Treasurer: State spending must be smarter

State legislators’ focus during the upcoming legislative session needs to be on spending money where it’s needed after seven years of out-of-control state spending, State Treasurer John Kennedy said Monday.
Kennedy was the guest speaker at the St. Mary Industrial Group luncheon meeting Monday at the Petroleum Club of Morgan City. The 2015 Regular Legislative Session begins April 13.
Though the state constitution requires a balanced budget, officials can get around that by pretending the budget is balanced on paper by taking money from places that was dedicated for other uses, he said.
The state raided $800 million that was set aside to pay for health care for the elderly, Kennedy said. “When we set it up, the principal was supposed to be left alone, and I would invest the money, which would generate interest earnings and stock dividends, and capital gains,” Kennedy said.
That money was intended to be used to provide health care funding, and the state took “every dime” of that money, he said.
State officials also took $400 million that was set aside to pay health insurance claims for state employees and retirees and put that money in the operating budget, Kennedy said.
To make the situation worse, the state took $3 billion in federal stimulus money and dumped that money in the state operating budget, created new programs and expanded state government, Kennedy said. State officials knew that the money would eventually run out, but the programs the money paid for would continue on, Kennedy said.
“We’re spending money on things that aren’t our priorities,” Kennedy said. “We’ve got enough money to do everything that we need to do. We could be No. 1 in the south in higher education. We could be No. 1 in health care. We could be No. 1 in the south in roads, but we can’t be No. 1 in those things and No. 1 in the south in political patronage because we just don’t have enough money,” he said.
In the past seven years, the state spent about $500 million “remapping our computer systems,” Kennedy said. Though Kennedy believes technology can enhance productivity, that money could have been spent on universities or on health care delivery systems, he said.
State officials should follow rules for operating the state budget, Kennedy said. “No. 1, don’t spend more money than you take in. And No. 2, when you do spend money, spend it on things you really need, not things that you just want,” Kennedy said. “For seven years, the state of Louisiana has been violating both of those rules.”
The state’s 2015-16 budget fiscal year begins July 1, and that budget will include $25 billion, Kennedy said. Former Gov. Kathleen Blanco oversaw a budget of $19 billion compared to a $12 billion budget under former Gov. Mike Foster’s administration.
“It doesn’t matter how much you have. If you spend more than you take in, you’re going to run a deficit.” Kennedy said. Kennedy cited some examples: The state Department of Children and Family Services is building a new website at a cost of $140 million with four out-of-state consultants, Kennedy said. The purpose of the website is to make the process to apply for food stamps easier, he said.
People on food stamps need a lot of things, but a new website should not be a priority, he said. They need help getting a job or a better job, he said. “As far as I’m concerned, we took that $140 million and threw it in the dirt,” Kennedy said.
Kennedy pushed to reduce the number of private consulting contracts the state signs, he said. “Because the governor opposed it, the legislature’s never had the guts to do anything about it. I hope this time is different,” Kennedy said.
Since 2009, the state has spent $1 billion on movie tax credits, Kennedy said.
State officials need to examine the numbers to see if that tax credit program is worth that amount of money, Kennedy said.
During the meeting, State Sen. Bret Allain, R-Franklin, called a lot of the tax credits “giveaway programs,” he said. “I don’t feel that we’re getting our bang for our buck for it.”
Gov. Bobby Jindal is proposing the state make all inventory tax credits nonrefundable to businesses, Allain said. Allain sees this proposal “as a $350 million tax on businesses that are already strapped, particularly here in the oilfield,” he said. “We’re going to fight that.”
The proposal to raise the inventory tax is wrong and will hurt about 10,000 businesses in the state, Kennedy said. However, Kennedy believes the state Legislature’s focus should first be on reining in spending, he said.
“What we really need is a state government in Baton Rouge that is as good as the people in Louisiana, and then we’ll be OK,” Kennedy said.

This story was written by Zachary Fitzgerald of The Daily Review staff. Reach him at zfitzgerald@daily-review.com