State budget surplus just an illusion

OPINIONS ---
Daily Advertiser 12-26-2007


Gov.-elect Bobby Jindal and the next Legislature are looking forward to a $1.1 billion surplus left from the 2006-07 budget year. The financial picture, however, is not as bright as it seems. The billion dollar-plus surplus is minor when the state's list of financial liabilities is perused. Also, the surplus dollars can be used for one-time spending only. It cannot be put into ongoing programs.

Only programs such as road construction and conserving the state's wetlands can be funded with the extra money, much of which will be gobbled up by inflation in health care and other programs. Thus, with a $1.1 billion surplus dangling in front of them, the governor and legislators will be able to fund very few new programs. State budget director Ray Stockstill laid out the situation in blunt terms. "There just won't be a lot of money for new initiatives," he said. Stockstill cited state liabilities of $30 billion. It should be no surprise that $14 billion is needed to handle the backlog in highway maintenance and repairs. Also, there is nearly $10 billion worth of debt in the two largest state pension plans.

The Jindal administration will have - in addition to the surplus - $657 million beyond the amount budgeted for the current fiscal year. There is also $477 million more than the original prediction for the fiscal year. That simply adds to the deceptive appearance of the state's financial status. After factoring for inflation and tax cuts, the funding is barely sufficient to keep government operating at current levels during the 2008-2009 fiscal year.

Jindal plans to divert $450 million from the general fund to spend on road projects. If he goes through with his plans, cuts may be required elsewhere. That raises the unpleasant prospect of cutting higher education and health care. They are the only areas of consequence that are not given statutory protection from reduction or redirection of funds. The situation stems from the desire of taxpayers to protect money approved for specific programs or services from being tampered with by opportunistic politicians. In achieving this, the process hamstrings government in times of financial crisis, which is most of the time in Louisiana.

With no other financial avenues to travel, the state has consistently used the budget scalpel on health care and higher education, taking away funds that are always badly needed.

Jindal will encounter a classic example of using one-time funds for ongoing needs. The biggest financial problem will be the Medicaid program for the poor, elderly and disabled. It needs more than $700 million in additional state support to continue operations at the present level. That situation exists because this year's budget was financed in part with funds that may not be available for years to come.

Those are the financial realities the Jindal administration will face. What looks like a wonderfully fat surplus is really an illusion.


HOME