Gov. Bobby Jindal privatized and consolidated government programs and significantly reduced the state employee workforce, which reversed a long and persistent trend of swelling numbers of state workers. The privatization of the Charity hospitals moved thousands of medical and administrative workers off the state payroll and into the private sector. So the state budget is supporting fewer state workers but more private sector employment. Jindal’s administration also ended the state’s routine practice of annual 4% pay increases for nearly all state employees, a generous rate that was well above inflation. A new policy for state employee raises has been implemented recently. Universities received less direct support from the state general fund but were allowed to increase tuition and fees to make up much of the difference. Several state agencies took budget cuts over time.
But Louisiana’s overall state budgets became increasingly propped with basically borrowed resources. So called “one-time money” -- as narrowly defined by legislative spending safeguards -- actually declined, but other forms took hold. The budgets were patched with a combination of trust fund depletions, debt defeasance maneuvers, lawsuit settlements, fund sweeps, delays in paying bills and other short-term fixes. Between 2009 and 2015, the state saw four tax amnesty programs, which is basically a way of accelerating collection of owed taxes and driving settlements in tax disputes with corporations. All of these measures were ways of borrowing from the future. And they were drawn from sources that would not be available in subsequent years.
One-time money can occur for many justifiable reasons, such as when the state gets a lawsuit settlement. But Louisiana’s government was manufacturing those opportunities by borrowing from the future for the primary purpose of raising money for the short-term operating budget, doing long-term damage to the state fiscal outlook. In 2015 these techniques added up to more than $1 billion in spending based on income sources that would not be renewable, and the situation grew even worse the following year. The predictable outcome: higher taxes passed in 2016.
For years the Legislature had been approving programs that resulted in new long-term costs. Tax credit programs are an example. The inventory, horizontal drilling and motion picture tax credits, combined, grew from an approximately $150 million cost in 2004 to $775 million in 2014. The three credits have decreased in value since then. A $250 million program to construct buildings for community and technical colleges across Louisiana – outside the normal capital outlay process – resulted in new facilities for many legislative districts but also created new debt payment obligations for years to come. Some of the building projects have been delayed to stem costs.
Money has been siphoned from trust funds to pay for operational expenses. The Medicaid Trust Fund for the Elderly, which was filled with a windfall of federal dollars more than a decade ago as a cushion for nursing homes and other services, was raided of more than $800 million until nearly depleted. The Medical Assistance Trust Fund and the Artificial Reef Development Fund were tapped but later were granted constitutional protection by Louisiana voters. The Transportation Trust Fund, dedicated to financing roads and other transportation infrastructure, forfeited $40 million annually in the late Jindal years to cover operational and retirement expenses for State Police. These funds are no longer offering easy money for the state operating budget.