The LA Budget Shortfall “Splained”

by CB Forgotston

As the state of Louisiana faces its next annual revenue shortfall (a.k.a. the “fiscal cliff”), apparently, it is necessary to explain the obvious to our politicians.

The issue

Spending one-time money on recurring expenses is not the cause of the shortfall, it’s just a symptom. The problem is simply that state revenues, while growing, aren’t growing fast enough to sustain the current level of spending by the state.

Solutions

No more comment needed!
It’s not one person, it’s the system.

There are only possible two solutions to the chronic shortfalls:
1) Increase the revenues going to the state by raising taxes, tuition (taxes by another name) and fees.
2) Reduce the level of state spending.

These are the same issues those of us in the private sector face daily — raise prices or reduce expenses. Most of us in the private sector choose to reduce our costs. The most successful businesses reduce costs even when the economy is doing well.

In the case of the state, increasing revenues will only serve to slow our economy and reduce future revenues to the state. However, state spending can be reduced by simply letting local governments, non-profits and non-governmental agencies fund themselves.

As we have seen by the giant stimulus packages at the Federal level government spending does not grow the economy or at least not at a rate fast enough to justify the increased spending. They only delay the inevitable.

If the economy is allowed to grow, naturally, then revenues to state government increase and spending can be increased in the future.

Question

Is there any leadership here?
Where’s the leadership?

The politicians in Louisiana must decide whether to maintain the rate of state spending or reduce the spending to allow our economy to grow.  That decision requires vision beyond the next election.

If I’ve missed anything please let me know.

 C.B.