In recent years, Louisiana has bounced from one budget crisis to another, with a decade’s worth of short-term fixes barely keeping the lights on. As the current fiscal year approached, the state faced yet another fiscal showdown, with revenue sources expiring and a shortfall threatening deep cuts to hospitals, nursing homes, and colleges and universities, as well as the possible elimination of the food stamp program entirely.
But a week before the fiscal year began in July, legislators agreed on a repair package that shifted $46 million in oil spill recovery money into the operating budget and, more important, preserved a sales tax increase that was set to expire. Or part of it, anyway. Rather than extending the full 1-cent surtax, lawmakers agreed to keep nearly half of it in place for the next seven years. That’s practically a lifetime in Louisiana budgeting. “By working together, for the first time in a long time, Louisiana’s budget will have the kind of stability and predictability we need to bring new business opportunities to our state and grow our economy,” said Gov. John Bel Edwards, who was applauding a sudden upgrade from Moody’s, the credit rating agency.
Robert Johnson, who chairs the Democratic caucus in the state House, put it differently. “The ghost of Bobby Jindal has finally left the building,” he told the Associated Press, referring to the state’s most recent ex-governor, who left the state in terrible shape financially.
There’s no question that the legislature managed to avert a set of painful spending cuts. But it may be a little premature to pop the champagne corks. While the budget deal enhanced revenues, it did little to address the state’s chronic spending problems. Overall spending by the state -- including a federal infusion of cash thanks to Louisiana’s belated expansion of Medicaid -- has grown by 24 percent over the past couple of years, many multiples above personal income growth. Daryl Pupera, the state legislative auditor, has warned that the Medicaid program is “pretty broken right now” and lacks proper oversight.
“I’m definitely raining on the parade,” says State Treasurer John Schroder, who argues the state needs to cut spending. “I’m glad we all came together and they passed a budget, but they didn’t fix anything.” Schroder fears that extending the sales tax for seven years may have removed the incentive to tackle difficult structural issues. He warns that lawmakers will be tempted to wait “six years and 364 days” before they take a serious swing at the spending side again. Looking ahead to next year, Republican legislators will be reluctant to cut deals with Edwards, a Democrat who’ll be up for reelection.
“Legislators don’t want to give the governor a victory to talk about in 2019,” says Pearson Cross, a political scientist at the University of Louisiana at Lafayette. “It’s good they stopped the bleeding,” he says. But he doesn’t think they’ve stopped it for good.