Treasurer says state spending out of control

Louisiana government has a spending problem, not a revenue problem, and is now operating on the second-largest annual budget in state history after raising $2.4 billion in taxes and fees during the past year, State Treasurer John Kennedy said Wednesday.
Kennedy was the guest speaker during the St. Mary Chamber of Commerce Luncheon at the Petroleum Club of Morgan City. Kennedy is in his fifth term as state treasurer and is running for U.S. Senate in the November election to replace Sen. David Vitter who is stepping down.
State government’s fiscal year began July 1. The 2016-17 state budget is $26 billion just for the executive branch, which is $3 billion greater than last year’s budget, Kennedy said.
In four legislative sessions in the past year, the Legislature raised taxes and fees by $2.4 billion, the largest such increase in Louisiana history. Louisiana now has the highest state sales tax rate in the country to go with increases in lots of other taxes and fees.
About $14 billion of the state budget is state money and $12 billion is federal money. State spending has risen 31 percent since 2010, he said.
The state has enough money to fund essential items, including universities, but officials must set priorities and control costs.
“We don’t have a revenue problem, folks. We didn’t before. We sure don’t now. But I’m telling you something, we have a spending problem,” Kennedy said.
“We have enough money, and it’s embarrassing that we don’t do something about it to support our universities,” Kennedy said.
State leaders chose to raise taxes “at the worst possible time,” Kennedy said. The oil and gas industry, which makes up 40 percent of the state economy, is hurting. Louisiana now has the third highest unemployment rate in the U.S. at over 6 percent, and St. Mary Parish has over 9 percent unemployment. Kennedy expects the state will lose over 20,000 jobs in the downturn.
The state’s unemployment rate is over 6 percent, and St. Mary Parish’s is even higher at over 9 percent.
Louisiana families have to make decisions every day about prioritizing where to spend money, he said.
“It’s about time Louisiana state government did it,” Kennedy said.
State officials could have fully-funded TOPS in the special session but didn’t. State Rep. Jerome “Dee” Richard, I-Thibodaux, brought forth a bill to cut consulting contracts by $183 million over a three-year period to raise enough money to fully-fund TOPS, Kennedy said. There are 18,710 private consultants in state government.
But the bill died in the Senate Finance Committee after Gov. John Bel Edwards lobbied strongly against the bill, Kennedy said.
Kennedy gave several examples of how state government can cut unnecessary spending.
In 2015, the state spent $8.3 billion on Medicaid, and about 10 percent of those costs are attributable to fraud. If the state tried to catch that fraud, the state could use millions to go toward areas such as higher education.
Last year, taxpayers paid for 900,000 visits to emergencies rooms for non-emergencies. Non-emergency visits to emergency rooms cost five times as much as getting treated at a private clinic, he said.
Other states have proven that reducing the number of emergency room visits for non-emergencies is attainable, but Louisiana hasn’t made an effort to reduce those costs.
Several years ago, the state Legislative Auditor found that 22 percent of managers in state government manage just one employee, and the average manager manages four employees, Kennedy said. The average should be at least 1-to-8 or 1-to-10, but state leaders aren’t trying to cut the number of managers.
In response to Kennedy’s comments, Edwards’ Spokesman Richard Carbo said in an email, “Gov. Edwards inherited the largest budget deficit in our state’s history, and is focused on solving the problems that have plagued our state for far too long.”
“The governor has cut hundreds of millions of dollars out of the budget and implemented efficiencies across state government. The treasurer was noticeably absent during the entire budget debate and is now campaigning for another office,” Carbo said.
The challenges facing Louisiana are “far too serious for this kind of political grandstanding from the treasurer,” Carbo said.