Many of us across the state can be elated that Louisiana does not have a one billion dollar fiscal cliff looking at us, as anticipated a few months ago Instead, based upon the Revenue Estimating Conference, that figure sits at roughly 650 million. However, if you are looking at providing the same level of services, considering inflation, considering other factors, according to one of the leading authorities on the state budget, whether you agree with him or not, that shortfall is roughly 1.2 billion dollars.
And, this expert states that the shortfall is manufactured, mind you.
On Thursday, Jim Brown and I interviewed Jan Moller, the Executive Director of the Louisiana Budget Project. Moller was the capitol reporter for the Times Picayune for roughly seven years, so has seen a budget or two. He dug deep with information and history and made the point that Louisiana has been cutting its budget for over ten years. He also claims that if the House of Representatives, run by Republicans, want to make cuts, the legislators should define those cuts in detail and not be vague.
The LBP, as Moller said, “is a nonprofit research and advocacy organization, we're based in Baton Rouge and we monitor state fiscal policy and its impact on low and moderate-income families so we are nonprofit nonpartisan but we do have a point of view and that point of view is that the budget should to the greatest extent possible help promote the welfare of low and moderate income families. So we we talk about the need to invest in things like education health care infrastructure, Public Safety, the things that we spend our tax dollars on. So if you familiar with our organization, again, you know we are fact-based research-based but we do have have a point of view.
Thanks to the legislature and the Insurance Department, the Louisiana insurance policyholder has less protection than policyholders in just about any other state in America.
Point of view? Politically, certainly left of center, but very well articulated. .
Below is part one of our discussion with Moller, which includes the transcript and the video of the entire interview. This segment begins at 13 minutes 23 seconds into the video.
Jan Moller of Louisiana Budget Project says fiscal crises is manufactured
SABLUDOWSKY: I guess from a political standpoint, as well as I guess ,a budgetary standpoint, I think what we're looking at is roughly 600 what 645 million and which is a lot better than it was close, to a billion and so I read elsewhere and I put up on an article a few minutes ago and Bayoubuzz the fact that the House is now looking at just trying to cut that 600 and again whatever it is 45 47 million the the entire amount, that way we don't have a special session. I'm sure the governor would not be happy about that. I'm assuming that Louisiana Budget Project likewise would not be happy about that. First am I right? And secondly, what are your thoughts about the possibility of being able to get those kind of cuts?
MOLLER: Well we need to see how they're gonna come, I mean, 650 million dollars is still an enormous amount of money to cut from the budget and we know where that money has to come from because 90 percent of the discretionary state general fund dollars in the budget comes from healthcare higher education and Social Services. That is where it has to be cut and so that the House has had two years really to come up with a plan and they kept saying well you know we need to cut, we need to cut, we need to cut--we still haven't seen a plan. Last year they were supposed to be a plan they never came up with a plan we've been told this year that they're gonna come up with a plan, we're gonna see a plan next week from Cameron Henry and the House Appropriations Committee how they plan to cut 650 million dollars from the state budget. But my prediction is that you're gonna see cuts to health care and and higher education--now the irresponsible thing to do and the thing that people have done frankly in the past is-- they try to get out of making the tough choices and they'll just kind of put placeholders in in the budget. One of the things they love to do you know the legislature wants to be independent but but then when it comes time to actually making tough decisions on the budget they'll put a placeholder that says--we direct the Commissioner of administration to cut fifty million dollars because that way their fingerprints won't be on it. You know the legislature has the power of the purse and if they will think that there's 650 million dollars in cuts they should spell it out and they should spell it out in detail. They shouldn't pass the buck to the Department of Health, they shouldn't pass the buck and say oh well we don't know. They've had the past month and a half --the budget came out on on January 22nd I believe. So, they've had the budget now for for close to three months and and had the ability to call every single state agency up there. They had the Department of Health up there for five or six hours this week,in detail so any questions that they had about the effect of these budget cuts should have been answered by now and so let's let's you know it's time for them to put their cards on the table in our view the more responsible route would be to replace some of the revenue that is expiring on July 1st. I mean this is, let's not forget that this is a manufactured crisis. This is not a crisis of the economy being in recession. This is a crisis that the legislature itself created by passing temporary taxes in 2015 and 2016 putting an expiration date on there. They said at the time that this is going to be a bridge to tax reform that that we want to reform the tax system and this is just a bridge because we know we need these revenues and we're gonna find something better to replace it. They didn't do that. There there was a commission, a set of recommendations came out and they got laughed out of the room nobody paid any attention and so they're here with a problem of their own making and if they think that the solution to this is cuts then they should put those cuts on the table and let's have that debate. And I suspect that I would have a different take on this then then maybe some of the members of the House.
BROWN: So let me play the devil's advocate if I can with you Jon if I can. I was a state senator for eight years. I served on the Budget Committee, I served on the Senate Finance Committee, I saw these going. And if I would have been a senator today then one option I would have would say--to look--I don't have an entire staff to tell me how to break that budget down but what you're saying governor is that you're giving us a level from last year and saying this is where it's going to be, now we got a go above this because inflation, for other factors, the Medicaid funding has increased and therefore we got to have more money. And I would say well governor convince us because politically back home voters do not believe we've got a budget crisis. I can tell you and looking poll after poll and in looking and talking to so many people across the state, there's just not a consensus that but we've got to raise money to solve all these problems. And so you you've done this with the your budget organization, the Louisiana Budget Project-- are you convinced that every dollar we're spending right now is necessary to run the state of Louisiana? Should we continue with the overtime pay--where that we're paying? I got a whole list of commissions that get two and three hundred thousand dollars a year for travel. What on earth does the tax commission, for example, need $300,000 for for travel. It's three or four million. It won't shut the hole down but I wouldn't be convinced as an observer that the administration has really gotten into that budget and cut it back. You've got the--and I can go on and on with you with a whole list of things like this that might come up with 50 or 100 million dollars. That's not going to solve the problem but would you agree with me Jon that if that had been happening and the governor would be touting that there would be a climate, that would be easier for him to make his case. I'm suggesting he's he's not making his case because he's not showing any real significant cuts in areas where you could cut, even though it wouldn't solve the problem, at least you say the guy is trying. And I just don't sense that--what response to that?
MOLLER: A couple of things, I mean, I think you brought up at the start of your comments the idea of inflation let's let's be clear about the difference between the shortfall and the fiscal cliff. The way a shortfall is defined in state law, the way it's always been defined--is is what's the difference between the revenue that you have coming in, the revenue forecast and the cost of doing everything next year that you're doing right now? That's not adding anything or subtracting anything from state government. That shortfall, before today, was was estimated at 1.6 billion dollars. It's a lot bigger number than the fiscal cliff. And and that's when you account for all the inflation and and some of the extra cost that you can't avoid, for example, debt service goes up every year. Retirement contributions go up every year, the cost of Medicaid as you mentioned goes up every year because the population is aging and and health care inflation, the cost of the MFP public schools goes up every year, because we have more students in public schools. So even if you don't give a single teacher pay raise and you don't rebuild a single school then you still have the cost of education going up just because there are more students and each student comes with a price tag to the state. So it was 1.6 billion this morning and and today we got another 345 million so let's let's say it's 1.2 so that's the shortfall. And then the fiscal cliff--is just--if we're gonna bring the forecast down to spend exactly the same amount of money we have this year, we're gonna eat all the inflation, we're not gonna count for a single extra dollar--then that is what the fiscal cliff. So the fiscal cliff is--is just if you're just gonna solve the fiscal cliff, you're still making cuts, and in state government. Now am I going to say that that every single dollar in state government is well spent? Absolutely not. Every dollar in, your company or any company, any organization in the iworld is gonna have some level of waste and some dollar that's not efficiently allocated. And so I'm sure we can we can find waste and I think that you should continue to look for that but but to say that we're not going to have a revenue conversation and we're not going to talk about these bigger issues until we found every single dollar that's wasted in state government then you're chasing unicorns, and it's frankly not realistic. Now you talked about yet you know the public doesn't believe this or that that we have a budget problem, the LSU survey came out this month and it shows that the public actually, a) understands we have a fiscal crisis; b) does not want to see health care and education cut especially higher education, people understand those things and they favor a balanced approach that includes not just cuts but looking at the revenue situation again. That's what the polls say.
SABLUDOWSKY: Did they use the word, taxes? I'm just going to--
MOLLER: I don't have the poll in front of me but but the LSU surveys the gold standard and they do live telephone interviews and this is a benchmark survey they go out every year and and this year's survey found that that people actually you know they are tired of seeing health care and education always on the chopping block and that is what we buy with the vast majority of our state tax dollars. I mean we buy things for that money. And then finally, people who say we haven't looked at the cuts, that's all we did for eight years under the previous governor. We had a streamlining Commission that met for six months, I had to cover those meetings 236 recommendations from the streamlining Commission, most of those were enacted. We had at least two Commission's looking at higher education alone and how to streamline our colleges and universities--hundreds of majors, and hundreds of programs were eliminated because they were redundant and so we made reforms in higher education to streamline that enterprise. We went out in 2013 or 14, I think near the end of the administration, they spent 8 million dollars on the best consultants money can buy--Alvarez and Marcel--came in and looked at every corner of state government. There is--if you google Alvarez and Marcel gems study, it's 450 pages. You couldn't read through it and they would think a week to read through all the recommendations they made for streamlining and making state government more efficient and less wasteful that's not to talk about what happened during--what individual agencies did during the Jindal years. So there's been an enormous amount of focused-time and attention on making government more streamlined and and that process should absolutely continue but at the same time, we have to understand, that when we pay taxes to state government, and nobody likes to pay taxes, and this is a week when people are paying taxes and they don't love to do that, we are buying education, healthcare, Public Safety and to a lesser extent social services. Talk to the Department of Children and Family Services and ask them how their budget has done over the last eight years, they'll tell you it's been cut in half and this is one of the few areas that's actually not being cut in the governor's executive budget and the reason is it's been cut so badly already