On Thursday mornings, a clutch of African-American preachers gathers for breakfast and conversation at the Bayou Café. It’s a cozy place in a decidedly nonaffluent neighborhood in north Baton Rouge, La. The ministers -- and others who may join them -- hash over issues of mutual concern and relax amid the cooking sounds and scents from the kitchen.
But on one particular Thursday morning in August, the atmosphere is anything but calm. Angry words filled the air as the talk turns to Louisiana Gov. Bobby Jindal’s decision to close the Earl K. Long Medical Center -- an aging, state-run hospital just up the road that serves the poor and uninsured. Among the kinder things the ministers call Jindal is “hypocritical.” His refusal to back a renovation to the outmoded hospital -- via a minor hike in a revenue source -- is particularly galling. “Anyone can be against taxes in the abstract,” one pastor says. “But what’s the solution without more money?”
Jindal is “driven by ambition,” says Rev. Tommie N. Gipson Jr., senior pastor of Donaldson Chapel Baptist Church. “He’s putting promoting the Republican agenda above the needs of Louisiana.”
As the ministers see it, the primary needs of this neighborhood -- a community where one-third of the residents live below the poverty level -- are accessible health care and the jobs that the hospital provides. And that’s how Rep. Regina Barrow, who represents north Baton Rouge and sits in on the morning get-together, sees it too. “The hospital has been the economic engine here,” she says. “It’s a marker in the community -- a beacon of hope. It provides services for those who do not have anywhere else to go.”
But the hospital represents more than that. It has an iconic name and history. If people are treated at the medical center regardless of their ability to pay, it’s thanks to the man for whom Baton Rouge’s public hospital is named: former Gov. Earl K. Long.
The Longs -- first Huey and then his younger brother Earl -- ruled Louisiana for decades, from 1928 when Huey was elected governor through 1960, when Earl died. Together, the Longs and their successors used Louisiana’s oil and gas wealth to build something unusual for the deep South: a social welfare state, complete with old-age pensions, free textbooks, modern highways and state-run charity hospitals.
Huey once believed that these accomplishments and his populist “share our wealth” philosophy, would carry him to the White House. Today another Louisiana governor with presidential ambitions occupies the fourth floor of the Capitol skyscraper that Huey Long built. But where Huey proudly built big government and heralded its accomplishments, Jindal, age 39, has staked his political ambitions on shrinking it. His decision to close the public hospital, even if it means sending north Baton Rouge’s residents to a medical facility several miles and a long bus ride away, reflects Jindal’s bold plans to downsize and transform state government. But what began as the nation’s boldest effort at streamlining eventually became something else -- a demonstration of the limits of sweeping change. In the process, Jindal seems to have learned a paradoxical lesson: In an age of populist anger, the most politically savvy style of leadership may involve almost no leadership at all.
A Model Reformer in Louisiana
When Piyush Jindal (his nickname “Bobby” reflects his childhood enthusiasm for The Brady Bunch) was elected Louisiana’s 55th governor in 2007, he was widely viewed as the Republican answer to Barack Obama. They both have fairly exceptional backgrounds: Obama is half-Kenyan; Jindal is Indian. Obama served as president of the Harvard Law Review; Jindal was a Rhodes scholar. But where Obama’s experience prior to being elected to public office was limited to brief stints as a community organizer and law professor, Jindal has developed one of the most sterling resumés in American politics. In 1996, at the age of 24, he was appointed as secretary of the Louisiana Department of Health and Hospitals. Stints followed as executive director of a national commission on Medicare reform, as president of the University of Louisiana System, and as an assistant secretary at the U.S. Department of Health and Human Services. In 2003, he returned to Louisiana and, in his campaign to become governor, suffered an unexpected loss to Kathleen Blanco. He ran for Congress instead and won handily. Four years later, he ran for governor again, and this time was swept into the governor’s mansion with a huge majority. An uninspired response on national television to Obama’s first State of the Union address damaged the new governor’s standing with the chattering classes. An energetic response to the BP oil spill resurrected it. While pundits parse his performances before the cameras, a far more interesting exercise has been playing out in Louisiana.
Two years ago, the Jindal administration began one of the most serious efforts to streamline state government in the country. Since then, as the Great Recession has intensified and state revenues have fallen, politicians in most states -- including high-profile Republicans such as Indiana Gov. Mitch Daniels and Mississippi Gov. Haley Barbour -- have cut spending and raised fees and/or taxes. Not Jindal. Instead, his administration has doubled down on his effort to make government smaller. Detractors say that to stick with his conservative philosophies and further his political ambitions, Jindal is prepared to run Louisiana’s health and higher education systems off a cliff.
“You can’t think we are not going to have some cuts,” Barrow says. “But when we poll, 70 to 80 percent of the people of Louisiana say they are willing to accept a cigarette tax increase. To say we cannot have a revenue measure and have no alternative to cuts is, in my opinion, irresponsible. Louisiana ranks last in virtually everything when we are compared to other the states. We cannot afford to not make the quality of life better.”
Admirers -- and they are numerous in national Republican circles -- dismiss these attacks. In Louisiana, they see a bloated state government, and in Jindal, with his obvious brilliance and deep background, they see the model reformer. They point out that his anti-tax, smaller-government resolve has made him the most popular politician in Louisiana, an incumbent who is a virtual shoo-in for re-election next year -- to say nothing of a man with national prospects. For state and local officials, however, Louisiana’s streamlining experience holds other lessons: A big one is just how treacherous the idea of a “great reset” -- a sweeping transformation of state government -- can be.
Reformatting Louisiana's Budget Process
“Streamlining” is often used as a euphemism for budget cutting, but in fact they’re very different activities. Streamlining is strategic. It involves establishing priorities, and then determining how to and who can best achieve them with the resources available. Budget cutting is short term and ad hoc. It often involves accounting gimmicks and across-the-board cuts aimed at balancing budgets for the fiscal year with no regard for what follows. Budget cutting happens during times of crisis. Streamlining tends to happen just after the crisis has passed, when revenues are rebounding but memories of hard times remain.
Jindal’s ambitions for Louisiana’s government were transformative. Earl Long once joked that one day, “the people of Louisiana would elect good government, and they won’t like it.” Jindal was determined to prove him wrong. To lead the conservative good-government streamlining effort, he turned to a colleague from his first stint in state government: Angele Davis.
Davis was much like Jindal -- young, smart, conservative and a protégé of former Louisiana Gov. Mike Foster, a Republican who held the post from 1996 to 2004. During Foster’s term as governor, when Jindal was running the Department of Health and Hospitals, Davis was the deputy commissioner of the Division of Administration. When Jindal left for Washington, Davis went to work for then-Lt. Gov. Mitch Landrieu (a Democrat who was elected mayor of New Orleans earlier this year) as secretary of the Department of Culture, Recreation and Tourism, which the lieutenant governor oversees. While she was there, Davis encountered the writings of David Osborne, the public administration expert best known for his work with former Vice President Al Gore on “reinventing government.” Since then, Osborne, a partner with the Public Strategies Group (and a paid adviser to Governing parent company e.Republic Inc.) had shifted his focus to working with state and local governments on implemening a form of performance-based budgeting known as “budgeting for outcomes.”
Osborne’s big idea is that government should move beyond the usual budgeting process, a system where departments propose to spend what they spent last year -- or more, if they can -- and look to the legislature to keep funding those expenditures. This “continuation” budgeting process, Osborne argues, is the fundamental problem with the way state government operates. Davis was taken with Osborne’s logic. “Continuation budgeting just reeks of inertia -- doing the same thing over and over,” she says. “In times where revenues are good, we spend a little more. In times when revenues are declining, we’re trying to figure out how to do the same thing with a little less.”
Although Louisiana’s budget process already incorporated some aspects of performance-based budgeting, Davis, as head of the Department of Culture, Recreation and Tourism, implemented Osborne’s ideas more fully by having her agency define its priorities and force divisions to compete for the resources to deliver them. Not surprisingly, the Davis-Osborne vision was not immediately a popular one in her agency. However, Davis’ persistence carried the day. Osborne was soon citing Davis’ work as an example of the successful implementation of his ideas. Soon after Jindal was elected governor in 2007, he appointed Davis commissioner of administration. She was also the governor’s top budget aide.
Part of the state’s streamlining needs concern health care -- both quality and costs. Health outcomes in the state have been abysmal, and its fee-for-service Medicaid plan has been almost wholly unmanaged. The state’s 10 charity hospitals, of which Earl K. Long Medical Center is one, cost the state roughly $300 million a year -- and the federal government hundreds of millions more.
To address the many health-care challenges, Jindal turned to Alan Levine, one of the stars of the conservative health-care world, appointing him secretary of the Department of Health and Hospitals.
Levine had cut his teeth in Florida as head of the Agency for Health Care Administration under then-Gov. Jeb Bush. There, he pushed through a controversial Medicaid managed care pilot program in two of Florida’s largest counties. Outspoken, combative and savvy, Levine was fearless in pushing his conservative agenda.
He would need those skills in Louisiana. “My first day here, I got a phone call from the health director in the city of New Orleans,” recalls Levine, “and he said, ‘We just had a police officer murdered, shot with a gun seven times by a person who was just released from the state mental hospital the day before. So welcome to Louisiana. This is your problem.’”
With Davis and Levine in place, the effort to streamline government began to move forward in earnest. But not exactly as Jindal had hoped or planned.
Issues With Jindal's Hands-Off Approach
To understand what did -- and did not -- happen, it’s important to know a few facts about politics in Louisiana. The first, says Pearson Cross, head of the political science department at the University of Louisiana at Lafayette, is that “there’s really just one political actor in Louisiana -- the governor.”
This is an exaggeration, but not by much. Legally the governor’s powers in Louisiana are modest. In his most recent institutional power ratings, University of North Carolina at Chapel Hill political science professor Thad Beyle rated the powers of Louisiana’s governor at slightly below the national average. By tradition, however, Louisiana’s governors’ powers are vast. They include selecting the speaker of the House and Senate president and consulting on the heads of the so-called money committees. Some previous governors even maintained their own hand-picked committee, Judiciary B, to move legislation at the governor’s behest.
“You’ve got to remember, Louisiana is the only state that went right from royal governance to statehood,” says Richard White, Louisiana State University professor and Huey Long biographer. “We didn’t have a House of Burgesses or any experience with self-governance. We’re enamored of authority; we accept it, and we accept it as necessarily corrupt.”
Not Jindal. His first step was to call the Legislature into special session to pass an ethics bill. However, observers who expected a PowerPoint-wielding uberwonk to step up, lay out a detailed plan and see it through were soon disappointed. Instead, Jindal encouraged the Legislature to be more autonomous. Instead of walking the floor and twisting arms like past governors, Jindal delegated dealing with legislators to staff. This hands-off approach caught observers of Louisiana politics by surprise.
“I thought when we elected him that we were getting a policy wonk,” says Cross. “Completely not.” Instead, Cross says, Jindal has focused on articulating broad conservative principles. “No one ever sees him as failing,” he adds, “because he’s committed to principles,” not specific programs.
Jindal “learned early on that getting into details can get you into trouble,” says Sen. Mike Michot, the Republican chair of the Senate Finance Committee. “He’s not going to get into the fight if he views it as something that could be sticky or messy for him.” Instead, he has focused on the trinity of issues at the heart of modern conservatism: taxes, guns and pro-life issues. “Those are the rock-solid issues that the right will not embrace him for as a president if he slides,” says Michot. “And those are the three issues where he has held the line.”
Unfortunately at precisely the moment Jindal was developing his leadership style -- hands-on in responding to disaster, hands-off in making policy -- the effort to reset government in Louisiana was running into problems.
One of the problems was technological. Louisiana’s enterprise resource planning (ERP) systems, which collect the vast amounts of information needed for performance-based governing, were antiquated. The outgoing administration of Gov. Kathleen Blanco had recognized the problem and left the incoming Jindal administration with a solicitation for bids on a new ERP but not with an ERP itself. Budgeting for outcomes requires starting with priorities. But continuation or baseline budgeting was, in Levine’s words, “hardwired” into every part of Louisiana’s system.
The other problem was legislative. The Legislature is only in session for a few months each year, and one session simply didn’t provide enough time to educate lawmakers about the fundamental changes the Jindal administration was trying to make. Term limits, which had gone into effect in 2007, complicated matters further. Nearly two-thirds of the 105 representatives were freshmen. Davis was able to trim the state workforce by eliminating 6,000 authorized postings, outsourcing numerous functions to the private sector. Levine reduced the size of his health department by 25 percent and set the state Medicaid program on the path to managed care. But sweeping change -- the “reset” -- eluded them.
“It was my understanding that we were going to prioritize our expenditures; we were going to decide what services the state of Louisiana should provide, and then we were going to rank them by importance,” says State Treasurer John Kennedy, who served on the streamlining commission. “None of that happened in the Legislature session.”
Levine concedes that in retrospect, the Jindal administration may have tried to do too much too soon. “The budget process moves too fast to implement those changes suddenly,” he says, noting that it’s a complicated and multilayered process -- educating the legislators, as well as building an appropriate computer system to run the new process. “We tried in six months to build a new budget process,” Levine says. “But not everybody buys into that concept. We just didn’t allow enough time. You have to do this through multiple budget processes.”
According to Kennedy, however, excessive speed wasn’t the primary problem -- lack of gubernatorial leadership was. The pro-streamlining forces “were not supported by the governor in the legislative session,” says Kennedy. “Why that didn’t happen, I don’t know.”
By late 2009, budget cutting had replaced streamlining as both the Jindal administration and Legislature’s top priority. In December 2009, the Revenue Estimating Conference announced that the state was facing a $300 million revenue shortfall for the current fiscal year. But when the Legislature convened later that spring, the governor was absent. To be certain, he had a good excuse: He was on the Gulf, responding to the BP oil spill. No one in Baton Rouge faulted the governor for his focus on the spill, but neither did the political advantages of stepping away from the budgetary mess go unnoticed. The result was paralysis.
Ten days before the session was scheduled to end, the revenue estimating board revised its revenue shortfall upward -- to $580 million. The House, led by Speaker Jim Tucker, a staunch conservative, wanted to push ahead with deep cuts now. The Senate, led by a more centrist Democrat, Joel Chaisson, felt that more dramatic cuts were impractical. This being Louisiana, both legislative leaders owed their positions, in whole or in part, to Jindal, who remained on the Gulf.
The weekend before the legislative session was scheduled to end, Jindal returned to Baton Rouge. On Sunday night, House members found a letter from the governor on their desks. The governor was siding with the Senate. “This,” declared Rep. Ernest Wooton, “is a day that will live in infamy. Little Bobby turns liberal.”
More troubling for Jindal’s conservative admirers, the budget didn’t shrink. Treasurer Kennedy notes that the state started with a $24.2 billion budget and ended up with a $27 billion budget. Moreover, it is balanced precariously with $2.8 billion in one-time, nonrecurring revenue. Next year that money will be gone. On a year-to-date basis, from July 2009 to July 2010, revenues are down 18 percent, with the sales tax down 13 percent and personal income taxes down 26 percent. “This has been called a [fiscal] cliff for about a year and a half,” Kennedy says. “If you’re driving toward a cliff, you go in another direction. What we did was speed up.”
Tucker voted against the budget. One week later, Jindal retaliated by using his line-item veto to strike funding for several projects in Tucker’s district. Earlier this summer, Davis and Levine, the two brightest stars in Jindal’s streamlining effort, stepped down from their positions to pursue private-sector opportunities.
Louisiana's Fiscal Future
Meanwhile, Louisiana’s fiscal future looks grim. “We are probably looking at a $2 billion revenue shortfall next year,” says Edward Ashworth, director of the Louisiana Budget Project. “We’ve used the rainy-day fund; that’s gone. We’ve tapped into all these other dedicated funds. We are down to the lick log. What do you do now?”
Streamlining has lost its momentum. Instead, budget cutting will be the focus for the next legislative session. “We have not fundamentally restructured government in Louisiana,” says Tucker. “If we do across-the-board cuts, we haven’t changed anything. It’s just a matter of waiting for the economy to turn around.”
But that wait may be too long for the folks in north Baton Rouge’s Bayou Café. The argument for closing the Earl K. Long Medical Center runs along the seam between streamlining and cost cutting. “We have to decrease the size of the infrastructure,” Levine argues. “It’s either going to be thrust upon the state by outside forces, in which case the state won’t have the ability to design the best model, or the state can come up with a plan that makes sense, community by community.”
For the Jindal administration, it seems clear that closing the hospital makes the most sense for Louisiana. For the ministers and representatives of the north Baton Rouge community, it’s just as clear that it does not.
*In the October 2010 issue of Governing magazine, John Buntin's article, "Louisiana's Great Reset," incorrectly stated that Louisiana Gov. Bobby Jindal's middle name was Amrit. Gov. Jindal does not have a middle name. His given name is Piyush Jindal. In the same article, it was stated that Gov. Jindal was appointed secretary of the Louisiana Department of Health and Hospitals in 1993 at the age of 25. He was actually appointed secretary in 1996 at the age of 24.