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Thursday, 25 February 2016 16:33
Moody's downgrades Louisiana: of course, John Kennedy blasts Edwards, Jindal and legislature
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Kennedy interview2Treaurer John Kennedy, who is running for US Senate, has issued a strongly-worded statement regarding Moody's downgrading of Louisiana's credit rating.  In his statement, he appears to be making a direct attack upon Governor Jon Bel Edwards's administration,  former Governor Bobby Jindal, and perhaps the legislature.  Edwards who inherited a $950M deficit from Jindal for the remainder of the year and a $2.0 budget deficit for the upcoming fiscal year.

 

The Treasury Department's e-statement,  said, "Moody's Investors Service downgraded Louisiana's credit rating today in a move that will make it more expensive for the state to borrow money for construction projects, according to State Treasurer John Kennedy. 

"You can't spend more taxpayer money than you take in for seven years in a row and not expect a downgrade to your credit rating," said Treasurer Kennedy. "You also can't make public statements about suspending TOPS, ending LSU football, closing Nicholls State University and closing five prisons without scaring the daylights out of the credit rating agencies that grade our debt and the institutional investors that buy our debt. What we tell our children is true: Acts have consequences."

Moody's changed the state's credit outlook from stable to negative in February 2015. The last downgrade occurred in November and December 2005 after hurricanes Katrina and Rita. Prior to 2005, the last Moody's downgrade occurred in 1987.

Today, the House of Represenatives, despite Kennedy's apparent claim, that the Edwards administration has manufactuured the depth of the budget deficit for the purpose of raising taxes, ignored Kennedy's repeated statements to the media about the budget and raised Sales Tax by one penny.

The House is dominated by Republicans.

Kennedy, has not provided any information evidencing  manufacturing of the current budget by Edwards administration.  In a recent interview, Kennedy told Bayoubuzz that the budget was much less than the Edwards administration has reported.

The allegation, if correct, it would almost be necessary for a govermental conspiracy for this occur. The revenues are determined by LSU economist Jim Richardson, who sits on the Revenue Estimating Conference REC, for the past 29 years and who has equal voting rights with the Governor.  The other REC members were the Republican Speaker of the House and the Republican Senate President.  The revenue projection requires a unanimous vote.  Richardson discussed the process in an interview with me yesterday.  When I questioned him about Kennedy's remarks, Richardson said he did not know what Kennedy was thinking. 

JUST IN FROM THE GOVERNOR'S OFFICE

“This is a disappointing development, particularly since we believed that Moody’s would wait until the conclusion of the special session to make any decision on our rating. Unfortunately, the downgrade confirms what we’ve been saying about the structural imbalance of our budget. The overuse and abuses of one time money and fund sweeps by the Jindal Administration were a major factor in this decision. It also reflects the global concern about the decline of oil prices and its impact on producing states. It is more important than ever for the legislature to work with me during this special session to stabilize our budget and repair the damage of the last eight years. We can do this by transitioning to a new tax structure that conforms to best practices promoted by organizations such as the Tax Foundation, which will help us achieve long term fiscal stability and predictability in Louisiana.”

penny tax 2There are not many choices Louisiana now has to deal with the immediate problem of raising roughly $940 million dollars before the end of the ffiscal year, June 30.

In part 3 of an interview with LSU economist James “Jim” Richardson, who has been the economist for the Revenue Estimating Conference, sales tax is the only vehicle to raise enough money quick enough.   

time hourThere is no doubt that Louisiana has a horrific budget problem?  How long have lawmakers known about the budget deficits?  What might they have known during the elections?  Are we in a recession?  Can our budget deficit be fixed before the end of t 

 

richardson sabludowsky 6So, why, once again, is the Louisiana 's budget on the downswing, rarely ever really balanced, it seems.

Louisiana is on the throes of another major budgetary overhaul, with its elementary education system bleeding, its higher education on a respirator and its healthcare system being read its last rites.  Read more...

 

 

 

 

 

Last modified on Thursday, 25 February 2016 17:26
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