because the budget problem is so big.  The revenue shortfall Is of historical proportions.  

No governor has ever come into this office in the history of our state, with a deficit as large as we have --$750 million to close out the current fiscal year by June 30th. And, 1.9 billion for the fiscal year starting July 1st.   As a result were having to make some very tough decisions and as we transition to this new and better tax structures, so we don't have these annual revenue shortfalls, we can adequately fund our priorities. But we do have to have a bridge. Unfortunately, that's the reality. It's not something that I'm happy to do, I just know it's the right thing to do  and as leadership requires for me to take ownership of the problem and move forward.

Last week, when the LSU President announced that the Louisiana Universities would need to shut down summer schools and charge a mid-year increase to the students, many of my anti-Edwards friends, said, he was just a “DEM”, engaging in usual scare tactics, designed to raise taxes.  A reporter asked the governor yesterday whether the LSU President was overreacting.  Edwards responded:

Do you think that LSU is overreacting and putting in these catastrophic cuts and should they maybe wait until February 13 when the executive budget comes out, to then decide what cuts to make ?

I don't think they're overreacting because we know that--that executive budget is going to have $1.9 billion less than is required to continue the services next year for the same as this year. 

And I want everybody to understand that the 1.9 billion, with a B--that does not factor in inflation, that does not factor in any merit raises for state employees, there's no additional (inaudible) for higher education, No additional (inaudible) for K-12 education. That's a $1.9 billion shortfall that we have to make up in order to grow government and so higher education is well aware that we already lead the nation the last eight years in terms of the disinvestment in higher education.  The state general fund was cut $700 million. They know what additional cuts are going to do to higher education in Louisiana. So I cannot say that they were overreacting. I think they're accurately looking at the future, if in fact the revenue is not increased, so that we can make the shortfall.

Could you tell us about the meeting with the LSU President, on Wednesday, right?

Well, it wasn't just with the President, it was with a number of folks, but we basically told them what i told you about the size of the budget problem for the rest of the fiscal year, what it looks like for the year going forward and we went through the timeline when the revenue estimating conference going to meet, when the executive budget proposal is due, when the special session is going to start and then into the regular session, so we just went through all of that and made sure that they understood where we are if we don't close the revenue gap and the impact that's going to have on higher education and so, i have not seen the communication, I suspect you are relating to in terms of what was the President of LSU has said.  I can only tell you that if he's saying it's a serious situation, he's right.

CAN WE DISCUSS CUTS?

Indeed, any way we cut it, it is a serious situation that just might get worse.  Should Edwards start talking about cutting more than he has done so?  Absolutely yes, to the extent that he reasonably is able to do so. 

For starts, I believe he should he respond specifically to those voices such as now-US Senate candidate Treasurer John Kennedy who insists upon cutting government without raising a penny of taxes.  In general, Kennedy believes we can cure our woes by eliminating Medicaid fraud, eliminating certain contracts with the state and by other using other cutting devices.  Maybe he has the secret sauce that we need.  Kennedy is by far, the most popular elected official in the state and his words resonate.  And you can expect a war of words between the governor and the treasurer, and others, who have a different political belief and perhaps a different agenda. 

One area that appears to be off the table, at least for Edwards, is higher education.  Kennedy also has warned about the demise to our college systems due to major surgeries over the past eight years.  Given the fact that we know that higher-ed and healthcare are the least protected institutions in state government, we can see how sensitive is the issue in the state political space.

In my asking Edwards about this issue, the governor was adamant about protecting Universities from cuts. 

One last question, you know, i did some research yesterday and i determined that if we were to close all of the universities in Louisiana, all public universities, that would be $700M from the general fund of the $1.9 billion, so i'm just wondering is there any other mind-blowing numbers that we're looking at in terms of how we get to the budget, are we talking about maybe 50-50, 60-40, 70-30 

 

In terms of revenue cuts?

 

Yea,

 

Look, I'm going to tell you, I'm not going there.  We've been cutting the budget for seven straight years.  And so we are where we are.  So, I am proposing to the legislature, a plan that will make sure that we don't close our universities, so they really are state universities and not just state-aided, but they are actually state supported.  We can't do what you're talking about.  Just think about a 25% cut, that's $500 million dollars next year.  And anybody proposes that we enact the 25% cut needs to say where the $500 million is going to come from and look at the impact that-that's going invariably have on higher education.    

SO, WHERE’S THE NUMBERS?

None of us want to savage the film and the growing digital media industries by shutting down tax incentives.  Nor do we want the poor to pay more sales tax nor the rich to spend a penny more for government services they might not ever use.  Unfortunately, those people who were supposed-stewards of our fate, failed us and have done so, in my view, miserably.  We are left with the bones as some of them seek future jobs in the private sector, moving from one mansion to another.

I know there are conservatives who insist that we should cut and not raise a single penny of revenues.  Maybe they have the answers and if so, I surely am willing to open my ears and this site to those with cogent solutions, not just political sniping.  But, before simply throwing out the same tired rhetoric of “cut government spending”, I’m looking for real specifics.  Cut what and tell us the likely consequences.  

For example, supposed we cut the Governor’s and the Treasurer’s office and the rest of the statewide-elected officials own staffs and budgets by 10 to 30 percent?  Exactly what would happen to those services they currently provide?  If they are not really necessary, why the heck have we been paying for them all of these years given the fact we have raided so many other accounts and one-time money sources?   If any of these elected officials insist upon cutting other sources, why not start with their own fiefdoms?  

What other governmental services can we eliminate or reduce to the core?  Do we really need all those state policemen?  Can’t we keep the Office of Motor Vehicles open for two days or at most, three?  Do we really need to inspect those hospitals and restaurants to ensure quality of service?  Is the water infrastructure only degrading in places like Michigan?  Surely not here in Louisiana, one of the known capital of the chemical industry?

What if we consolidated universities starting a year from now, how much would that save us today?  If closing all universities brings in only $700M in savings, just how much would consolidations render us and how much of the hole do we still own?

Which protected cows can we inflict the budgetary pain, especially since they have been evading it for so many years?  Can we make these cuts this budget year ending June 30 or must we wait for the one starting July 1, 2016 ?

Folks, there are no easy answers.  Just maybe we will cut 80 percent and raise revenues by 20 percent, which revenue include taxes.  Perhaps it will be more or yes, less.  But those who insist that we can do it all by cutting and only cutting, please provide to us real details, not generalities, not campaign rhetoric, not ranges, not political poppycock.  Details. 

It is way too easy for bloggers and others bent on embarrassing a new governor they never liked who has inherited the worst state budget in state history, worse than the one he anticipated while he and others ran for office.  It is too simple for them to call the governor a liar and a breaker of promises without producing a scintilla of reliable evidence.

It is way too facile for some political candidates during an election year, to throw out “cut-only” solutions, without telling us whom might be hurt by these remedies nor explaining to us why they were not instituted in past years or even in other states.

Indeed, let’s have an honest debate where we work towards real solutions, not talking points from the likes of Fox News or MSNBC. 

Let’s have it now.

 

Last modified on Wednesday, 03 February 2016 17:47

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