by Elliott Stonecipher

jindal-budget-cuts2Since Governor Jindal threw his “tax swap” plan on the Louisiana and national table a couple of weeks ago, a good number of notable commentators have weighed-in with commendable reactions, suggestions, and alternatives.  Each has been required, though, to note that without further – which is to say, almost any – detail from the governor, all such work is thoroughly conditional.

Those involved in this and other public policy debates in Louisiana have waived the white flag of surrender in efforts to get information from the governor’s executive branch until it is usually too late for the peoples’ interests to be protected.  We have learned to expect a whole lot less information than a properly deliberative and responsible people require for such structural changes.  In this case, since the legislature doesn’t convene until April 8th, we expect no additional detail of substance until a week or two before, if we’re lucky.

Skeletal proposal?
Skeletal proposal?

Since the governor’s skeletal proposal was floated, two questions continue to bother me most, and since my research hasn’t provided answers, I figure it’s time to throw these out there to each of you.

Doesn’t It Matter In All of This That Revenue Continues to Grow?

There’s no question about it:  the Jindal years are perhaps most notable in their unrelenting focus on too little revenue – we are told – and the resulting, feverish need to search for more spending to cut.  Such cutting, as far as I can tell, takes up most of the time of most state government officials, from supervisors up to the governor’s staff.

Revenue rises above the rate of inflation...
Revenue rises above the rate of inflation…

The fact, it appears, is that money collected by our state treasury steadily rises, comfortably above the rate of inflation, so why this proposed tax-swap – or is it tax increase – now?  My friend C.B. Forgotston hit this point in an article last week from a somewhat different direction, sending me on a data-dive of my own.

As we think about the governor’s kinda-sorta plan, consider this:  in the past ten years, there are only 119,247 – 2.7% – more people living in Louisiana, state revenue collections are up 30.1%, more than keeping up with a 24.9% cost-of-living increase, and our take from federal coffers is 93% higher.  Here’s the data:

(1)  From Fiscal Year 2002 / 2003 through FY 2011 / 2012, state revenue collections have risen steadily, from $10,268,904,269 to $13,356,542,509.  That more than $3 billion – $3,087,638,240 – increase is 30.1%.  (For FY 2011 / 2012, click top-left on “Comparative Statement,” then see “Existing as of 12-01-2011” middle data column.)
(2)  During this period, the corresponding official, cumulative rate of inflation was 24.9%.
(3)  As to Louisiana’s federal revenue stream, the amount for FY 2011 / 2012 is almost double the amount in FY 2002 / 2003, $5.8 billion then, and $11.2 billion in the just-past budget year … 93% higher.
(4)  Louisiana’s population increase (seriously lagging the state and southern regional rates) has been only 2.7% between July 1, 2002 and July 1, 2012.

Is This “Swap” Really a Cover for the Upcoming $1.2 Billion Budget Shortfall?

In my effort to understand the reasons and timing of the governor’s idea, I just read a 14-page analysis of state spending by respected Legislative Fiscal Office Chief Economist, Greg Albrecht.  In his analysis, Mr. Albrecht cites the precise figure at the core of my second question, the $1,278,096,671 budget hole for next-up FY 2014.

In the steady diet of bad budget news for the past six years, Louisianans learned some few months ago about this deficit which awaits solution in the upcoming legislative session.  Given that the governor doesn’t care to suffer the political impact of another round of cuts, much less so large, there has been a lot of wondering how he was going to pull this one off – without raising any taxes, as he claims is his bedrock principle.

Revenue NeutralBear in mind, the governor asserts that his “tax swap” will be revenue neutral, i.e., as he arranges for the legislature to kill personal and corporate income taxes, thus creating a $2.9 billion revenue hole, he / they will raise sales and other taxes in the same amount.  So, does that mean we are awaiting a plan which, in the first year, raises $4.1 billion in new revenue, the swap-created $2.9 billion plus the $1.2 billion deficit?  If that is the case, we might well assume that the governor ran out of politically bearable cuts, and decided instead to arrange a revenue increase via the so-called “swap.”  What we don’t know, and would be silly to expect, is that an extra $1.2 billion will be raised and spent for a single year, then somehow … poof! … it’s gone.

Calculator OperatorI know a lot of good and smart women and men in state government, and I can use a calculator pretty well.  My hope is that one (or more) of those smart folks will straighten me out about all of this.  I am, after all, educable.  Is the tax swap proposal actually Jindal’s admission that his political ambition can’t bear the heat of more cuts, and thus is forced to shift, and actually, raise taxes?  Why is even more revenue needed with a stagnant population?  With population little changed for 30 years, how can spending continue to swamp even these revenue facts and trends?

Until understandable answers are provided, I’m going to assume this is another administration drive-by, like “ethics reform,” the (unconstitutional) funding of education vouchers, the (unconstitutional) manipulation of the legislative process in overhauling the state retirement system, and other such public policy misfires.  I’m also going to assume these state budget figures are accurate, meaning the revenue side of the equation isn’t a problem.  And, I’m going to assume this administration is unlikely to “disappear” a billion bucks or so after one year.

Elliott Stonecipher

Elliott Stonecipher’s reports and commentaries are written strictly in the public interest.  No compensation of any kind has been solicited or accepted for this work.  This work is protected, and no other use of it is permitted without the written consent of Mr. Stonecipher