Out of Control Policy Blog

Addressing Louisiana's Budget Shortfall

Louisiana Gov. Blanco signed an executive order Saturday cutting a half billion dollars from the state budget, and opened the legislative session on Sunday asking legislators for their help to trim spending even further to address an almost $1 billion budget shortfall in the wake of Hurricanes Katrina and Rita. From The Advocate:

    Blanco outlined her approach to addressing the estimated $960 million shortfall in state tax revenue that Hurricanes Katrina and Rita created.

    She initiated the first part of her strategy Saturday by cutting nearly $500 million in state spending. The move rankled many lawmakers because the governor took the unprecedented step of making the cuts without their input.

    For the rest of her belt-tightening plans to see fruition, she'll have to rally at least two-thirds of both chambers behind her. The governor wants to tap into a third of the state's $460 million "rainy day" savings account and borrow money.

    She also will have to stave off attempts by legislators to restore what she chopped from the budget. Her cuts include so-called slush funds and other pet projects doled out to lawmakers.

    Blanco wants legislators to go even further and cut their own budgets.

    "I am cutting some of your favorite programs," Blanco said. "Some of you will consider these cuts way too painful and you'll try to avoid them. Let me warn you -- this is just the beginning."

    Blanco invited critics of her cuts to look at the budget and bring her suggestions of better ways to slash state spending.

Sounds like a decent start. See the Governor's executive order here. It's also worth taking a look at Reason's recent study, The Sky Isn't Falling, as well as Priority Colorado, to see how states like Texas and South Carolina are using performance-based budgeting and activity-based prioritization funding models to institutionalize fiscal discipline by focusing spending on the highest priority needs and most effective programs. Louisiana would do well to take a page from this playbook.

But the Washington Times offers some less encouraging news:

    Louisiana will spend $45 million on sports and livestock facilities and other new projects in spite of a looming deficit, frustrating some officials who say the frivolity reinforces the state's history of political patronage.

    "We're in Washington with our hands out asking for $2 billion plus, and rather than holding on to the money to see what the needs are, they're spending it on local projects financing goat shows and lawn-mower races," says state Sen. Robert Barham, Oak Ridge Republican.

    . . . .

    "I like a good goat roping as much as anyone, but come on," Mr. Barham said. "It's funny, but it's sad. At a time when Louisiana needs so much to enhance its public image, the taxpayers are just shaking their heads and wondering."

    The Louisiana state Legislature yesterday began a special two-week session to deal with record-setting budget shortfalls, but this spending, approved by the state's bond commission and headed by Gov. Kathleen Babineaux Blanco, will go unchallenged.

    . . . .

    The list of projects also includes reservoirs, a cargo airport, sewer systems, an Audubon Institute building, a hospital, a performing-arts center, a cruise-ship terminal, a light-rail line, a gene-therapy research building, a library, an arboretum and a technology transfer center.

Of course, the light-rail line stuck out like a sore thumb in that list. Given that it is usually a total loser, does it make sense to pour even a dime into light rail in Louisiana when there are so many other fish to fry?

Leonard Gilroy is Director of Government Reform


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