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Here We Go Again

March 22, 2017

By: Stephen Waguespack

Here we go again.

In just a few weeks, the Legislature will be back in session. It has only been a month or so since they met and addressed the most recent shortfall, which was the 15th mid-year deficit since 2009. For decades, annual deficits have become commonplace with the exception of times with hurricane recovery dollars or oil booms.

It’s a fact that most of the issues teed up for discussion in 2017 will be remarkably similar to topics debated in the Capitol time and time again throughout the years. Once more, Louisiana’s elected officials will discuss how to stabilize our budget and how to improve our schools, roads, legal climate and economy. Once more, Louisiana’s employers will be unfairly blamed for the state’s budget woes, even as exemptions are plummeting and tax collections are up substantially as a result of the laws passed in 2015 and 2016.

Some issues, like criminal justice reform, have the chance to break through the annual stalemate of repetitive debates and become a noteworthy exception to the rule as a new idea to an old problem that actually becomes law. However, let’s be clear. Without strong leadership driving big, specific transformational changes, it is nearly impossible to expect new results that stop the decades-long theme of low national rankings for performance, the cyclical path of a boom-or-bust economy and unstable government budgets.

In Washington right now, the conversation – and the action – is about reducing burdensome regulations that stifle economic growth, reforming a broken tax code to be globally competitive, re-evaluating trade negotiations to give Americans a fair deal, improving  infrastructure and being aggressively innovative in education. Here in Louisiana, we’re focused on the same old, same old – how to fund an ever-expanding state government, spread the soup as thin as possible, to be as many things as we can to as many people as possible. Even as job losses pile up, state leaders continue along with the same old plan, consumed with what’s happening with government programs, seemingly much less interested in the tax-paying public that is working hard and funding the state’s bills.

As I travel the state this week, it’s clear that many people are not aware that just this year, Louisianans will pay $1.3 billion more in state taxes than what we paid in 2016. Major business exemptions – often incorrectly blamed for the state’s budget problems – have been reduced by over 50% in just one year. Yet the deficit remains because the state budget overall is growing at a far faster pace than our economy and tax base.

Not only is our state spending high compared to historical norms, but it’s high compared to our peers in the South. US Census data shows that Louisiana spends dramatically more than the average of other southern states. Many of these dollars are going to programs the politicians never want to discuss. Dedicated funds wall off over $4 billion from any real oversight or scrutiny. Another $2 billion is for the state’s cost share for retirement plans that government refuses to reform. Many boards, commissions and other fiefdoms sit on auto-pilot budgets that should be analyzed for relevance and need.

Contrary to what you may read, the state’s Medicaid program is the largest cost driver in the state’s budget. Legislators have discussed ad nauseam whether to expand Medicaid, but unfortunately there has been no real debate on how best to reform it. Even before the Governor’s decision to expand Medicaid under Obamacare, the Pew Center reports that Louisiana’s STATE spending for our share of the Medicaid program has increased more than any other state in the nation from 2000 to 2014. In 2000, 10.5% of Louisiana’s state revenue was spent on the state share of Medicaid. That figure is up to 18.9% of Louisiana’s state revenue in 2014. That 8-point increase is the largest in the country. Once the state’s share of expansion kicks in, you can bet that growth rate will only go up.

Meanwhile, as programs grow and costs soar, outside the Capitol, Louisiana has lost 25,000 jobs since state employment peaked in late 2014 – most of these in the past 18 months. It’s time for us to re-evaluate and revamp everything about the 90-year-old design of our current government. New tax increases with a catchy new name to fund the same archaic programs won’t change our fate.

It’s time to face the fact that the 90-year-old model for Louisiana government designed by Huey Long and enshrined in the Constitution under Edwin Edwards is fatally flawed. This model depends on an all-powerful state government that taxes, spends, and plays a prominent role in our lives and businesses – but frankly, continues to fail to deliver the outcomes our people need and deserve. This outsized role might be acceptable if it led to good roads, an educated and skilled workforce and a safe community – but it hasn’t. This top-down approach has failed in those respects time and time again, while also failing to incentivize individual responsibility and achievement, support upward mobility of families or spur economic growth.

Hopefully, this realization will trigger a sense of urgency. Perhaps this will spark not only thoughtful but innovative debates that will serve as a catalyst to reverse this 90-year trend. Big change is essential to alter our historic big-government approach. Confronting these ghosts won’t be easy or simple, but the days of running from this moment are soon coming to an end. Will this finally be the year? I guess we soon shall see.