BATON ROUGE, La. Already, the state of Louisiana had gutted university spending and depleted its rainy-day funds. It had cut 30,000 employees and furloughed others. It had slashed the number of child services staffers, including those devoted to foster family recruitment, and young abuse victims for the first time were spending nights at government offices.
And then, the states new governor, John Bel Edwards (D), came on TV and said the worst was yet to come.
Edwards, in a prime-time address on Feb. 11, said hed learned of devastating facts about the extent of the states budget shortfall and said that Louisiana was plunging into a historic fiscal crisis. Despite all the cuts of the previous years, the nations second-poorest state still needed nearly $3 billion almost $650 per person just to maintain its regular services over the next 16 months. Edwards gave the states lawmakers three weeks to figure out a solution, a period that expires March 9 with no clear answer in reach.
Louisiana stands at the brink of economic disaster. Without sharp and painful tax increases in the coming weeks, the government will cease to offer many of its vital services, including education opportunities and certain programs for the needy. A few universities will shut down and declare bankruptcy. Graduations will be canceled. Students will lose scholarships. Select hospitals will close. Patients will lose funding for treatment of disabilities. Some reports of child abuse will go uninvestigated.
Doomsday, said Marketa Garner Walters, the head of Louisianas Department of Children and Family Services. If the state cant raise any new revenue, her agencys budget, like several others, will be slashed 60 percent.
At that level, she said in an interview, the agency is unsustainable.
But even if Louisianas Republican-dominated legislature approves certain tax increases, as most expect, the state still would grapple with problems. The taxes which could include hikes on everything from groceries to salaries would dig into the pockets of citizens in a state where 18 percent live in poverty and where the median income is 20 percent below the national average. And the taxes alone wont close the gap. Nasty cuts will still be necessary, meaning Louisiana will be taking more from its 4.6 million people while offering them less.
Many of the states economic analysts say a structural budget deficit emerged and then grew under former governor Bobby Jindal, who, during his eight years in office, reduced the states revenue by offering tax breaks to the middle class and wealthy. He also created new subsidies aimed at luring and keeping businesses. Those policies, state data show, didnt deliver the desired economic growth. This year, Louisiana has doled out $210 million more to corporations in the form of credits and subsidies than it has collected from them in taxes.
Initially, Jindal had been able to cut taxes because Louisiana was buoyed by billions in federal money, an influx to help with the recovery from Hurricane Katrina, which struck in 2005. But as that money ran dry, Jindal said he would veto any bills that would push taxes back to where they had been. Instead, to plug budget gaps, Jindal relied not just on cuts but also on controversial, one-off fundraising methods. The state sold off assets, including parking lots and farmland. It cleaned out money from hundreds of trust funds among them, one intended to build reefs for marine wildlife. It pieced together money from legal settlements.
Initially, Jindal had been able to cut taxes because Louisiana was buoyed by billions in federal money, an influx to help with the recovery from Hurricane Katrina, which struck in 2005. But as that money ran dry, Jindal said he would veto any bills that would push taxes back to where they had been. Instead, to plug budget gaps, Jindal relied not just on cuts but also on controversial, one-off fundraising methods. The state sold off assets, including parking lots and farmland. It cleaned out money from hundreds of trust funds among them, one intended to build reefs for marine wildlife. It pieced together money from legal settlements.
The math is daunting: For the fiscal year that ends June 30, Louisiana is facing a $940 million deficit, roughly one-eighth of what the state typically doles out from its general fund in a year. For 2016-2017, which begins July 1, the gap is $2 billion.
This was years of mismanagement by a governor who was more concerned about satisfying a national audience in a presidential race, said Jay Dardenne (R), the lieutenant governor under Jindal and now the states commissioner of administration. Dardenne said Jindal had helped the state put off its day of reckoning in a way that mirrored a Ponzi scheme.
Dardenne was elected separately from Jindal and said he wasnt part of his inner circle.
Jindal suspended his presidential campaign in November, saying he couldn't stand out in a "crazy, unpredictable election season."
On Jindals watch, nearly every agency in Louisiana shed employees, and state lawmakers say some teetered because of the losses. The Department of Children and Family Services shrank to 3,400 employees, from 5,000 in 2008, and social workers began carrying caseloads larger than national standards. The state also cut funding for youth services and mental health treatment.
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