Monday, February 25, 2013

The Budget Of Hope and Dreams

“Grab your ticket and your suitcase
Thunder's rolling down this track
Well you don't know where you're goin' now
But you know you won't be back”

Bruce Springsteen “Land of Hope and Dreams”
 Unfortunately, unlike the Springsteen line, the Louisiana State Budget is back.
Friday, Governor Jindal unveiled his 2013 State Budget. The Budget, weighing in at $24.7 Billion, includes significant cuts to state government across all Departments except the Department of Corrections (up almost 7%) and the Department of Natural Resources (up .5%).

The Governor is proposing to eliminate 10,200 jobs, 7,300 of which are in the hospital system. Many of these jobs won’t be lost as private companies are partnering to take over many of the state hospitals. In addition, 846 currently-unfilled positions in Higher Education will be eliminated.
The budget fills a $1 Billion deficit primarily by cutting $780 Million from LSU’s Public Hospital System under the assumption that 8 of the 10 state public hospitals will be privatized. Thus far, only 5 hospitals have announced plans to partner with private groups and none of these deals have been finalized.

In addition, the Governor proposes using $424 Million in one-time money.
Stop me if you’ve heard this one before. Perhaps, last year?

In fact, a lot of the money used to close the budget deficit hasn’t yet materialized and may never materialize.
In addition to the hospital savings, the one-time money includes anticipated money from the sale of state properties and proceeds from lawsuits.

And, therein lies the problem.
How many times can Louisiana keep going to the “one-time money” well?

What happens if the anticipated hospital savings doesn’t come to fruition? Or if the properties sell for less than expected (or don’t sell at all)? Or if the money from the lawsuits doesn’t come through?
And, this doesn’t even include the potential loss of income tax revenue that will be replaced by a higher state sales tax. Officials continue to maintain that the Governor’s plan will be revenue-neutral. Since every 1% increase in the state sales tax will yield about $700 Million, at a proposed 1.78% sales tax increase, the math doesn’t add up to replacing $3 Billion in lost revenue.

The short answer is, the state will face another budgetary hole next year possibly even deeper than this one.
I guess we all need to have the optimism of Springsteen:

“Ya leave behind your sorrows
Ya this day at last
Well tomorrow there'll be sunshine
And all this darkness past