Louisiana state budget (2008-2009)
From Sunshine Review
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Gov. Bobby Jindal announced on December 11,2008 that in light of a $1.2 billion shortfall a review of government functions is necessary "to eliminate inefficiencies and reduce spending in a strategic way that will help our state in handling the effects of this national economic downturn.” [1] However, according to Jindal, Louisiana is facing "good news" because in December 2008 the real estate market is holding steady and while the various other states saw a decline in job opportunities "Louisiana gained jobs in seven of the 10 months" in 2008.[2]
In February 2009 the Louisiana Workforce Commission reported that although the national unemployment rate increased to 7.6 percent, Louisiana's was at 5.9 percent. "Our economy doesn't mirror the rest of the nation," said Curt Eysink, spokesman for the Louisiana Workforce Commission. "But we're certainly not immune."[3]
[edit] Impact of budget woes
- Main article: State budget crisis, 2009-2010
- Proposed reforms include cuts to health care and higher education, both of which are not constitutionally mandated.[4]
- House education committee chairman Austin Badon said on February 15 that available funds should be used inside the classroom and "not tied up in administrative costs." [4]
- Chairman of the senate finance committee, Senator Mike Michot, said that the state cannot continue to fund the state's 17 four-year schools, who have recently requested $200 million. "Let's look at shutting down some of our smaller four year institutions and converting those to community colleges," he said.[5]
- In January Louisiana's unemployment was below the national average of 7.6 percent but still continues to rise. The rate has increased 0.6 percent since November when it was at 5.3 percent and 1.9 percent from 2008's 4.0 percent.[6]
- In the final quarter of 2008 claims for unemployment insurance jumped to 17,960 from 10,819 in November and 9,572 in December 2007. According to the federal Labor Department there were 52 layoffs in the final quarter of 2007 which triggered 5,185 unemployment claims compared to 2007's 28 layoffs that triggered 3,399 claims.[7]
[edit] Budget background
The Louisiana state budget is prepared every year by October 1st and includes a detailed financial plan for the fiscal year. Prior to the adoption of the budget a series of public hearings are held in both the House of Appropriations Committee and the Senate Finance Committee. A majority vote is required to pass the state budget.
The Louisiana fiscal year begins in July.[8]
This fiscal year's budget will be presented to the legislature on March 13 and because of the $1.2 billion shortfall the presentation will include an extensive review of all state expenditures. [9]
[edit] Ideas about why the crisis exists
- According to the Rep.James Morris the state simply cannot afford to continue to increase the state government's payroll. In February he said, "I don't know how we can continue to afford that." The state has about 105,000 people on it's payroll, totaling $4.6 billion annually for just base salaries. Last year the number of state employees earning less than $40,000 declined however, 4,334 employees making more than $40,000 were added.[10] [11] [12] [13]
- However,Hurricane Katrina in 2005 also had an impact on the state's budget - increasing the number of state jobs. Immediately following Katrina approximately 10,000 jobs were lost but by the end of former Gov. Kathleen Blanco's term the number climbed back to the 100,000 range. Since 2005 base salaries have risen by 22 percent.[14] [15]
- Louisiana is a state that draws most of its revenue from the energy industry however recently oil prices have fallen sharply from record highs, leading to lower prices at the pump.The state's funds are a result of royalties collected from production on state land and severance taxes that are tied to the price of oil and natural gas. [16]
- According to Louisiana's Department of Revenue, the state is owed $297 million in back taxes and interest but on February 18 Gov.Jindal said that he supports an amnesty for people with outstanding income tax bills but not for those under investigation which the Governor expects will bring in $150 million for the next fiscal year. If passed this would be the fifth tax amnesty since 1985.[17]
[edit] Projected budget gap
| Fiscal Year | Gap | Percentage of current general fund |
|---|---|---|
| 2008-2009 | $341 million[18] | 3.7%[19] |
| 2009-2010 | $2.0 billion[20] | 21.7%[21] |
[edit] Proposed actions
[edit] Governor Bobby Jindal
Gov. Bobby Jindal speaks about the Louisiana budget |
Gov. Jindal proposed six fiscal reforms: increase the the annual five percent cap on cutting dedicated budgetary units to ten percent, eliminate the two-year limit on dedicated fund reductions, enhance dedicated fund accountability, enact a four-year sunset for all statutorily created funds, ensure that public education spending is accountable, transparent, and targeted to areas that improve student performance and create a user-friendly website to post school information for parents and the general public.[22]
[edit] Republicans
In light of the looming budget deficit some Republican lawmakers are calling for cuts across the board before raising taxes,[23] even if that means cuts to education and health care. "If they are forced to absorb the cuts that are anticipated for our next budget year, this would have a significant role in setting us back from the progress that has been made in higher education," said Sen. Mike Michot, chairman of the Senate finance committee.[24]
[edit] Democrats
In January the Louisiana Democratic Party suggested that the "eyebrow raising salary increases" are of major concern and should be considered for a cut, "especially when Jindal’s talking about significant cuts in education and health care."[25] In November 2008 Sen. John Alario, a member of the Senate Finance Committee, and other lawmakers said that the use of the "rainy day fund," a total of approximately $285 million, might be a partial fix to the deficit.[26]
[edit] Reduce unnecessary spending
Kay Marcel, a member of the Louisiana Developmental Disabilities Council is calling for the reallocation of funds. Instead of running several costly developmental centers Marcel suggests that some be closed and the property sold. Marcel noted that instead of funding a program that costs approximately $127,000 per person, officials should consider the $70,000 a person home and community-based state program.[27] However, some lawmakers including Rep. Chris Hazel said that they are hesitant to consider the cut."Those folks have been there so long, it's home to them," he said.[27]
[edit] Economic Stimulus Package
Although Louisiana was initially expected to receive approximately $4 billion from the $787 billion dollar economic stimulus. Currently Louisiana is estimated to receive a total of $538,575,876 for infrastructure spending which White House officials estimate will create 50,000 jobs.[28]
Jindal became the first Governor in the US to reject certain programs of the stimulus bill. He was quoted in the Washington Post saying:
"Increasing taxes on our Louisiana businesses is certainly not a way to stimulate our economy. It would be the exact wrong thing we could do to encourage further growth and job creation," said Mr. Jindal, although the Louisiana legislature could override his decision."[29]
Louisiana Gov. Bobby Jindal on rejecting stimulus money 02-22-09 |
According to preliminary reports Louisiana is expected to receive:[30][31]
- $1.7 billion for the state's Medicaid program
- $587 million in education dollars to help prevent layoffs and cutbacks
- $130 million in flexible dollars to help stave off budget cuts
- $455 million for road and bridge work
- $269 million for high-need schools
- $197 million for special education
- $77 million for transit projects
- $72 million for clean and drinking water projects
- $53 million for state and local law enforcement to hire officers and purchase equipment
- $27 million for homelessness prevention
- $16 million for the Head Start program
[edit] Budget Transparency
On November 12th, 2008, Louisiana announced the launch of its spending transparency database, LA Trac.[32] The database is now up and searchable.
The new government spending database is LaTrac (Louisiana Accountability and Transparency). The database resulted from an executive order by Governor Jindal and the authorization of the legislature. As the Commissioner of Administration, Angele Davis, said, “This is an important event, an extraordinary step forward, and a historic reform initiative for Louisiana and its pursuit of better, more accountable government…Today we begin to empower four million citizen auditors to monitor what the state spends and to judge whether it’s wise, necessary, and achieving results.”[33]
LaTrac contains all executive branch spending for the state of Louisiana, including higher education. It also has a vendor search and a link to the performance of state agencies (through LaPAS). LaTrac also contains LA eGrants which lists all grants that are available through the state.
Also, the new Taxpayers Union of Louisiana Taxpayers of Louisiana website was formed in the spring of 2008 aided by a "Standing Together" grant from the National Taxpayers Union. Founder, John Roberts, stated his belief that transparency in Louisiana's budget was a boon to the taxpayer and would help curtail much of the unnecessary spending so many in Louisiana have become accustomed to.
[edit] Legislation
- Louisiana Senate Bill 37 (2008) was passed in February 2008. The legislation will mandate the Commissioner of Administration to post a monthly report of the appropriations and spending for each budget unit of state government.
- Louisiana Executive Order BJ 2008-2[34]
[edit] Government Tools
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
| State Database | Searchability | Grants | Contracts | Line Item Expenditures | Dept/Agency Budgets | Public Employee Salary |
|---|---|---|---|---|---|---|
| LaTrac |  |  | | | | |
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[35]
- Louisiana will receive an estimated $2,297,586,422 [36]
- The economic recovery website to show how legislators and government officials in Louisiana are spending Federal funds is available here.
[edit] Limitations and Suggestions
Some of the information in LaTrac lacks the specificity some users would like, but every appropriation is listed payable to the entity by name, i.e. Avoyelles Parish School Board. That said, Louisiana is in the process of updating its current software systems, and improvements to LA Trac will continue to be made pending those software upgrades.[37]
[edit] LaPAS
The Louisiana Performance Accountability System (LaPAS) is electronic database that tracks performance standards, interim quarterly performance targets, and actual performance information for Louisiana's Executive Branch departments and agencies.
Departments and agencies are required to submit quarterly Performance Progress Reports to LaPAS via a web-based application. The Office of Planning and Budget (OPB) in the Division of Administration, as the official record keeper of performance standards and information, maintains LaPAS.
[edit] Support for creation of the database
Louisiana's Governor Bobby Jindal and the state legislature supported the creation of the database.
The Pelican Institute applauded Bobby Jindal for LA Trac, but the group says there's more to be done. Their suggestions include requiring "every municipality, parish and school board to put its budget online. Those who pay the local government bills should also be able to see how their tax dollars are being spent. And the costs involved in creating these websites are surprisingly modest."
[edit] Public employee salary information
- Main article: Louisiana state employee salaries
[edit] Online salary database
The Times-Picayune provides an online database of state employee salaries using data from the Louisiana Office of Civil Service. Users can search by name, job title, employer or salary range. The breakdown of salary range is as follows:[38]
| Salary | Number of employees |
|---|---|
| $0 - 49,999 | 72,834 employees |
| $50,000 - 99,999 | 27,834 employees |
| $100,000 - 199,999 | 3,021 employees |
| $200,000 - 299,999 | 139 employees |
| $300,000 - 399,999 | 19 employees |
| $400,000 - 550,000 | 4 employees |
The average pay of a classified state worker is $39,619, while an unclassified worker, (which are generally political appointees), averages $59,246. Gov. Jindal's salary, set by the legislature, is $130,000. Putting this in perspective, the median household income in Louisiana is $39,418.[39]
[edit] Salary increases
In the last year, state employees making less than $40,000 a year actually decreased, while those making over $40,000 rose by 4,334. Additionally, employees making over $100,000 were responsible for growing the payroll by $96 million in a year.[40]
[edit] Highest salaries
Four out of the top five highest paid employees work at LSU. These include:[41]
- John Lombardi, President, LSU System Board of Supervisors - $550,000
- J. Stanley "Skip" Bertman, Athletic Director, LSU - $425,000
- Gary Crowton, Assistant Head Coach, LSU - $400,000
- Michael Martin, Chancellor, LSU, $400,000
- Sally Clausen, Commissioner, Board of Regents - $377,000
[edit] See Also
Louisiana taxpayer-funded lobbying
[edit] External links
- Louisiana Workforce Commission
- Louisiana Accountability and Transparency website
- Pelican Institute for Public Policy
- Taxpayers Union of Louisiana
- Louisiana Office of Planning and Budget
- Louisiana Legislature Website
- Louisiana House of Representatives
- Louisiana State Senate
- Louisiana state budget news
- Louisiana government website
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Louisiana Department of Civil Service
[edit] Additional reading
[edit] References
- ↑ Office of the Governor, "Governor Jindal discusses Louisiana's economy and budget," December 11,2008
- ↑ Office of the Governor, "Governor Jindal discusses Louisiana's economy and budget," December 11,2008
- ↑ The News-Star,"La. has healthy unemployment fund at $1.4B,"February 10,2009
- ↑ 4.0 4.1 WWL-TV,"Stimulus package to help plug budget shortfall,"February 15,2009
- ↑ WAFB,"Governor Jindal outlines six fiscal reforms," February 13,2009
- ↑ The News-Star,"La. has healthy unemployment fund at $1.4B,"February 10, 2009
- ↑ Forbes,"Louisiana gains non-farm jobs in December,"January 28,2009
- ↑ The State of Louisiana,"State Budget Document," retrieved February 17,2009
- ↑ Louisiana Division of Administration,"Commissioner Davis statement on upcoming budget cost-saving measures,"January 26,2009
- ↑ The Times-Picayune,"Louisiana's growing state payroll strains budget,"February 14,2009
- ↑ Louisiana Department of Civil Service,"2007-2008 Annual Report," retrieved February 18,2009
- ↑ Bayou Buzz,"Louisiana Legislature Budget Bloated Not Scrubbed,"June 1,2007
- ↑ Bayou Buzz,"Louisiana Legislature Pay Raises, Budget Lunacy,"June7,2007
- ↑ The Times-Picayune,"Louisiana's growing state payroll strains budget,"February 14,2009
- ↑ Louisiana Department of Civil Service,"2007-2008 Annual Report," retrieved February 18,2009
- ↑ The Advocate,"Jindal rejects using rainy day fund, taxes to fix budget," December 12,2008
- ↑ The Times-Picayune,"Gov. Jindal, lawmakers propose amnesty period for state tax delinquents," February 18,2009
- ↑ Center on Budget and Policy Priorities,"STATE BUDGET TROUBLES WORSEN," retrieved February 18,2009
- ↑ Center on Budget and Policy Priorities,"STATE BUDGET TROUBLES WORSEN," retrieved February 18,2009
- ↑ Center on Budget and Policy Priorities,"STATE BUDGET TROUBLES WORSEN," retrieved February 18,2009
- ↑ Center on Budget and Policy Priorities,"STATE BUDGET TROUBLES WORSEN," retrieved February 18,2009
- ↑ Office of the Governor,"Governor Bobby Jindal Announces Fiscal Reform Priorities For Upcoming Legislative Session," February 12,2009
- ↑ Republican party of Louisiana"blog," January 16,2009
- ↑ Associated Press,"La. gov seeking greater budget cut flexibility," February 13,2009
- ↑ Louisiana Democratic Party,"You’d think he’d have a handle on the budget process by now,"January 28,2009
- ↑ Associated Press,"State 'rainy day' fund could be tapped for shortfall," November 16,2008
- ↑ 27.0 27.1 The Associated Press,"Groups disagree over use of funds," February 18,2009
- ↑ CBS News,"Jindal Signals Louisiana May Not Take Stimulus Money,"February 17,2009
- ↑ Washington Post, Jindal rejects La.'s stimulus share, Feb. 21, 2009
- ↑ The Associated Press,"La's share of stimulus pegged at $3.8 billion; Jindal unsure if state will take all the money,"February 14,2009
- ↑ Federal Funds Information for StatesRetrieved February 18,2009
- ↑ Louisiana Division of Administration, "State government launches online spending database," November 12, 2008
- ↑ Louisiana Division of Administration, "State government launches online spending database," November 12, 2008
- ↑ Louisiana Executive Order BJ 2008-2
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ Wall Street Journal,"Stimulus Spending by State," March 12,2009
- ↑ Forbes.com, "New database to show how Louisiana money spent," November 13, 2008
- ↑ The Times-Picayune, How much do state employees earn?, February 14, 2009
- ↑ 2 the Advocate, 11,839 state paychecks top $70,000, January 18, 2009
- ↑ The Times-Picayune, Louisiana's growing state payroll straining budget, February 14, 2009
- ↑ The Times-Picayune, Government Jobs and Pay'
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