Tuesday, 28 June 2016 15:25

Louisiana budget distortions: Two billion dollar surplus and Treasurer Kennedy says

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According to certain (conservative to right-wing) legislators and bloggers (and their loyal followers) who are always going to push an agenda, to make Democrats and Governor John Bel Edwards look like he is "a liar" and "a tax and spender", we just wasted this spring and summer raising a lot of taxes, we did not need to raise.

Let me add to this team of those who always want to claim we don't have a problem but rarely come up with any REAL solutions how to fix it, is no other than Louisiana Treasurer John Kennedy. He has been and is running for US Senate, on a 'we have a spending problem, not a revenue problem" platform.

Among the many issues being discussed now that the Louisiana legislative session is completed, are the following:

Did Louisiana really need to raise roughly 2.3 billion dollars since last spring to cover alleged budget holes?

Didn't Louisiana budget for this upcoming fiscal year (starting July 1, 2016), roughly two billion dollars more than it did last year (fiscal year ending June 30?). If so, why would we need to raise a single penny in taxes if we had a surplus of two billion dollars? Isn't this just more "tax and spend" Democratic folly, wanting to spend our money to fund bigger government?

Of importance, earlier this year, Rep. Alan Seabaugh and others claimed that Louisiana did not need to raise any money. After posting on Facebook, that the budget was two billion dollars more than last year, and after being thumped by Governor John Bel Edwards for spreading myths and lies, Seabaugh responded with the following pertinent comments from a relevant post, which appeared on The Hayride:

Since the moment of his election, Governor Edwards has talked about the states budget deficit and fiscal problems. Something that he has not told the people of Louisiana is that the budget that passed this week increases state spending by $2 billion over last year.

You read that number correctly.

When you consider that the budget passed last year fully funded TOPS, Higher Education, the medical schools, and the states hospitals without cuts in essential services, and that this year’s budget spends $2 billion more than last year, then ask yourself why the services are not funded this year.

The answer is simple. Governor Edwards deliberately pushed through a budget leaving these unfunded in an attempt to “blackmail” the legislature into raising even more taxes.

If you heard a legislator running for office use the line: “Louisiana does not have a revenue problem, it has a spending problem,” they were correct. Louisiana spends more per capita than any other state in the nation.

Yep, you read it.  Prior to the beginning of the last special session (ending lastt week), in which Louisiana raised another quarter of a billion dollars, Seabaugh said our budget was two billion dollars more than last year, so, we therefore, logic dictates we didn't need to raise any more money via taxes. He essentially said, our services were at least equivalent to those provided by the state last year. 

Today, Treasurer John Kennedy, got into the critize the governor and legislature mode by sending out the the following:

"Over the course of 365 days, the Louisiana Legislature raised $2.4 billion in taxes and fees," said TreasurerKennedy. "I don't need to remind Louisianians that these tax increases arrive during an especially weak economy. The oil and gas industry is in a depression, and north Louisiana is still reeling from devastating floods. We also have the third highest unemployment rate in America."

State spending in Louisiana's operating budget that takes effect on Friday has increased 31% since 2010. The most recent U.S. Census Bureau data ranks Louisiana as No. 1 in the South for state and local spending per capita.

"Louisiana is in a league of its own now, and not in a good way," said Treasurer Kennedy. "We cannot tax ourselves into prosperity. History will prove this point as more businesses fold and more families suffer. I've said it before, and I'll say it again. We have a spending problem."


Keep in mind, Kennedy told me, in early January that our budget deficit was about one-half of what the state economists, the Louisiana legislature determined it to be.  In essence, Kennedy, who speaks so often about how wasteful the governor (in particular) is in raising taxes, was so wrong in his estimation of the budget hole, that he blew the budget by undercutting the hole by fifty to sixty percent.  Of course, it was easy for him to claim that the state only had a spending problem.  it might be worth noting that the Republican Party honored Kennedy with the post-Governor address to discuss the budget and upcoming taxes.  In that speech, Kennedy again said that no taxes were needed.  

Hours after the Louisiana legislative special session completed, I discussed the session events with Gannet reporter, Greg Hilburn.  In the beginning, we discussed the winners and the losers.  However, the topic turned to the two billion dollar surplus.

I ask you to read the below:

SABLUDOWSKY: They were early on, this session, and, yes, it was early on, this session, there were some reports that the budget was actually two billion dollars more than the prior year and for that reason, the argument was that there was no reason to raise any revenues. I'm sure that you received some of that information.  Actually I received it from the Republican party but also from some of the conservative bloggers

HILBURN: Right.. Well it's one of those things that technically, that's true, but that's not the whole story. So, the budget is about two billion dollars bigger than last year but at least a little over a billion of that is federal money, in other words, that's not state general fund money.  That's from the Medicaid expansion. eight hundred to a billion dollars is because the one time money that was used last year, about 800 million, if you recall, fund sweeps--that had to be replaced with "Jindal- fund" dollars. So the budget is indeed 2 billion dollars bigger but there's the amount of overhead for the federal money and the other had to be replaced with one-time money and also if you recall there's an extra 200-plus million--that was pushed into this year by slow paying or delaying

SABLUDOWSKY: Delaying the final payment, Sure. That was for the healthcare. Am i correct?

HILBURN: That's part of it. I-Medicaid. So, while true, it's not totally accurate.


SABLUDOWSKY: So as I understand then, what you're saying is and this is something that has really puzzled me and I did read what the governor's response was, and he said , and I forget the exact word that he said that he used--but what you're saying, so, roughly a billion dollars, roughly is, went into, came into Louisiana, but that is for the Medicaid expansion

HILBURN: That is federal money,

SABLUDOWSKY: That is federal money


SABLUDOWSKY: Now what you're also saying is that there was another piece, I forget how much it was, 30 million, maybe somewhere around that, maybe less, that went into the payment, that we-- for the last payment that was not made by the Jindal administration.

HILBURN: Right that was pushed into this year (2016-2017 budget).

SABLUDOWSKY: Right, exactly

SABLUDOWSKY: But the major part was the fact, as you're saying, these, I think you called it the "Jindal fund sweeps" to help balance the budget from last year, and we had to replenish that money.

HILBURN: That's exactly right. (inaudible) I think it's a legitimate position, whether you agree with it or not, to say "well look, we should just cut, no matter what, I don't want to raise taxes, I'm not going to vote for taxes", well while that's a legitimate position, if you couple it--well if you just start out by saying "well, we've got two billion more in the budget, we don't need it", that's (inaudible). If you want to say, "I'm just against taxes", okay that's your position, but if you try to back it up by saying, "there are no cuts, we've got two billion more", I don't think that tells the accurate picture.

SABLUDOWSKY: Sure, sure, sure, yeah-- because, that just means that the agencies were defunded last year, or wherever the pots were, they would just filled but that did not deal with the the actual expenditures that the state had to be responsible for, for this year. Is that?


SABLUDOWSKY: So then he gets to the question, so let me see how I can praise it- and that is--we heard so much about there not being any necessity to raise any money at all, for example, there have been people such as John Kennedy, Treasurer--who have said repeatedly it is not a revenue problem, it's a spending problem. Yet, in this year, at least this session, we raised about what, two hundred forty million dollars.

HILBURN: We raised, in both sessions, in two special sessions, a total of about 1.5 billion dollars.

SABLUDOWSKY: right but this session, this session,

HILBURN: I think it ended up, that number fluctuate, but the end of the day, yesterday, they allocated about 280, 84, 284 million in new taxes raised, us, 258, I'm sorry these numbers-- 258 in new taxes and another thirty or so in other revenues, that came elsewhere

SABLUDOWSKY: So, I guess what I'm saying is, their voices out there that are saying, "hey, we don't need to raise any money at all, it's not true, we're flush with money, we don't have to raise it", yet I would argue that the legislature, which, in this case is controlled by the Republican Party, raised two hundred, say two hundred and fifty-eight million dollars, yet, the argument is there was no reason to raise it. I'm not saying that they're the only ones who did, certainly they were pushed by the governor and certainly the Democrats voted for it and almost in lock-step, but still, still it never would've happened, but for Republicans on both sides of the houses raising the money.

HILBURN: That's right. It could not, the Republican majority in both (inaudible) in order to raise the 258 in the session-- which is only about one half of what the governor wanted, but-- still (inaudible)

SABLUDOWSKY: So in a sense, I mean, I would say, let me just put my own opinion, is--I would say it's a repudiation of what our treasurer was saying. I would say, and you don't have to answer that. I would say that the legislature, the people who were there, including the Republican legislators, who were there, were basically saying-- John Kennedy, The Treasurer, you know, "you're wrong. We need this money."

HILBURN: By their action, I would say that, that's right

SABLUDOWSKY: And, I would say, that, they were saying--especially since he gave a speech early on, in January, he gave the Republican address--if I'm not mistaken or February--where he made the same statement--statements and--you're saying how much did we? one point, how many billion? 1.5.

HILBURN: 1.5 total. 1.5 billion total, 1.5 billion--if we combined the two sessions.

SABLUDOWSKY: So, I mean, I would argue that the legislature, the Republican-controlled legislature, the governor and the Democrats, as minority, were saying--"well, your off about $1.5 billion?


HILBURN: Well, I mean, i think you can certainly make that argument, absolutely.

SABLUDOWSKY: That's going to be really interesting, I think. Again, I'm just opining, here, but--that's going to be really interesting because-- as he runs for governor, I mean for U.S. Senate, and he makes a statement that, hey we didn't have to raise a penny, he's making all these Republicans legislators look like, they don't know what they're doing


HILBURN: He'll be counting on them for their support

SABLUDOWSKY: Sure, absolutely, that's very puzzling to me,

Yesterday, I published another interview with The Advocate Reporter, Tyler Bridges, who also covered the legislative session. Bridges also addressed the issues raised in the above discussion


Last modified on Tuesday, 28 June 2016 16:05
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