Monday, 21 March 2011 15:14

Governor Jindal, the Louisiana Legislature, and our money

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Lawrence ChehardyFamilies across Louisiana sit down regularly at the kitchen table to discuss their finances and to balance their checkbooks.  They know that if they spend more than they make they are headed for trouble.  Working hard and doing the right thing is responsible, and we expect it of ourselves and others.  So shouldn’t the state be just as responsible?

A recent statewide survey by the LSU Public Policy Research Lab reports that Louisiana residents believe the state is headed in the wrong direction.  The biggest problem cited was the economy (35.5%), and voters are almost evenly divided on whether they believe state government will adequately address its problems.

Certainly, the national economy is playing a major role in respondents reply that Louisiana is headed in the wrong direction.  But people are smart.  They know the state is facing a $1.6 billion deficit, and they know that the state budget must be balanced and spending brought in line.

Louisiana faces three basic choices during these tough economic times.  Raise taxes, cut spending, or a combination of both.  A saving grace for Louisiana taxpayers is the requirement that the state must have a balanced budget.

There are those who believe that raising taxes is the answer to everything.  Well, it isn’t.  Businesses cannot sell their products at any price they want.  The market must be willing to pay the price, or the product won’t sell.  Government is in a similar situation.  It cannot price itself out of people who can afford to pay for it.  Higher taxes make it more expensive to start a new business, to expand a business, or to just keep the doors open for an existing one.  Higher taxes increase the cost of living and make it harder for individuals to make ends meet.

People and businesses must be able to afford the taxes levied without those taxes being a burden.  The rule should always be that government only spends what its people and businesses can afford to pay for.  Increasing the tax burden, even sin taxes, is counterproductive to growing the state’s economy.  And it’s even worse in a bad economy like the one we have now.

I have heard some people say that they would not mind paying more taxes if state government would just be more responsible in spending the money it has.  Well, if government was so responsible, you would not need to pay higher taxes.  Budget cuts would not be needed, and we would not be in the mess we are now in.  But it makes some folks feel good to say we would pay more if you, the government, would promise to spend it more carefully.  Folks, it hasn’t happened; it isn’t happening now; and it isn’t going to happen in the future.

Cuts make sense but cutting expenses is not something that government likes doing.  Government is bloated.  At every level.  It likes to grow and then say you can’t do without me.  It doesn’t shrink because it doesn’t know how to shrink.  Government is much better at spending your money than at saving it or economizing.  So the approach becomes budget cuts with a machete slashing away at expenses many times sacrificing programs that actually work and provide a good return for the taxpayer’s investment while programs that waste money and provide little benefit thrive maybe with a little less cash but still with minimal justification for their existence.

Another approach is a combination of both higher taxes and some budget cuts.  To me this is the approach for those who cannot make a decision either to admit that higher taxes won’t work or that budget cuts are necessary.  So they play the middle.  A little of both.  A few taxes and some cuts.

The problem with this “a little of this and a little of that” approach is that it makes politicians susceptible to criticism from everyone.  Those who oppose more taxes are mad because taxes have been increased and adequate cuts have not been made.  Those who favor higher taxes are mad because budget cuts have been made, and they oppose most of those cuts.  In either case the real problems of waste and overspending are generally ignored.

So what’s a politician to do?

The answer is to lead, and Governor Jindal is doing just that with a fourth alternative.  His answer is to combine cuts with the use of stimulus funds and the sale of some state assets to plug the gap for the next fiscal year without raising taxes.  The governor’s plan is certainly a workable solution as the state eases its way into a smaller, leaner budget for the 2011 - 2012 fiscal year and beyond.

Lastly, some find comfort in the argument that the downturn in the national economy has caused revenue to drop and deficits to appear.  They say don’t worry we’ll patch it together and get by until things are better.  This is no solution either.  A bad economy has been around for several years. Budgeting without considering that things may get a lot worse before they get better, as has happened, is a mistake of the past that cannot be repeated today.

There are no great solutions in a budget crisis.  So, as the regular legislative session starts up in April, watch events closely.  Cuts may hurt, but cuts with a little creativity as the governor has suggested hurt less and are the responsible way to go especially when all else is headed south.

About Lawrence Chehardy

For thirty-four years Lawrence Chehardy served as Assessor of Jefferson Parish and throughout his career has been a champion the maintenance of the Homestead Exemption.  During his years as Assessor Lawrence Chehardy served as President, Vice-president, and Treasure of the Louisiana Assessors’ Association. He also served on numerous boards and committees of the association. 

Chehardy has extensive knowledge of politics, political campaigning, and the political process. When it comes to political strategy and creating the campaign’s message, Lawrence is one of the best. Lawrence Chehardy has been instrumental in the election of numerous candidates through endorsements as well as campaign strategy. In many cases his endorsement turned the election in favor of those candidates.

In addition to his political commentary and public speaking engagements, Lawrence Chehardy is a founding member of the Chehardy, Sherman, Ellis, Murray, Recile, Griffith, Stakelum & Hayes Law Firm and serves as its managing partner.

By Lawrence Chehardy

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